In this newsletter:
Benchtest 05.2019, National Pension Fund Part 5, treating your customers fairly

NAMFISA levies

  • Funds with year-end of June 2019 need to have submitted their 2nd levy return and payments by 25 July 2019;
  • Funds with year-end of December 2019 need to have submitted their 1st levy returns and payments by 25 July 2019;
  • Funds with year-end of July 2018 need to submit their final levy return and payment by 31 July 2019; August 2018 year-ends need to submit their final levy return and payment by 30 August 2019.
It must be borne in mind that the new levy was introduced only from 1 November 2017 and the levy must thus be pro-rated between the new levy and the old levy calculation methods..

Phasing out of cheques - reminder
Local banks no longer accept any cheques issued after 1 February. Note that cheques will expire after 6 months, thus 1 August. Cheques issued on 1 February 2019 will thus be valid only up to 31 July 2019.

Proposed Income Tax and VAT amendments

If you have missed previous communications on what’s in store for us in terms of changes to the Income Tax Act and the Value Added Tax Act, follow this link to a crisp overview by PWC.

Registered service providers

Certain pension fund service providers need to be registered by NAMFISA and need to report to NAMFISA regularly

These service providers are:-

  • Registered Investment Managers
  • Registered Stockbrokers
  • Registered Linked Investment Service Providers
  • Registered Unit Trust Management Companies
  • Registered Unlisted Investment Managers
  • Registered Special Purpose Vehicles
  • Registered Long-term brokers
  • Registered Long-term insurers

If you want to find out whether your service providers are registered, or whether you need to establish directly from NAMFISA because the service provider does not appear on the list, use this link...

Check out our new retirement calculator

Our web based retirement and risk shortfall calculator has been enhanced and updated to assist you to determine how much you should contribute additionally, either by way of lump sum or regular salary based contribution, to get to your target income at retirement, death or disablement.

Try it out. Here is the link...

Dear reader

In this newsletter RFS Managing Director, Marthinuz Fabianus continues his discussion on how a National Pension Fund can be established.

In ‘Tilman Friedrich’s industry forum’ we present -

  • The editor's views on investment markets.
  • Treating your customers fairly – what’s good for the goose should be good for the gander.
  • Provision for late payment interest in fund rules.
  • The Administration of Estates Act – where do we stand?
  • Death benefits and circular 04/2019.
  • An analysis of one new regulation and two new standards circulated under the FIM Bill for commentary.
  • FIM Bill to be tabled in parliament.

In our ‘Benchmark’ column we welcome SatCom

In ‘News from RFS’ we salute long-serving staff and present unique comfort factors we offer to our clients.

In ‘News from the marketplace’ read about –

  • RFS appointed administrator by Napotel;
  • Orbis proposes changes to some of its fee structures;
  • The price of fuel – do you know what you pay for;

In ‘News from NAMFISA’ we present –

  • Meeting between industry and Inland Revenue;
  • New regulations and standards issued for industry comment;
  • Feedback from industry meeting of 13 June 2019;
  • New requirements for registration of special rules;
  • Unclaimed benefits circular;
  • Circular 03/2019 – death benefits of pensioner members;
  • Latest version of FIM Bill released;

In ‘Legal snippets’ our guest writer considers how to dispose of unclaimed benefits in the light of the requirements of the Administration of Estates Act versus those of the Pension Funds Act.

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!


Tilman Friedrich

Rationale for the proposed approach to the operationalisation of the National Pension Fund (NPF) - Part 6

This is the 6th article in as many months that I am discussing the topic of the NPF. In the previous edition, I alluded to reports from various quarters that Social Security Commission (SSC) has thrown out what I and many considered to have been most pragmatic policy thoughts for operationalising the NPF that the 2015-2017 SSC board presented to the line ministry (The Ministry of Labour). Reports are rife that the new SSC board is dancing at the tunes of the same line ministry and is currently favouring proposals from International Labour Organisation (ILO) consultants that have once again been brought in to spearhead our NPF agenda. It is utterly incomprehensible that we don’t seem to learn as a country and in this case SSC and its line ministry, from all the failures of the past and don’t seem to regret the wastage of precious resources. Attempts have been made to operationalise the NPF since 1997 or so, and more than 20 years on, we still cannot find a formula which is best suited for our Namibian socio-economic environment. This is because we time and again prefer to listen to so called international consultants that have no real understanding and appreciation for our environment.

I have all but given up hope that sanity will prevail in the end and I still submit that the solution for a NPF that can best meet the needs, aspirations and socio-economic realities of our country would be one that is crafted by ourselves, rather than one dictated to us by western experts based on what has worked in their countries and elsewhere. For that reason I have been building arguments for a locally engineered solution and I for that reason would like to submit some high level thoughts in that regard.

As conceded in earlier editions on this topic, there is global consensus amongst policy-makers that social protection programmes or social security initiatives play a crucial role in the eradication of poverty and income inequalities.  Namibia’s development agenda as set out in the National Development Plans (NDP4), Vision 2030 and more recently the Harambe Prosperity Plan (HPP) also recognises that enhanced social protection will help fight poverty and our highly skewed income distribution. The Social Security Act, No. 34 1994 (SSA) provides for the establishment of a National Pension Fund. It is however, the “how” to operationalise the NPF, that has eluded the SSC and its tripartite board and the line Ministry of Labour.

In answering the “how” question, it is necessary to recapitulate some key issues which have been the bone of contention between the different parties of interest in the establishment of the NPF. The key parties of interest are government, Social Security Commission, labour and the employers.

The key issues are revisited briefly below:

Whether to introduce a Defined Benefit or a Defined Contribution fund?

A quick search on Google defines, a Defined Benefit (DB) Pension Plan as a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum or combination thereof on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual contributions and investment returns. A Defined Contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account. Most governments’ pension schemes and social security schemes are set up on a defined benefit basis. This is also how Namibia’s Government Institutions Pension Fund (GIPF) is set up. This system hides a lot of inefficiencies as there is no requirement to maintain strict records of contributions made in respect of each individual participant in the fund. By contrast, Defined Contributions schemes require accurate recording of contributions for each participant and the interest earned thereon. Basically all occupational pension funds in Namibia are defined contribution schemes, with GIPF being the only exception.

