Important notes and reminders

RFS client function to be held on 5 September

RFS will once again host a client function of 5 September at ‘De Kayak’ next to Olympia municipal swimming pool on 5 September starting at 17h15.

The keynote address will be delivered by Brett St Clair. Brett has more than 20 years of experience in the global digital landscape. He mastered the secrets of Silicon Valley over 10 years, as he worked to build African successes at Admob (the world’s largest Mobile Advertising Network), Android, YouTube, Google and Google’s Cloud Computing across Africa.

Brett will speak on ‘Digital Transformation - The Path To Innovation’. Understanding where digital  disruption is coming from and key technology trends causing exponential disruption holds the key to understanding the ways of working in future.

Benchmark Retirement Fund annual member meeting to be held on 6 September

Members of the Benchmark Retirement Fund will be updated on latest developments within the fund, it financial position and investment returns at the annual member meeting to be held at NIPAM, Paul Nash Street Olympia, on 6 September 2018, starting at 17h00. The keynote address will be delivered by Brett St Clair. Brett has more than 20 years of experience in the global digital landscape. He mastered the secrets of Silicon Valley over 10 years, as he worked to build African successes at Admob (the world’s largest Mobile Advertising Network), Android, YouTube, Google and Google’s Cloud Computing across Africa.

Brett will speak on ‘The Era of Digitalism’. The world used to be the domain of Silicon Valley but over 50 billion devices will be connected by 2010. What impact will this have on life for us all? Please confirm your attendance by writing to This email address is being protected from spambots. You need JavaScript enabled to view it. or call Andrea on 061 446 6069 by 31 August

If you are interested in any of these topics, your presence at the meeting is a foregone conclusion!

Quarter 3 of 2018 SIH returns – forewarning

The SIH return at 30 September 2018 is due to be submitted by 15 November (note that the 45 days period remains in place). The return for quarter 2 was due to have been submitted by 15 August.

NAMFISA levies

• Funds with year-end of July 2018 need to have submitted their 2nd levy return and payments by 25 August 2018; August 2018 year-ends by 25 September 2018.
• Funds with year-end of January 2018 need to have submitted their 1st levy return and payments by 25 August; February 2018 year-ends by 25 September 2018.
• Funds with year-end of January 2018 need to submit their final levy return and payment by 31 January 2019; December 2017 year-ends need to submit their final levy return and payment by 31 December 2018.

Newsletter

Dear reader

In this newsletter we present a message by managing director Marthinuz Fabianus to our clients; we review the dilemma of pension fund or provident fund, lump sums or pensions; we review the potential risk of dismissal for an employer; we question the value of conferences, seminars and workshops; we analyse the requirements of RF.S.R.5.17, and in our investment commentary we suggest that under current market conditions, a prudential balanced portfolio is the best choice for an investment horizon of 3 years and longer. Under ‘legal snippets’, we review an interesting judgment by SA Appeal Board of the FSB dealing with the adjudicator’s powers to refuse to register rules.

The topical articles from various media should not be overlooked – they are carefully selected for the value they add to the management of pension funds and the financial well-being of individuals...

...and make a point of reading what our clients say about us in the ‘Compliments’ section. It should give you a good appreciation of who and what we are!

As always, your comment is welcome, so open a new mail and drop us a note!

Regards

Tilman Friedrich

Message from our Managing Director

I owe the diverse RFS clientele, various business leaders, peers in the industry, even former school mates I have not heard from in many years and not to forget friends and family a big thank you for the overwhelming congratulatory messages regarding my appointment as RFS Managing Director.

Most of the messages served not just to congratulate and wish me well, but to also offer support and importantly give me a heads-up on the challenges lying ahead. I have had to state at times repeatedly in recent conversations that my career story is not even a bit as remarkable as the story of RFS, the business that was started from absolutely zero less than 20 years ago. I have been extremely fortunate to have been part of RFS from its early days and I credit the keen interest in my role at RFS to the exceptional business reputation RFS has earned in the market to date. It sounds exaggerated to state the fact that RFS is today the largest wholly Namibian owned pension fund administrator, managed locally, by local Namibians!

We are extremely fortunate to have Tilman who is still energetic, of good spirit and most importantly willing to remain involved to offer his technical advice, motivation and mentorship on the operational side of the business. I could not have hoped for anything better. The greatest achievement of RFS and Tilman is the quality and strength of the management team and staff that conceals some of the finest individuals that form part of in my view the best pension fund management team ever put together in our industry.

With the imminent complete overhaul of the pension fund laws and the changes in the regulatory environment, the pension fund industry but more specifically pension fund administrators, boards of trustees of pension funds and pension funds asset managers face extremely challenging times ahead. Yet, further reasons for concerns are created with the uncertainties and secrecy around the envisaged National Pension Fund law being pursued by the Social Security Commission. Probably more than ever before, our industry needs a vibrant body to earnestly represent the interests and concerns of the industry.

Tilman was recently reconfirmed to serve on the legal and regulatory committee of the Retirement Funds Institute of Namibia (RFIN). This is a direct benefit our clients and the industry at large are gaining from Tilman’s wealth of experience and expertise. I have myself also recently joined the board of RFIN once again, which I previously served as President 12 years ago. RFIN however has not received the required support it needs from especially pension fund boards. It is not enough to pay membership fees to an industry body like RFIN and then leave it to a handful of trustees and mostly representatives of service providers to fight the challenges the industry face with regulators. I can make the point on another day, but on my maiden contribution to the newsletter in my new role, my plea to pension fund trustees is to get involved in the activities and the running of RFIN if RFIN is to be taken seriously and be meaningful in our industry.

I look forward to serving firstly our clients, but also the industry at large as I have done for the past 17 years I have been with RFS.

Marthinuz Fabianus graduated from Namibian University of Science & Technology with a Diploma in Commerce and Bachelors in Business Management. He completed a senior management development programme at University of Stellenbosch and various short courses including a macro-economic policy course which he completed at the International Training Centre of the ILO in Turin, Italy. Marthinuz also serves as trustee on the board of the Benchmark Retirement Fund and is a member of the board of the Retirement Funds Institute of Namibia.

In July 2018 the average prudential balanced portfolio returned 0.15% (May 2018: 2.45%). Top performer is EMH Prescient (0.88%); while Allan Gray (-1.12%) takes the bottom spot. For the 3 month period, Stanlib takes top spot, outperforming the ‘average’ by roughly 1.15%. On the other end of the scale Namibia Asset Management underperformed the ‘average’ by 1.43%.

The prudential balanced portfolio – the best choice for an investment horizon of 3 years and longer

Graph 1.7


Graph 1.8


Graphs 1.7 and 1.8 above depict the 5 year and the 10 year returns of prudential balanced portfolios to the end of July 2018, as blue bars. An article by Patrick Cairns in Moneyweb of 8 August 2018, shows the SA top-performing world-wide flexible funds for these periods to the end of July 2018. The table below sets out a comparison between the SA and Namibian funds

• Currently, there is no legal requirement to preserve one’s capital upon resignation. The Income Tax Act encourages preservation by allowing retirement capital to be transferred to another approved fund, tax free but at the same time it allows you to withdraw a portion or all your capital within the first three years of resignation. This is only one leakage. The National Pension Fund envisages compulsory preservation but it is not in force.·         A much more serious leakage is the provision for provident funds in the Income Tax Act. These funds cannot pay pensions but only lump sums and oblige the employee to accept cash as the default arrangement. Obviously most employees are unlikely to reinvest the cash once in their possession. We question the existence of provident funds and believe SA has taken the right decision to enforce annuitisation at retirement meaning that fund members will be obliged to convert a portion of their retirement capital to an annuity. Under the FIM Bill, RF.S.5.18 also envisages compulsory preservation of a minimum of 75% of a member’s ‘minimum individual reserve’, often also referred to as member’s fund credit or share.
• Often pension funds require the retiree to purchase a pension from another fund or insurer. Such transactions not only often expose the retiree to unscrupulous operators, but the retiree has to incur substantial costs. Trustees are also often overwhelmed by consultants talking them into unnecessarily complex structures that might serve the needs of a very small minority but come at a cost. Trustees often do not grasp the complexity of such complex structures nor do they appreciate the risks. The consultants often introduce such arrangements with their own agenda, such as selling house products and services and making themselves indispensable for the fund.
• There are other less serious leakages which we will not cover now. The most serious leakages can and should be addressed by government through policy measures. The thought has been raised for the Income Tax Act to do away with provident funds. With regard to the National Pension Fund, it is still being contemplated whether or not any exemption will be granted to existing funds. It would appear likely that if any exemption were to be granted, it would be on the basis that the employee and employer contribution rate towards the fund is at least equal to that of the National Pension Fund (12%-14% of payroll?) and that benefits will primarily take the form of income rather than lump sum benefits.