Whether participation must be compulsory for all employees and employers?

This has probably been the most contentious issue that has derailed the introduction of the NPF. Most employers have since Namibia’s independence realised the benefit and spurred on by social and moral obligations to sponsor pension fund schemes for their employees. Choose if by default, design or coincidence, but the occupational pension sector grew in leaps and bounds over the years to where it has today the potential to be (if not already) the biggest catalyst for economic development in Namibia. The average total contributions to occupational pension funds would be around 17% of employee earnings shared between employee and employer. With such high contribution rates, it would be unrealistic to expect such employee and employer to be required to contribute on a compulsory basis to a NPF.

Who should administer/manage the NPF? Should NPF be regulated by NAMFISA per occupational pension fund laws or under its own law?  

The case has been made repeatedly that Namibia has institutions that are currently managing occupational pension funds on a competitive and in an efficient world class manner. In Namibia, occupational pension schemes are regulated by Namibia Financial Institutions Supervisory Authority (NAMFISA). NAMFISA regulates pension funds based on the Pension Funds Act (Act 24 of 1956). Even though this law has recently been criticised (mainly for the fact that it is a pre-colonial law), this is probably one of the best crafted laws that have allowed pension funds to grow to their current indispensability to our national economy. The Pension Funds Act inarguably offers best protection of assets against creditors for fund members and their dependents as well as protection to defined dependents of a deceased member. NAMFISA amongst others also regulates other financial institutions that offer complementary services to pension funds such as asset and unit trust managers and insurance companies. These complementary institutions have all developed in tandem and in the process helped contribute to the industry which is today hailed internationally and helps Namibia in global development indexes. NAMFISA as public institution has in the process also developed hot on the heels in keeping up with the fast evolving pension funds’ industry.

Should persons in the informal labour sectors be included?

In a developing country like Namibia, we have a huge informally employed population. Whilst empirical information suggest that some developing countries with large economies such as India, China, Philippines etc. are exploring ways of providing some coverage to persons in the informal sector, examples of tested success cases if any are few and far in between. The above background suggests that participation in the NPF on a compulsory basis should realistically be targeted at formally employed persons.

Do not miss next edition, where I will conclude with my suggestions on the NPF topic.


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. Marthinuz also served as a Commissioner on the Social Security Commission from 2015-2017.

Monthly Review of Portfolio Performance to 31 May 2019

In May 2019 the average prudential balanced portfolio returned -2.8% (April 2019: 2.7%). Top performer is Investment Solutions Balanced Fund -1.3%, while Allan Gray Balanced Fund -4.0% takes the bottom spot. For the 3-month period, Stanlib takes top spot, outperforming the ‘average’ by roughly 1.1%. On the other end of the scale Allan Gray Balanced Fund underperformed the ‘average’ by 1.0%. Note that these returns are before asset management fees.

Have investment markets normalised?

It is pretty much common knowledge that the situation we are and have been facing in investment markets globally for the past nearly 10 years, is the result of ‘ultra-loose’ monetary policy by central banks across the world, including Namibia. After the financial crisis, central banks poured money into the financial markets in order to encourage the consumer to pick up spending levels again after these had fallen flat in the aftermath of the financial crisis. Artificially low interest rates, designed to encourage spending, were great for the borrower, but bad news for the depositor, pensioners to a significant extent. In many instances depositors would earn negative real interest rates. To avoid this they would have been looking around for any asset class that offered any real returns. This is what we have seen, where all assets other than fixed interest investments experienced significant inflows resulting in their artificial and unsustainable growth.

This was certainly the case until the US Fed thought that it had achieved its objective of re-igniting economic growth. It started to raise the Fed rate for the first time in December 2015 when it looked like inflation was ticking up. At that point inflation has just turned positive and grew to 2.95% by April 2018, only to start turning down again since then to currently only 1.7%. The Fed rate was increased to 2.5% in December 2018 to stagnate since then and recent talk being for it to be lowered again.

The US Fed rate currently represents a real return of only 0.8%. Going by its long-term average the real rate should be around 1.7% in a normal interest rate environment.

Read part 6 of the Monthly Review of Portfolio Performance to 31 May 2019 to find out what our investment views are. Download it here...

Treating your customers fairly – what’s good for the goose should be good for the gander

Two interesting news snippet that caught my eye read:

“GIPF gambles with pension money. The government borrowed N$34 billion (latter corrected to N$ 11 bn by Minister of Finance) from the Government Institutions Pension Fund (GIPF) in the last four years, a most definite sign that the state is increasingly relying on the national pension fund to pay its operational budget shortfalls. This practice has raised concerns from experts who warn that the GIPF could fail to pay pensioners on time if the government goes broke. The GIPF, which has assets totalling N$116 billion at the end of 2018, had about 106,000 civil servants as members.” – The Namibian

“The Namibian Government may default on GIPF debt. Although it is not illegal for the government to borrow from the Government Institution Pension Fund, some financial experts believe that national rules favour the government to raid the national pension fund. According to the expert who spoke to the Namibian, the GIPF is also elbowing out private companies which want to win government bonds by bidding high price/low yield, and in so doing, dictating how much the bonds should cost. University of Namibia risk management lecturer Samuel Nuugulu told The Namibian last month that the GIPF’s exposure to government bonds is a cause of concern, given the increasing number of people retiring from government service, as well as the high life expectancy in the country.” – The Namibian

So why is this interesting? Well section 19(4) of the Pension Funds Act reads “No registered fund shall invest any of its assets in the business of an employer who participates in the scheme or arrangement whereby the fund has been established or in any subsidiary company (as defined in the Companies Act, 1973 (Act 61 of 1973)) of such employer's business or lend any of its assets to such employer or subsidiary company: Provided that the Minister may exempt wholly or in part any fund established or conducted by a statutory body or a utility undertaking from this provision.”

So the Minister may exempt his pension fund to invest in his employer. Doesn’t this constitute a serious conflict of interest and fly in the face of one of the key protection mechanisms of the Pension Funds Act? In addition, given the GIPF’s overwhelming size relative to the rest of the industry and relative to the Namibian economy, doesn’t this also pose a serious systemic risk?

It is also relevant to consider section 19(6) of the Pension Funds Act, which reads “The registrar may, under exceptional circumstances, and on such conditions for such periods as he may determine, temporarily exempt any fund from compliance with any provision of subsection (4), (5) or (5B)(a).”

So the Namfisa CEO, as registrar, may grant temporary exemption. And this responsibility is taken very seriously by the registrar. For example a fund that invests in a unit trust, which invests in Stimulus, which has invested in the principal employer of the fund, amongst its many investments, is required to establish what its effective investment in the employer is, even though there is no proximity between the employer and the fund’s investment, none more than that of an investee company of Stimulus that may coincidentally be a major customer of the employer. In another instance a pension fund holding an investment in the listed shares of one of its participating employers is required to also add its operating bank account balance to this investment to really get to the bottom of its exposure to the employer. These funds must apply for exemption to the registrar and as a rule such exemption is only granted for between 1 year and 3 years and is capped at 10% of the assets of the fund.

When conflict of interest reigns, fairness fades. What’s good for the goose should be good for the gander, not so? On the one end the measure is bent to breaking point while on the other it is stretched to the point of ridicule.  The objective of the Pension Funds Act to protect the interests of the members of the fund at all cost is very sound but maybe we have lost sight of what the Act tries to achieve and maybe we have become excessively dogmatic? Some introspection should serve good purpose in this discussion!

Provision for late payment interest in fund rules

Fund rules more often than not, are silent about any interest payable from the time of a member’s termination of membership of the fund. Late payment interest (LPI) is usually a rate as determined by the trustees in their utter discretion.

If LPI is not specified in your fund’s rules it is always taxed as long as there is an encashment of the benefit.  On the other hand, if LPI forms part of your fund’s rules, it may be to the benefit of members as LPI will be taxed as part of the relevant benefit due e.g. in case of a retirement claim, the one-third portion of the benefit to which LPI applies will not be taxable.

Another factor to take into account is that a draft standard to be issued under the FIM Bill prescribes the inclusion of LPI as part of a benefit payable from a Fund. For the sake of avoiding income tax and to pre-empt the provisions of the FIM Bill we suggest that funds consider including LPI in their rules.

The Administration of Estates Act – where do we stand?

An amendment on the Administration of Estates Act (Government Gazette 6813 of 31 December 2018) has been passed by parliament and signed into law on 31 December 2018. It requires with immediate effect, that all monies payable to minors and persons under curatorship payable from pension funds, insurance policies, annuities and even from deceased estates, to be paid to the Guardians Fund in the Master’s Office.

This Amendment Act applies ‘notwithstanding any other law’. It thus overrules every other law including the Pension Funds Act.

NAMFISA circulated a notice to pension fund stakeholders with a copy of a letter issued by the Minister of Justice on 22 January in which stakeholders including pension funds and their administrators are informed that “The Minister of Justice has decided, in the interests of all concerned stakeholders, to consult with the industry members to discuss the implementation of the Amendment Act. These consultations will take place during the second week of February 2019…Until such time, all affected institutions are advised to continue making payments for the months of January and February 2019 in terms of their mandates prior to 31 December 2018.”

On, 12 February 2019, the Minister called for a public consultation session at the Country Club, which was very well attended including RFS representatives. From these discussions it seems that the Minister will not repeal this law but is open for further amendments based on concerns raised by industry. In summary his concluding remarks were as follows:.
  1. The Amendment Act 2018 will remain intact and operational, thus it will not be repealed. However, amendments will be considered based on the discussion today. Possible amendments will be shared with those present here today for consideration and further input. Amendments to the Trust Monies Protection Act, 1934, will also be considered expeditiously.
  2. All stakeholders are invited to submit input to possible amendments to the Amendment Act and also to the Regulations to the practical implication of the Act. Due date for submissions: 11 March 2019
  3. The regulations should be made operable by 1 June 2019
  4. As from 1 April the MoHC will start consulting with institutions on a one-on-one basis to determine the modalities of the payments into the Guardians Fund and to the beneficiaries.
  5. All practitioners and fund administrators are requested (will be put in writing) to continue making payments in the best interest of the children until such time that a formal notification is send out with final date for payment of funds as will be applicable at that time.
Following the Minister’s invitation to submit input on possible amendments to the amendment, various proposals were submitted. In the meantime the consultation that should have taken place between industry and the Master never took place.

We have coincidentally come across a letter by the Minister to various stakeholders but not to the pensions industry, dated 9 May wherein the Minister acknowledges the contributions received from various stakeholders and hastens to point out that he has not been amenable to all proposals for changes. He also makes reference to a consultation to be held in the second half of June. Find the letter here...

To our knowledge this consultation has not taken place.

Many funds had resolved to continue paying benefits to minors as before the amendment of the Administration of Estates Act came into force. In doing this, funds are in breach of the law. The fact that both NAMFISA and the Minister of Justice have seemingly condoned this will not carry any weight before a court of law. It places funds in the unenviable position that beneficiaries may argue from both positions, i.e. the fund should have applied the law to achieve a better outcome for the beneficiary or because it did not apply the law the beneficiary is now in a worse position!

Death benefits and circular 04/2019

I must say when I first read this latest NAMFISA Circular while on overseas holiday, I thought that it only states the obvious and saw no fault with it as it merely cites the definition of ‘member’, ‘dependant’ and section 37 C, quite correctly.

Back in office I read the circular again. To my mind it only refers to a lump sum benefit arising upon death of a pensioner member for which the rules do not designate a beneficiary.  The circular is certainly ambiguous!

It seems though that the regulator attaches a very different interpretation to this circular. The regulator appears to interpret section 37 C as prohibiting a fund to offer annuities to children and spouses when a fund member passes away.

The Act does not draw any distinction between a pensioner member and an active member and the circular would thus be equally applicable to both categories.

Where the rules offer specified benefits to a spouse and or children following the death of the pensioner (or active member) such benefit is payable in terms of the rules and in my humble opinion does not fall under section 37C or the Circular. In years gone by, spouse’s and children’s pensions were a very common benefit offered by most funds. Some of the largest funds in Namibia today still offer such benefits such as the GIPF most prominently.

In the new circular, the regulator now seemingly requires funds that offer such benefits to amend their rules. Besides the fact that I wholeheartedly disagree with NAMFISA as I will explain further on, such a rule amendment would imply a change in the conditions of employment which I as an employee, would certainly not accept. Imagine 100,000 government employees having to give up such exceptionally important benefits and imagine government having to enter into a consultation process with its 100,000 employees to give up these benefits, because the regulator has now all of a sudden decided to attach a new interepretation to section 37 C of the Act!

The definition of ‘pension fund organisation’ explicity makes provision for lump sums or annuities to members, former members after retirement, or their dependants:
“(a) any association of persons established with the object of providing annuities or lump sum payments for members or former members of such association upon their reaching retirement dates, or for the dependants of such members or former members upon the death of such members or former members; or...”

How am I to understand this definition then other but explicitly allowing a fund to offer annuities to spouses and children being dependants of such members or former members (i.e. fund pensioners)?

New regulation and standards issued under the FIM Bill

RF.S.5.24 - Manner and form of application for registration of a fund

Application for registration must be done per form in Annexure A signed by –
  • Board of existing fund
  • Interim board of any other fund
Application must be accompanied by –
  • One original plus copy of rules signed and certified as being the rules which become effective on the date of registration, or commencement of operations if later, by –
    • Chairperson plus one board member;
  • Original certificate of valuator re financial soundness and certified copies of his qualifications and his CV; certificate to reflect –
    • Name, physical address, professional qualification and experience;
  • Document indicating authority for establishing fund (e.g. resolution);
  • Proof of payment of prescribed fee;
  • Documents per section C (interim board of trustees) of Annexure A –
    • Code of conduct of board;
    • CV’s and ID’s of interim trustees;
    • Disclosure of interest report;
    • Proof of application for Police Clearance certificate;
    • Completed fit and proper form;
    • Documents per section C (principal officer) of Annexure A –
    • CV ;
    • Proof of Namibian citizenship;
    • Proof of application for Police Clearance certificate;
    • Completed fit and proper form;
  • Documents per section C (third party) of Annexure A –
    • Copy of administration agreement with fund administrator ;
    • Copy of agreement with any other service provider.
  • The requirements re fit and proper (GEN.S.10.2) and independence (GEN.s.10.8)
Our comments:
  1. With the introduction of the FIM Act, all existing funds also have to register under this Act within 12 months and will thus have to apply as set out in RF.S.5.24.
  2. A valuator does not have to be registered by NAMFISA but the credentials of the valuator have to be submitted together with the fund registration application.
  3. The format of rules is prescribed in RF.S 5.4 and these requirements must also be observed by all existing funds.
  4. Since all existing funds have to re-apply for registration and will thus have to go through all the requirements in this regard. In the light of the extensive requirements and the fact that a fund will only acquire legal persona upon registration, we foresee that many existing funds will be in limbo for extended periods depending on the objections NAMFISA may raise on the application and required supporting documentation. We believe the Act does not properly consider the transition from the old to the new law in this regard which will produce such unintended consequences for existing funds.

RF.S.5.25 - Form of certificate of registration for a fund

This prescribes the format the certificate of registration will take.

Our comment:
  1. Not sure it was necessary to issue a standard for such bureaucratic measures.
RF.R.5.11 - Exemption from prohibited investments
Minister may allow the following funds to invest in or lend to a participating employer or its subsidiary for determined period and conditions, if fund has certified that such investment is in terms of its rules and investment policy:
  • State fund;
  • Public enterprise fund;
  • Statutory body or utility undertaking fund.

Our comment:
  1.  Interestingly, section 282(4)(a) provides for the Minister exempting ‘public’ funds from the prohibition to invest in a participating employer or its subsidiary. Section 282(4)(b) affords similar powers to NAMFISA which may exempt in accordance with the standards. It thus seems that a public fund can apply under either section of the 2018 draft of the Bill.

The FIM Bill to be tabled in parliament
Report back from parliament by Monika von Flotow, Manager: Projects at RFS

The NAMFISA Bill and Financial Adjudicator Bill were tabled and motivated in Parliament on June 25, 2019 – the debate was postponed to July 3, 2019.

The FIM Bill was then tabled and motivated in parliament on 26 June 2019. Concern was raised regarding timing of the Bill due to its volume and complexity and the number of industries involved. (It was acknowledged that it important, but not urgent..) A proposal to postpone to September 2019 was rejected by the Minister of Finance, arguing that once it’s off the agenda it will receive no attention. The Speaker proposed that the Chief Whips of the various political parties should meet to consult on the way forward; an announcement can possibly be expected very soon.

Pension fund governance - a toolbox for trustees

The following documents can be further adapted with the assistance of RFS.
  • Download the privacy policy here...
  • Download a draft rule dealing with the appointment of the board of trustees here...
  • Download the code of ethics policy here...
  • Download the generic communication policy here...
  • Download the generic risk management policy here...
  • Download the generic conflict-of-interest policy here...
  • Download the generic trustee performance appraisal form here…
  • Download the generic investment policy here...
  • Download the generic trustee code of conduct here...
  • Download the unclaimed benefits policy here...
  • Download the list of fund service providers duly registered by NAMFISA here... 
  • Download the Principal Officer performance appraisal form here...
  • Download the revised service provider self-assessment here...
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.

From a former fund member

“Good afternoon
I acknowledge to have received the document. Working in Namibia again and recommendation to others on the best Pension Fund, I would choose Benchmark thank you.  

Read more comments from our clients, here...


The Benchmark Retirement Fund welcomes SatCom

Benchmark Retirement Fund takes further strides on its course to become the biggest retirement fund in Namibia (just joking... it will never get anywhere close to the GIPF). Nevertheless, it could by now be the 4th largest fund in Namibia in terms of assets under management, including the GIPF, thanks also to the latest sign of confidence by SatCom, manufacturer of communication equipment for military purposes, that has taken the decision to join the Fund. We welcome SatCom and its staff and look forward to serving you beyond expectation for many years to come!

Paul-Gordon /Guidao-Oab joined RFS as Manager: Audit and Compliance in May 2016 and then moved into the position of Benchmark Product Manager. In 2019 he assumed the duties of Principal Officer of the Funds. Paul holds a B Compt degree from Unisa and has completed his articles with SGA.

The Retirement Fund Solutions Winter Classic 2019 volleyball tournament

The third of 7 Timeout Beach Series 2019 events took place on Sunday, 26th May 2019, at DTS Beach Arena, Windhoek. The Retirement Fund Solutions Winter Classic 2019 saw a huge turnout of over 100 athletes participate in 4 categories; 2-a-side Men’s, Ladies, Social, and 4-a-side Social Mixed. 

The Timeout Beach Series 2019 makes its fourth stop of the year at DTS Beach Arena for the Clausthaler King of the Court 2019 in July.

Official Results:
  • Ladies 2-a-side: 1st Rosi Hennes & Almut Hoffmann, 2nd Hannah Reusch & Kudzai Chiguta, 3rd Hendrina Lindongo & Frieda.
  • Men’s 2-a-side: 1st Steve Kangandgera & Bernhard Schurz, 2nd Tony Oraapeleng & Nonofo Motswetla, 3rd Damian Schreiber & Andriko Böhringer.
  • Social 2-a-side: 1st Michael Fente & Lars Fischer, 2nd Nikolai Pfeifer & Jörn Lüsse, 3rd Jan Jenson & JP Jooste.
  • Mixed 4-a-side: 1st Phoenix, 2nd High Voltage, 3rd Wildcats.

Above: Stefanus Kangandjera (left) Bernhard Schurz (right).
Photograph: Steve K Photography.

Above: Nonofo Motswetla (left) Tony Orapeleng (middle) Bernhard Schurz (right). Photograph: Steve K Photography.

Above: All ladies category teams (1st Place Rosi Hennes & Almut Hoffman on the left). Photograph: Steve K Photography.

Long service awards complement our business philosophy

RFS philosophy is that our business is primarily about people and only secondarily about technology. Every time a fund changes its administrator, a substantial amount of information is lost be it physically or knowledge. Similarly, every time the administrator loses a staff member, it loses information and knowledge. We know that as a small Namibia based organisation we cannot compete with large multinationals technology wise because of the economies of scale that global IT systems offer. To differentiate us we need to focus on personal service and on the persons delivering that service to get customer acceptance and service satisfaction. With this philosophy we have been successful in the market and to support this philosophy we place great emphasis on staff retention and long service.

The following staff recently celebrated their 5 year work anniversary at RFS! We express our sincere gratitude for their loyalty and support over the past 5 years to:
  • Esmé Mouton (plus an additional 8 years during previous tenure)
  • Nicolo Benade
We look forward to these staff members continuing their value-addition to our clients!

Unique comfort factors offered to our clients

Our executive committee:

Our executive committee of 11 staff boasts the following credentials:

Average years relevant experience 55
Average years of service 15
Number of holders of a diploma or certificate 6
Number of graduates 8
Number of honours degrees 4
Number of post-graduate diplomas 5
Number of staff who obtained CFP® 2
Number of chartered accountants 3

How RFS measures up:

RFS answers to the key requirements of board of trustees as set out below.


Fund administrators should answer to a few key requirements, set out below that every board of trustees should have.


Stefan du Preez to head Alexander Forbes

Reliable information has it that Stefan du Preez, who was formerly employed as actuary at Sanlam Namibia, was appointed to head up Alexander Forbes Financial Services in Namibia. This is another senior appointment at Alexander Forbes of a former Sanlam employee. The question begs to be asked whether Sanlam has a strategy to take over Alexander Forbes as rumours blowing over from SA have it? If that is the case, it is consequent to ask whether Sanlam Namibia is contemplating to re-enter the fund administration industry in Namibia?

RFS appointed as administrator to Napotel

In conclusion of its tri-annual tender process, the Napotel Pension Fund recently resolved to appoint RFS as its administrator as from 1 October 2019! We sincerely appreciate this gesture of trust and comfort in our capabilities and look forward to a long lasting association over many years to come!

Considering that we served the Napotel Pension Fund from 1 October 2001 to 31 March 2016, it is appropriate to say – welcome back Napotel, we are really pleased and proud to have you back!

Orbis proposes changes to some of its fee structures

Orbis has proposed a change to the fees on most of its funds available to African investors.

The change is intended to make the fee structure more ‘reactive’, so that the fee being charged will more accurately reflect an investor’s current experience.

“This is not something we are doing in reaction to the last year of underperformance,” says Lamb. “We think this is a better fee through the cycle.”

The main funds affected by the proposed changes are the Orbis Global Balanced Fund and the Orbis Global Equity Fund, which will also then reflect in the Allan Gray-Orbis Global Equity Feeder Fund.

The first component of the new fee is that it will be meaningfully lower when the fund performs in line with its benchmark. At this level the funds currently charge 1.5%. Under the new structure, they will charge 1.1%.

However, the potential for Orbis to earn additional fees for outperformance will be significantly greater. Currently, Orbis earns around 12% of outperformance as a fee. The proposal is to increase this to 25%. The total fee charged will also be uncapped – both to the downside and the upside.

Read the full article by Patrick Cairns in Moneyweb of 19 June 2019 here...

The price of fuel – do you know what you pay for?

The latest fuel levy was set in Government Gazette 6928 of 5 June 2019 and reflects an interesting composition of the price of fuel as per below table. The total for Namibia is based on an estimated annual consumption of 1 billion litres of fuel in Namibia.

Current  status N$/litre % Nov 2018 % Total for Namibia N$m
WTI Spot Price 4.92 35 58,40 4,920
Taxes per Gazette 3.57 25 58,40 3,600
Trading margin per Gazette 1.99 14 58,40 2,000
Storage and delivery in Namibia per Gazette 0.17 1 58,40 174
Theoretical selling price 10.65 76 58,40 10,650
Difference (onshore delivery and refining) 3.41 24 58,40 3,410
Selling Windhoek price May 2019 (diesel 50 ppm) 14.06 100 58,40 14,000

New regulation and standards issued for industry comment
NAMFISA issued the following regulation and standards on 19 June, for industry comment by 22 July 2019:
  • RF.R.5.11 Exemption from prohibited investments
  • RF.S.5.24 Manner and form of application for registration of a fund
  • RF.S.5.25 Form of certificate of registration for a fund

Industry Meeting 13 June 2019

A pension funds industry meeting was held on 13 June 2019. The presentation contain interesting statistics on fund investments and unlisted investments specifically. It provides an exposition of issues experienced with regard to CoA returns and of circulars recently issued.

If you missed the presentation given by NAMFISA officials, download it here...

Requirements for registration of special rules
NAMFISA communicated new requirements where an employer is tranferring from one fund to another fund. Accordingly when special rules are submitted for registration, the following is required:
  1. Confirmation whether employer is transferring from another fund;
  2. Cost and benefit structure in the previous fund and same information in the new fund;
  3. Where members benefits are impacted adversely or their obligations increase, the requirements of PI/PF/Dir/05/2015 concerning member communication must be complied with.
If you missed this notice, download it here...

If you want to acquaint yourself with directive 05/2015, find it here...

Unclaimed Benefits Circular

In this circular NAMFISA takes issue with funds failing to observe the following prescriptions when disposing of unclaimed benefits of 5 years and older:
  1. Statement of unclaimed benefits not published;
  2. Unclaimed moneys not paid over forthwith to the Guardians Fund after expiry of 3 months after publication of statement of unclaimed benefits;
  3. Statement and affidavit in the prescribed form not submitted to the Master.
In the circular the registrar reaffirms his position that funds must observe these requirements and in addition directs that –
  1. Proof of payment of unclaimed benefits to the Master must be submitted to NAMFISA within 14 days of the expiry of the 3 month period;
  2. Upon deregistration funds may pay unclaimed benefits at date of deregistration to the Guardians Fund.
If you missed this notice, download it here...

Circular PF/03/2019 – Death Benefits of Pensioner Members

NAMFISA issued this circular on 27 May 2019. Although it refers specifically to death benefits of pensioner members, the contents of the circular will equally apply to death benefits of ‘active members’ as the reasoning is based on the PF Act and the PF Act makes no distinction between a pensioner member and an ‘active member’ but only refers to a member.

In short the circular provides as follows:
  1. It refers to section 37 C and confirms that the principles must be observed with the distribution of a benefit to dependants and nominees.
  2. Trustees are required to trace dependants if the pensioner has left anything in the fund to pay to a dependant.
  3. The accrual of benefits to nominees, dependants is subject to the rules of the fund and that the accrual must of necessity be in accordance with the Act.
  4. Rules should thus not vest all benefits due at the death of a member exclusively to the spouse but the benefit should be handled in line with section 37 C.
  5. Rules that provide for payment of the benefit to a person or persons at the exclusion of dependants are inconsistent with the Act.
  6. Funds must ensure that their rules are consistent with the Act and if they are not they are void and of no force or effect.
 Latest version of Bills released

NAMFISA  just released new version of the -
  1. The FIM Bill – click here for the latest version of the Bill...
  2. The Financial Services Adjudicator Bill –click here for the latest version of the Bill...
  3. The NAMFISA Bill – click here for the latest version of the Bill...
It is to be noted that the FIM Bill will be tabled in Parliament for the first time on 19 June. A superficial review of changes to the FIM Bill reveals that it seems no substantial changes were made. However, the age of majority was changed to 18 in line with the Child Care and Protection Act.

Meeting between industry and Inland Revenue

NAMFISA invited all interested parties from the pensions industry to a meeting that was held with Inland Revenue on 26 June at NIPAM.

The following topics were placed on the agenda by industry participants:
  • Provident funds: provision of risk benefits and treatment of employer contributions for risk benefits
  • Taxation of benefits payable to the Master of the High Court
  • Grammatical error in section 16(1)(z)(aa)
  • Increase in tax deductible contribution towards retirement funds
  • Other topics from the floor
  1. Provident funds: provision of risk benefits and treatment of employer contributions for risk benefits

    This discussion addressed comments made by Inland Revenue in a letter to RFIN of 9 May 2019. In short, Mr Sepo Shigwele confirmed that provident funds can indeed offer death benefits, funeral benefits and disability benefits. He also confirmed that contributions by the employer in terms of the rules of the fund are tax deductible in accordance with section 17(1)(o) and are not a fringe benefit in the hands of the employee. However if the employer were to assume responsibility for paying the contribution, or a portion of the contribution payable by the employees in terms of the rules or the employment contract, such contribution would represent a fringe benefit in the hands of the employee. It was also confirmed that funeral benefits payable upon death of an insured relative of a fund member is fully taxable (in the hands of the beneficiary in terms of the general tax principles) as the IT Act does not provide for such benefits being offered by a provident fund.

  2. Taxation of benefits payable to the Master of the High Court

    According to Mr Shigwele, funds/ fund administrators must deduct income tax on any benefit that is to be paid to the Master of the High Court in accordance with the recent amendment of the Administration of Estates Act, despite the fact that this amendment requires that all moneys and interest payable in respect of a minor, must be paid to the Master within 30 days “...notwithstanding any other law...”. Mr Shigwele is of the opinion that there is a principle of presumption in law that dictates that any new law cannot radically change an existing law.

    Accordingly the IT Act still prevails and benefits should only be paid to the Master after deducting income tax. At this juncture it was put to the representative of the registrar, that in that case the amendment of the Administration of Estates Act can also not overrule the Pension Funds Act on the basis of this presumption.

    The NAMFISA representative did not offer any guidance as to how industry is to deal with this confusion but appealed to the attendees to be patient and wait for the Minister of Justice to review this amendment, which is expected to be in due course.

    Attendees concluded that the situation is very unsatisfactory for funds and practitioners, and appealed to the representatives of Inland Revenue and NAMFISA to make every effort to resolve the uncertainties sooner rather than later.

  3. Grammatical error in section 16(1)(z(aa)

    Mr Shigwele of Inland Revenue agreed with the assertion that this section requires a comma after the word ‘provident preservation fund’, to read correctly.

  4. Increase in tax deductible contribution towards retirement funds

    Mr Shigwele advised that the increase of the tax deductible contribution towards approved funds and study policies is still a proposal only and has not been passed by parliament yet. He advised that consultation on the proposed changes of the Income Tax Act were concluded but the amendments have not been submitted to the Ministry of Justice for review yet. The changes are expected to be finalised before parliament going into recess and confirmed that ICAN will still be afforded an opportunity to review the wording but not the principles of the changes.

  5. Other topics from the floor

    In response to a question concerning the problem of paying unclaimed benefits to the former member, and to the Master after remaining unclaimed for 5 years because of the member having failed to clear his tax status, Mr Shigwele advised that Inland Revenue would consider making an estimate of tax payable and issuing a directive on that basis.

    A delegate raised the problem that the current maximum annuity capital that may be commuted for cash of N$ 50,000, creates problems in the industry as such small annuities cannot be offered cost-effectively and suggested that this limit should be reviewed by Inland Revenue.

Disposal of unclaimed benefits: The Administration of Estates Act vs the Pension Funds Act
A guest contribution by Andreen Moncur BA (Law )

Disposal of unclaimed benefits: The Administration of Estates Act vs the Pension Funds Act

Unclaimed benefits from a retirement fund are regulated by the Administration of Estates Act 66 of 1965 (the Estates Act) and the Pension Funds Act 24 of 1956 (the PFA). Let’s examine unclaimed benefits from a retirement fund in terms of the applicable legislation:

Since the promulgation of amendments to the Estates Act effective from 30 December 2018, s 87A of the Estates Act applies on the withdrawal, death, disablement or retirement of a member where benefits are payable to a minor or to a person under curatorship. For purposes of the Estates Act a “minor” is a person under the age of 21 years. A person is placed under curatorship when he/she is no longer able to manage his/her her own affairs.  The law distinguishes between the curator ad litem and the curator bonis. We are concerned with the latter type of curator, i.e. a legal representative appointed by the court to manage the affairs (finances, property, estate or person) of another person who is incapable of managing his/her own affairs due to mental or physical incapacity.

The Estates Act requires any benefit payable to a member or other beneficiary who is a minor or under curatorship to be paid directly to the Guardian’s Fund within thirty days of becoming payable. Thus, for withdrawals, deaths, disablements or retirements involving payment of benefits to minors or persons under curatorship on and after 30 December 2018, unclaimed benefits cannot arise. Unclaimed withdrawal, death, disability or retirement benefits held by funds for minors or persons under curatorship that became payable before 30 December 2018 should have been paid to the Guardian’s Fund within thirty days of 30 December 2018. However, on 22 January 2019, the Minister of Justice addressed a letter to NAMFISA wherein he advised all retirement funds to continue making payments in accordance with their mandates prior to 30 December 2018. On 22 January 2019, NAMFISA issued a Notice for Information to retirement funds whereby NAMFISA appeared to endorse the Minister’s advice. At a consultative meeting between the Minister and all parties affected by the amendments to the Estates Act, funds were requested to continue making payments in the best interest of minors and persons under curatorship until such time as the Ministry of Justice issues a formal notification to the contrary.

Unclaimed withdrawal, death, disability or retirement benefits held by funds for members and other beneficiaries who are not minors, nor persons under curatorship, become subject to the provision of the Estates Act only once such benefits have been unclaimed for five years or more. Section 93 of the Estates Act requires each retirement fund to publish in the Government Gazette each January a detailed statement of all unclaimed benefits held by the fund on 31 December of the previous year that at the time of preparing the statement have remained unclaimed for five years or more. Three months after the date of publication of the statement, the fund must deposit in the Guardian’s Fund to the credit of the beneficiaries concerned, all such amounts remaining unclaimed.

Interestingly, the PFA does not mention unclaimed benefits, probably because the legislature felt that the matter fell within the purview of other legislation such as the Estates Act. This certainly seems to be the view of the Registrar of Pension Funds as evidenced by NAMFISA Circular PI/PF/07/2015. This circular prohibits the reversion of unclaimed benefits to a retirement fund after any period and requires funds to pay any benefits unclaimed for five years or longer to the Guardian’s Fund in accordance with s 93 of the Estates Act. Said circular also provides for the payment of unclaimed benefits to the Guardian’s Fund before benefits have been unclaimed for five years if the fund rules so provide. The sole exception hereto would be s 37C(1)(c) of the PFA in terms whereof the death benefit or the relevant portion thereof must be paid into the Guardian’s Fund if within twelve months of a member’s death, the fund does not become aware of or cannot trace any dependants and the member has not designated a nominee or has designated a nominee to receive less than the full benefit and the member does not have an estate.

The potential unintended consequences of prescribed investments

“Over that decade [of prescribed investments in SA], inflation in South Africa averaged 11.3%, and prescribed bonds delivered a negative real return of 4% per year. Equities returned 13.2% above inflation over the same period. As pension funds were forced to invest at least 53% of their portfolios in government and state-owned company bonds, they had to be exposed to their relative underperformance, even though local equities were enjoying such a strong run.

Source: Asisa

It is extremely difficult to align this with the responsibilities placed on pension fund trustees under Regulation 28. The regulation insists that trustees have a “fiduciary responsibility” to manage the fund’s assets responsibly and to deploy capital into markets that will “earn adequate risk adjusted returns”. They simply can’t do this with one hand tied behind their backs...”

Read the full article by Patrick Cairns in Moneyweb of 14 June 2019, here...

Making retirement fund contributions meaningful

“Alexander Forbes Member Watch analyses over one million retirement fund members' behaviours and retirement outcomes. It has found that more than 50% of pension fund members who retire each year receive less than 20% of their pensionable salary as an income in retirement.

"The first problem is that people don't consciously connect what they are contributing now and what happens when they retire in the future. It is an abstract concept that people struggle to connect with," says Lange.

Generally most members default into the lowest contribution category.

If you're saving 13% of your pensionable salary for your entire working life, you will get less than R60 for every R100 earned at retirement, as a pension income. But if you're saving 17%, then R75 for every R100 is achievable, explains Lange.

If you are currently 40 years old, you should have saved at least 3.2 times your current annual salary. By age 65 (at retirement) you need to have saved 12 or more times your annual salary. This is calculated on a 75% replacement ratio.

Auto-escalation of contributions over time could be a way to increase contribution rates without significantly affecting employees' take-home pay.

This concept has worked around the world to raise contribution levels, according to Lange.

A small 0.25% increase each year since 2012 at salary increase time would have led to a 1.5% of salary contribution rate increase by 2018, leading to an almost 10% improvement in expected retirement benefits for younger members...”

Read the full article in Fin24 of 5 May 2019 here...

Don’t fall victim to the switch itch

“Our brains are very much like a central processing unit (CPU) for the world we live in, and a pretty effective one at that. However, with the modern age having brought exponential complexity to our decision-making process, our cognitive biases – or bad mental habits – result in an actual cost over time in the form of lower investment returns.

This cost is commonly referred to as a “behaviour gap” and, for investors, is often attributed to the “switch itch”. This is according to Paul Nixon Head of Technical Marketing and Behavioural Finance at Momentum Investments, who says that the switch itch – which refers to the urge to change investment funds – is best explained by the theory that losses are experienced roughly 2.5 times as much as the equivalent gains. “This theory suggests that investors are 2.5 times more likely to switch funds as a result of their current fund performing poorly, than as a result of another fund performing exceptionally well...Nixon suggests the following simple tips to help investors quell bad investment urges:
  • Get advice, set goals and develop a plan to achieve these
  • Have a long-term mind-set and don’t worry about timing, get your wealth to work for you as soon as possible
  • Diversify and spread your risk
  • Have a cash windfall for a rainy day to ensure you are not forced to sell long-term investments
  • Review your plan periodically and rebalance your portfolio as required.”
Read the full article by Paul Nixon of Momentum Investments in Cover magazine of 30 April 2019, here...

This is how much your investment behaviour is costing you

“...Trying to time the market or pick where it might be best to move your money is rarely more productive than simply staying invested. This is emphasised by a study conducted by Momentum Investments and the North-West University into the cost of investor behaviour.

The research covered approximately 17 600 investors who had money on the Momentum Wealth Platform between January 2008 and January 2018, and investigated what impact switching funds had on their outcomes.

“We had a look at each investor, and what their strategy was when they started the journey, and compared that against what they ended up with after they changed funds,” explains Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments. “We then tracked the two journeys. We looked at original strategy and what return they could have got, and compared that against what they actually got.”

What the study found is that 64% of investors switched funds based on past performance. An annual return from their fund of 3% or more below the previous year tended to trigger a switch to an alternative fund.

Doing this, however, resulted in a behavioural cost of 1.38% per annum for some of these investors.

Similarly, a return of 25% on a fund in which they were not invested tended to trigger a switch into that fund. Once again, however, this had negative consequences. It resulted in a behavioural cost of 1.05% for some investors.

Overall, nearly one in four investors incurred a behavioural cost of 1% per annum. That may seem small, but compounded over time it becomes substantial...”

Read the full article by Patrick Cairns in Moneyweb of 3 May 2019, here...

The one word that negates what Harvard professor says is leadership’s central issue

“John Kotter is a legend in the world of leadership and change... One particular thought of his stands out to me above all others. According to Kotter, “the central issue [of leadership] is never strategy, structure, culture, or systems. The core of the matter is always about changing the behavior of people.”

As a leader, you want your people to choose to do the right things, to interact in positive ways with your customers, and to apply best practices. You want them to act in the best interest of the organization and take on new, more effective, behaviors. And, you want them to choose to do these things because they see value in doing them - not because you are lording over them or because of an organizational policy...

Have you ever tried to change your own behavior? It's tough... Have you ever tried to change someone else's behavior? It's really tough... Have you ever tried to change the behavior of many people? It's really, really tough. It's called being a leader... You start with changing paradigms. People behave differently when they see things from new and different perspectives... if he sees the change as a short-term sacrifice for a long-term gain, if he understands why the change is happening, and if he is given a voice in the process, his willingness to change can go way up...

Luntz explained that the word imagine is one of the most powerful words in the human language. He said that more leaders should put the word to use... When a leader harnesses the power of the word imagine she can help people see what's possible, how they can overcome an obstacle, or what things can look like in the future if they go a new direction.

Arguably, this one word has the power to help you accomplish the biggest leadership challenge you face - changing the behavior of others...”

Read the full article by Patrick Laddin in Linkedin of 19 April 2019, here...

Did you ever wonder why??

WHY: Why are people in the public eye said to be 'in the limelight'?
BECAUSE: Invented in 1825, limelight was used in lighthouses and theatres by burning a cylinder of lime which produced a brilliant light. In the theatre, a performer 'in the limelight' was the Centre of attention.

How much will you need when you retire and are you investing enough?
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