• Rather offer a pension fund than a provident fund.
• The pension fund should offer income benefits rather than lump sums in the event of death, disablement and, as a matter of course, in the event of retirement.
• Be wary of converting your fund from pension fund to provident fund and to do away with income benefits.
• Be wary of outsourcing pensioners if your fund is large enough to carry the liability for in service spouse’s and children’s pensions and post retirement pensioners.
• Be wary of dissolving your investment reserve which is particularly useful for funds maintaining a pensioner pool.
• Be wary of unnecessarily complex and expensive fund structures that may serve a small group of members only.

The following regulations and standards were issued and covered in the process:

Regulations:

• RF.R.5.3  Terms & conditions on which a board may distribute some or all of an actuarial surplus
• RF.R.5.7   The rate of interest payable on the value of a benefit or a right to a benefit  not transferred before the expiration of the applicable period pursuant to section 262(9)(c
• RF.R.5.8   The protection of unpaid contributions of an employer and the rate of interest payable on contributions not transmitted or received pursuant to section 262 (9)(a) and (b).

The above regulations were covered in the Benchtest 2018-02 newsletter issued in February.

Standards:

• RF.S.5.11  Alternative forms for the  payment of pensions for the purposes of defined contributions funds
• RF.S.5.12  The conditions pursuant to which a fund may be exempted from Chapter 5 or from any provisions of Chapter 5
• RF.S.5.13  Requirements for a communication strategy
• RF.S.5.14  Requirements for the annual report of the fund to its members
• RF.S.5.15  Requirements for the annual report of a fund to NAMFISA
• RF.S.5.17  Categories of persons having an interest in the compliance of a retirement fund with the provisions of section 262  and the requirements for reports that must be submitted to such persons
• RF.S.5.18 Matters to be included in investment policy statement
• RF.S.5.19  Matters to be communicated to members and contributing employers and minimum standards for such communication
• RF.S.5.20 Matters to be included in a code of conduct
• RF.S.5.22 Transfer of any business from a fund to another fund or from any other person to a fund
• RF.S.5.23 Fees that may be charged for copies of certain docs

In the Benchtest 2018-03 newsletter we addressed RF.S.5.11.
In the Benchtest 2018-04 newsletter we addressed RF.S.5.12 and RF.S.5.13.
In the Benchtest 2018-05 newsletter we addressed RF.S.5.14 and RF.S.5.15.
In the Benchtest 2018-06 newsletter we addressed RF.S.5.18 and RF.S.5.19
In the Benchtest 2018-07 newsletter we addressed RF.S.5.20, RF.S.5.22 and RF.S.5.23

RF.S.5.17
Categories of persons having an interest in the compliance of a retirement fund with the provisions of section 262  and the requirements for reports that must be submitted to such persons

This standard requires every pension fund to now report on a quarterly basis to members, pensioners, employers, labour unions, fund bankers, fund investment managers, fund actuary, fund auditor, NAMFISA, the Financial Intelligence Centre and “…any other party who may have a similar interest…” [to these parties]. This report is to be in a standard tabular form setting out extensive detail on contributions due and paid.

Tilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner ® practitioner, specialising in the pensions field. Tilman is co-founder, shareholder and Chairman of the RFS Board, and retired chairperson, and now trustee, of the Benchmark Retirement Fund.

Paul-Gordon /Guidao-Oab joined RFS as Manager: Audit and Compliance in May 2016 and has then moved into the position of Benchmark Product Manager. Paul holds a B Compt degree from Unisa and has completed his articles with SGA.

• Aliza Prinsloo
• Maria Teixeira
• Agnes Brockerhoff
• Anna Willemse

• Giovanni van Wyk

• Although appellant raised two matters namely the amendments to make members of exited employers paid up and the amendment of rules of actively participating employers to make membership and contributions compulsory and argued that the first type of amendments should at least have been registered, not being in contravention of the determination by the Minister of Labour, the appeal board did not consider the first matter as it was not part of the arguments submitted for consideration.
• The SA Pension Funds Act was amended with the insertion of section 7 D that defines the duties of the board of trustees. In the context of this case, it specifically requires the board of trustees to ensure that the rules and the operation and administration of the fund comply with all other applicable laws. This does not apply to Namibia.
• The SA Pension Funds Act was amended with the insertion of section 12(6) that empowers the registrar to request such additional information in respect of any rule amendment that he may deem necessary and such amendment will lapse if the required information is not provided within 180 days. This does not apply to Namibia.
• Although the Pension Funds Act in section 12(4) requires that the registrar must register a rule amendment if it is not inconsistent with the PFA and is financially sound, the registrar cannot register an amendment if it contravenes a law of South Africa. The object of section 12(4) is to “…deny the registrar a general discretion and not to require of the registrar to register something that is unlawful in the broader sense of the term…” “The Act does not operate in a bubble of its own…”
• In this case, the determination by the Minister of Labour that the new fund be established as a compulsory fund for security personnel is a legal requirement and hence the registrar was within her rights to require proof that the actively participating employers have been exempted from the statutory requirement to participate in the appellant.
• Although the determination of the Minister of Labour does not prohibit an employer in the private security industry to also participate in another fund, the envisaged amendment of the special rules of the actively participating employers to provide for compulsory membership and contributions of their employees is a contravention of the determination by the Minister of Labour which requires the written consent by an employee for any deduction to be made from his salary as opposed to a compulsion to participate and to contribute.

1. A budget
2. Medical Aid
3. An own bank account
4. A slush fund or spending money
5. A balanced investment portfolio
6. An updated financial plan
7. A professional wealth planner

1. Myth: Exercise doesn't help counter the negative effects of aging.
2. Myth: A sluggish metabolism is the main reason you gain weight as you age.
3. Myth: To stay in shape, you only need to work out once or twice a week.
4. Myth: The best time to work out is first thing in the morning.
5. Myth: Weight lifting turns fat into muscle.
6. Myth: Puzzles and games are great workouts for your brain.
7. Myth: Exercise is the best way to lose weight.
8. Myth: Sit-ups are the quickest ticket to a 6-pack.
9. Myth: Weight training is for men.
10. Myth: It takes at least a couple weeks to get 'out of shape.'
11. Myth: Running a marathon is the ideal way to get fit.
12. Myth: Keeping a food diary is a reliable way of monitoring and controlling what you eat.
13. Myth: Sports drinks are the best way to re-hydrate after a workout.
14. Myth: Your BMI is an accurate way to size-up your overall health.
15. Myth: You need to sweat for your exercise to count.

1. Education has increased on average by 8.3% per annum,
2. Electricity and fuels with a staggering 13.8% per annum and
3. Food by 7.1% per annum.

1. 12% of the respondents in the survey reported an increase of less than 5%.
2. Only 3% of respondents indicated that budgeted increases for the next 12 months exceed 6%...”

Blackboard wisdom at a filling station

A  filling station has become quite a landmark in Gauteng, South Africa, with its daily #PetrolPumpWisdom, which are uplifting quotes written on a chalkboard. Some motorists say they deliberately travel this road just to read the quote which brightens their day. Here's one: