In this newsletter:
Benchtest 01.2020, Electronic Transactions Act summarised and more...

NAMFISA levies

  • Funds with year-end of February 2020 need to have submitted their 2nd levy returns and payments by 25 March 2020;
  • Funds with year-end of August 2020 need to have submitted their 1st levy returns and payments by 25 March 2020; and
  • Funds with year-end of March 2019 need to submit their final levy returns and payments by 31 March 2020.
Extension granted for Online Submission of Employees Tax (PAYE) returns via the ITAS portal - Final reminder

Employers were originally required to submit their monthly PAYE 5 returns on ITAS by 20 September. Due to difficulties experienced by many employers to adapt their payroll systems in time, the due date was postponed to 20 March with a clear message that any further extension will not be granted.

Read the relevant PWC alert here...


RFS once again scoops top PMR award

It was announced that RFS was awarded the 2019 PMR Diamond Arrow award during a gala breakfast on 17 February 2020.

RFS previously won the same coveted prize in every year since 2012.

The Diamond Arrow is awarded to the participant with the highest score of not less than 4.10 out of a maximum of 5 -  RFS scored 4.28 (previous year - 4.26).

Second place was Alexander Forbes, who scored  4.08 (Gold award winner)

Sanlam scooped 3rd place with an overall score of 4.00 (Silver award winner)

Pension fund governance - a toolbox for trustees

  • 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...

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 we address the following topics:

Marthinuz Fabianus suggests that the “FIM Bill is a fait accompli”.

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

  • An extract from the Monthly Review of Portfolio Performance to 31 January 2020 and our assessment of the state of the global economy;
  • A summary of the Electronic Transactions Act;
  • The full article in last month’s Benchmark Performance Review to 31 December 2019 – “How to invest in 2020?’..
In our column on fund governance Carmen Diehl speaks about “The obligation to report suspicious transactions under FIA”.

In ‘News from RFS’, read about:
  • The FIM Bill panel discussion at NUST, sponsored by RFS;
  • “RFS Tigers representing RFS at volleyball-for-all for 21 years running;
In letters from our readers, find:
  • “If I were a pension fund member and read NAMFISA’s 2019 annual report”;
In ‘Legal snippets’ read about –
  • “Prescription of death benefit claim of minor beneficiary”;
  • “Trustees who adopt a ‘business as usual’ approach to arrear retirement fund contributions are reckless and can be held liable”;
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

FIM Bill – a fait accompli

I“If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell”.

These popular words by Carl Sandburg were my opening remarks at a panel discussion on the FIM Bill organised and held at Namibia University of Science and Technology in association with Harold Pupkewitz Graduate School of Business. The event drew huge interest from the media, industry players, business representatives and even from some ordinary pension fund members.

The FIM Bill as it has become popularly known, has been a heated topic of discussion in pension fund industry gatherings, in boardrooms and training rooms and in corridors of institutions that will be regulated. It is also a subject matter on which a lot has been written about by the early readers of the Bill. As you may be aware, the FIM Bill was tabled in Parliament in its last sessions of 2019 and it was postponed without much discussion. The Bill will likely be discussed during last sitting of Parliament which will end 19 March, before new lawmakers are sworn in after the country’s 30th independence celebrations.

I thought NUST and the Harold Pupkewitz Business School should be applauded for recognising the need to organise a discussion and create awareness about this very significant law amongst the student community, academia and the public at large. Those of us operating in the pension funds industry have for some time been calling for a more robust engagement on this Bill amongst stakeholders.

As was clear from the presentations, discussions amongst panellists and questions from the floor, there is clearly a need for an intensified and broad stakeholder discussion on critical issues of concern that need to be addressed before the Bill is passed into law. I established from the organisers of the panel discussion, who confirmed that they have sent invitations to the Speaker of the National Assembly (NA), the Chairperson of the National Council (NC), the Executive Director, the Deputy Minister and the Minister of Finance respectively. The organisers further confirmed that they also requested the Secretaries to the NC and the NA respectively to forward an invitation to all MPs. Unfortunately, all these central parties to this extremely complex law were conspicuous in their absence. The lawmakers have lost a tremendous opportunity to become aware and understand first hand, the issues they could have followed up and to prepare themselves accordingly for the discussions needed to make this law.

The FIM Bill once passed into law, will not only affect practitioners who have to ensure that they are adequately versed and resourced to implement the law to the letter. It will no doubt, also impact on the expected benefit of and payment to the common member from their retirement savings fund. This is because the practitioners and custodians of pension funds first need to be clear in no uncertain terms how to interpret the law with all its regulations and standards before being able to apply and comply with it. Similarly, the supervisory regulator (NAMFISA) needs to be adequately equipped to enforce the law, NAMFISA appeal board needs to be capacitated to deal swiftly and justly with all cases brought before it and our courts need to be properly resourced and prepared to establish new case law.

A wise man once said, “it is better to debate a question without settling it, than to settle a question without debating it”. It is therefore my sincere hope that the panel discussion held stirred and awoke something in all who were present, and my message: -

To the lawmakers – my hope is that they will seek opportunities to inform themselves on all issues of possible concern in the Bill with the view to have these addressed before passing it. A heavy responsibility rests on their shoulders to ascertain that this law is fair, reasonable, relevant and appropriate for Namibia before they lift their hands in approval of this law.

To the trustees and members of retirement funds – my hope is that they will insist on their needs to be educated about the law and its consequential impact on their duties as trustees and retirement savings respectively.

To the practitioner – my hope is that we can earnestly embrace the positive aspects of the Bill and propose practical solutions to areas of concern with the Bill.

To the Regulator – my sincere hope is that NAMFISA will prudently consider the aspects pointed out as being of serious concern and purposefully engage all stakeholders with the view to find just solutions.
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 January 2020

In January 2020 the average prudential balanced portfolio returned 1.1% (December 2019: 1.0%). Top performer is Investec Namibia Managed Fund with 2.0%, while Momentum Namibia Growth Fund with -0.3% takes the bottom spot. For the 3-month period, Namibia Coronation takes the top spot, outperforming the ‘average’ by roughly 1.3%. On the other end of the scale Momentum Namibia Growth Fund underperformed the ‘average’ by 2.3%. Note that these returns are before (gross of) asset management fees.

The Monthly Review of Portfolio Performance to 31 January 2020 provides a full review of portfolio performances and other interesting analyses. Download it here...

Does the global economy show any signs of recovery?

Since the performance of the global economy is the underpin of the performance of global equities, our hopes for an improvement of our retirement outlook is pinned to an improvement in the global economy. We have all been incensed by the negative impact of president Trump’s trade war with China in 2018, primarily on equities. Some glimmer of hope of the dispute being resolved reared its head in 2019 and lead to a pleasing recovery in global equities. In 2018, our average prudential balanced portfolio returned a mere 0.5% against the backdrop of an inflation rate of 5.1% - thus a negative real return of 4.6% for the year! In 2019 fortunes turned much to every pension member’s satisfaction. For the year 2019, our average prudential balanced portfolio returned 9.9% against the backdrop of an inflation rate of now only 2.1% - thus a positive real return 7.8% for the year! Many a fund member may not appreciate the fact that funds returned ‘only’ a single digit return having been spoilt in the 20 years or so up to the financial crisis in 2008. However, considering that the expected long-term real return on a typical prudential balanced investment portfolio is around 6%, the real return on our average prudential balanced fund for 2019 actually exceeded the expected long-term real return by around 2% - nothing to be dissatisfied with at all! This has been quite an unexpected turn of fortunes for pension funds.

I acknowledge that I did not expect this and I venture to say that very few people if anyone, expected this turn of fortunes. Certainly, going by the exposure of our prudential balanced portfolio to equities, a slight decrease of total equity exposure from 67% in September 2018 to 66% in September 2019 does not exactly reflect a mass piling into equities by the managers of these portfolios. Not a single manager increased its total equity allocation by more than 1%. Digressing briefly into the no-risk cash vs ‘high risk’ equity debate, the adamant cash proponent’s investment would have underperformed the average equity proponent’s investment by 2.2% for 2019, ranging between as little as no difference to the worst performing portfolio and as much as 5% difference to the best performing portfolio, at the expense of the cash proponent.

Will we see another great year for equities in 2020? Well in the previous two columns of this journal I concluded that it is unlikely. This month I take another perspective to try and form an opinion on this question. Oil is a bell-weather commodity for the global economy, so understanding which direction oil consumption is going in 2020 will give a fair indication for the direction the global economy is likely to take.

Read part 6 of the Monthly Review of Portfolio Performance to 31 January 2020 to find out what our investment views are. Download it here...

Promulgation of the Electronic Transactions Act

Nowadays most of business communication is in digital format. Business probably generally save all digital communication and documentation in digital format and probably on top of that also file hard copy versions of the digital documents. This obviously requires quite an effort in terms of retention and archive management.

Up to now business really had no choice but to maintain a costly dual system for digital and physical retention of all business communication as technological progress in digital communication had left behind the law that still requires physical documentary evidence should any matter be heard in court.

Reprieve however is in sight now since the promulgation of the Electronic Transactions Act, Act no 4 of 2019 in government gazette 7068 of 29 November 2019 that hardly received any attention in the media although it will bring about major changes to the creation, capturing, processing and retention of business documentation and communication.

Another perspective to this new law is that it provides for public electronic information systems such as ITAS to now become a legal obligation for the tax payer.

Here are a few key matters from Act:

General purpose of Act -

  • Provides a general framework for the use and recognition of electronic transactions.
  • Gives legal effect to electronic transactions and data messages.
  • Consumer protection is provided in electronic commerce specifically dealing with suppliers offering goods or services for sale, for hire or for exchange by way of an electronic transaction.
  • Provides for the admission of electronic evidence in court.
  • Act establishes the Electronic Info Systems Management Advisory Council to advise Minister

S 1 Definitions –

  • Types of electronic signature –
    • ‘electronic signature’ – data (incl sound, symbol or process) to identify person and indicate his approval with content of data message or attachment
    • ‘recognised electronic signature’ – advanced electronic signature per s 20(3) (i.e. as per regulation)
  • Excluded laws (i.e. prevailing rules regarding physical documentation and signatures remain in place) –
    • Wills Act;
    • Alienation of Land Act;
    • Stamp Duties Act, Bills of Exchange Act;
    • any law requiring borrower (i.e. financial transactions) to sign a contract;

S 16 Legal recognition and effect of data messages and electronic transactions

  • All transactions prior to this law remain valid;
  • Does not apply to excluded laws.

S 17 Legal recognition of data messages

  • Data messages in the form of statements, representation, expression of will or intention, transactions or communication, will have legal effect.
  • Persons involved may regulate use of data messages.
  • Subject to this law no person may be forced by public body to interact by means of a data message.
  • Electronic signatures are now recognized as legally valid, except in terms of the Wills Act and Alienation of Land Act.
  • Functionary’s (i.e. regulator or supervisor such as Inland Revenue re ITAS) powers to prescribe form or manner to submit info extends to -
    • Procedure for use of data messages;
    • Format for provision of data;
    • Specific type of electronic signature and manner of attachment;
    • Class of security product to be used;
    • Appropriate control processes and procedures;
    • Manner of storage or retention of information;
    • Reference to ‘writing’ in any law refers to data message;
    • Reference to ‘signature’ in any law refers to electronic signature;
  • For electronic evidence to be admitted as an original source: the information must remain complete and unaltered from time of first generation.
  • The level of reliability must be assessed in light of the purpose for which it was generated.
  • Where law requires -
    • multiple copies to be submitted, one data message capable of reproduction satisfies this;
    • document or info to be sent by mail/similar service, electronic submission satisfies this;
    • info to be retained, electronic retention of data message satisfies this if retained in format it was generated and record enables identification of origin and destination.
  • Admissibility and evidential weight of data messages
    • Electronic evidence is admissible and the general rules of evidence apply.
    • The best evidence rule does apply.
    • The court will assess the weight given to the evidence.
    • The court will look at the reliability, integrity and the method used in how the evidence was obtained.
    • Certified copy of print-out of data message is admissible if affidavit provided as required by S 25((4).
    • The data message may be certified by the creator in affidavit that the contents are correct, except in cases of hearsay evidence.
  • Formation and validity of contracts
    • Where data messages are used in the formation of a contract, the contract will have legal effect. Info in data messages is also recognised as legally enforceable if message indicates that info is regarded to have been incorporated in the message.
    • Rules for time and place of dispatch and receipt and attribution set out.
    • A contract formed by the interaction of an automated message system and a person, or by the interaction of automated message systems, is not without legal effect, validity or enforceability on the sole ground that no natural person reviewed any of the individual actions carried out by the systems or the resulting contract.
    • Consumer protection

S 34 Information to be provided:
Where a supplier offer goods or services for sale, for hire or for exchange by way of an electronic transaction on the internet, certain minimum information must be provided, else consumer may cancel transaction.

S 35 Cooling-off period:

  • Consumer may cancel transaction within 7 days without reason and without penalty, but direct cost for returning goods may be charged. Refund must be paid within 30 days.

S 36 Unsolicited goods, services and communications:

  • Minimum info of marketer to be provided.
  • Opt-in requirement to be provided for.
  • No contract is formed where addressee has failed to respond to such communication.
  • Not providing an operational op-out facility is an offence subject to a max fine of N$ 500,000 or 2 years imprisonment or both upon conviction.

S 37 Performance

  • Supplier must execute within 30 days else consumer may cancel.

S 40 Complaints

  • A consumer may lodge a complaint with the Online Consumer Affairs Committee in respect of non-compliance by the supplier with this act.

S 41 to 48 – Accreditation of data security services or products.
S 49 to 57 – Liability for unlawful material.

Download the Government Gazette in which this Act was promulgated, here...

How to invest in 2020?

In our opinion that there will be no return to a normal interest rate environment in 2020 but rather expect real interest rates to decline further some into more negative territory. Over the month to end December, the US repo rate in real terms declined another 0.25% into negative territory thus presenting a negative real return of 0.5%. Investors thus actually pay the borrower (the US Fed in this instance) for the privilege of lending money to the Fed. This is not sustainable in the long-run as investors will always be looking for opportunities to earn positive real rates in order to be compensated for the risk of not receiving back the money lent. While we linger in such an abnormal interest rate environment, valuations of all other assets are skewed. If you have to pay for lending money to government you will be prepared to accept a lower return on alternative investments, as long as the risk-adjusted return beats the return on money lent to government. The consequence of the lower return expectation is that the underlying investment will have a higher value, i.e. you will be prepared to pay more for the same annual dividend or annual interest return you will get from that investment.

At this point in time therefor, investors are paying more for their investments than fundamentals would normally dictate. Investors will be watching out for any signs of interest rates moving back to a normal situation in order not to be caught off-guard. Company earnings of course determine how much the investor is prepared to pay for the share as they ultimately determine the dividend the company will be able to pay. In this regard it is important to understand whether company earnings are likely to rise or to decline.

Interest rates

In last month’s newsletter we expressed our view that global consumer and investor sentiment should stand a fair chance of improving rather than declining further taking into account good early rains, a possible settlement of the US/ China trade war and the fact that the SA economy is about as low as it can go. We also expressed our expectation that the trend in interest rates to be downward. We would ascribe this primarily to the fact that the US will be holding presidential elections this year and that president Trump considers the US stock market as a measure of his success. Low interest rates are good for equities. At least for 2020, we are unlikely to see an increase in the Fed rate. Whatever the US does will be mirrored in other economies. Graph 6.1 substantiates this, showing a very close correlation between the SA repo rate and the Fed rate over this 30 year plus period. Interestingly, this graph indicates that the risk premium attaching to SA interest rates is around 5% as represented by the differential in the scale on the left, and the right hand axis. As we know, SA Reserve Bank just lowered the repo rate by 0.25% as from 16 January 2020, after the Fed had lowered its policy rate by 0.25% at the end of October last year.

Graph 6.1

202002 g601

Graph 6.2 shows a real SA repo rate of 3.9% at the end of December. The cut of 0.25% effective 16 January will result in a slight reduction of the real repo. On average the SA Reserve Bank maintained a real repo of around 3.5% until the global financial crisis and around 1% since then. At its current level, there is probably not much scope for a further reduction unless SA inflation was to decline further relative to US inflation or the Fed was to reduce its repo rate further.

Graph 6.2

202002 g602

Exchange rates

In graph 6.3 we see that the differential between the real repo rate and the real US Fed rate (red line) was varying widely up until about 1999 to become more confined to a narrower band between minus 6% and 4%. We also see that since 1999 the graph displays a high correlation between the R: US$ exchange rate (blue line) and the differential in real interest rates up until the end of 2012. Up to then a decline in the red line (SA real interest rate increases relative to the US Fed rate) went along with a strengthening of the Rand and vise-versa. As from the end of about 2012 we see a disconnection between these two lines. SA real interest rate relative to US real interest rate increased consistently while the Rand weakened consistently against the US$. Graph 5.1 above indicates by the measures applied that the Rand is undervalued and that the exchange rate should rather be 11.68 then 13.98 at the end of December. Graph 6.2 thus corroborates this conclusion. The red line of course does not recognise the cumulative effect of an inflation differential as the blue line does. A continuously higher inflation rate in SA relative to the US should lead to a continuous depreciation of the Rand, as graph 5.1 above does portray better.

Graph 6.3

202002 g603

The stock exchange

Graph 6.4 shows a very similar trend of the blue line (the inflation adjusted R: US$ exchange rate) and the red line (JSE ALSI, inflation adjusted). Over the first 14 years to the beginning of 2001, the ALSI basically moved sideways while the inflation adjusted exchange rate played catch-up. Since then the ALSI initially ‘went ballistic’ to early 2007, just to revert back to normal by early 2009 as the result of the global financial crisis. It then turned sharply up again until early 2014, to move onto a downward slide where it is currently not far off the blue line that can probably be considered ‘ground zero’.

Graph 6.4

202002 g604

Graph 6.5 shows a correlation of SA and US CPI adjusted earnings over the 30 plus year period. From the end of 2016 however, SA CPI adjusted earnings moved sideways while US CPI adjusted earnings continued to increase. Both lines show a decline in CPI adjusted earnings over the past 3 months. Average US CPI adjust historic earnings over this 30 year plus period were 75 whereas at the current level of around 150, they are now about twice their historic average. Average SA CPI adjust historic earnings over the same period were 2,500 whereas at the current level of around 3,600, they are now about 45% higher than their historic average. This could at least partially be due to a change in the economies and consequent the make-up of the earnings.

Graph 6.5

202002 g605


Based on our above analysis, we see no increase in interest rates for 2020 in the US or in SA, everything being equal, perhaps still another reduction. We also believe there is not much scope for further reductions in the SA repo rate except if SA inflation dropped relative to US inflation or if the US reduced the Fed rate further. The Rand is currently noticeably undervalued. This is probably due to the poor shape of the SA economy which of course is unlikely to improve much over the medium term, particularly in the absence of another commodity run. That also does not seem to be on the horizon. We rather see a slow improvement on the back of a slow improvement in global economies and the settling of the US: China trade dispute. The Rand is thus likely to remain under valued in the medium term. We certainly do not see a rapid correction. Company earnings being as high as they are both in SA and much more so in the US, there is little support of equities deriving from improving company earnings but to some extent by declining interest rates.

Equities will unlikely deliver the two-digit returns we have seen in the past, in 2020, but are expected to out-perform cash returns slightly, i.e. in the region of 7% to 10%. Since we do not expect interest rates to decline much further, and certainly not to increase, bonds should deliver a return of around 10%, i.e. above that of equities and cash. Property is likely to remain in the doldrums for next year. Our expectations of the returns on the various asset classes for 2020 would suggest a conservative portfolio with a fair spread across global investment markets.

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.

Compliment from the principal officer of a large financial institution

“Dear RFS Team

Thank you for all your kind assistance during this year – you really made a difference to our Members, and the ... Fund as a whole, with your exceedingly professional service...”

Read more comments from our clients, here...

The obligation to report suspicious transactions under FIA

RFS is obliged to report suspicious transactions to the Financial Intelligence Centre (FIC) in terms of the Financial Intelligence Act (FIA). This obligation arises from section 33 of the Financial Intelligence Act 13 of 2012 which reads as follows:

33 Suspicious transactions and suspicious activities
(1)    A person who-
(a)    carries on any business or the business of an accountable [e.g. pension fund] or reporting institution, or is in charge of, or manages a business undertaking [i.e. any business], or a business undertaking of an accountable [e.g. pension funds] or reporting institution; or
(b)    is a director of, secretary to the board of, employed or contracted by any business, or the business of an accountable [e.g. pension fund] or reporting institution [e.g. fund administrator], and who knows or reasonably ought to have known or suspect that, as a result of a transaction concluded by it, or a suspicious activity observed by it, it has received or is about to receive the proceeds of unlawful activities or has been used or is about to be used in any other way for money laundering or financing of terrorism purposes, must, within the prescribed period after the suspicion or belief arose, as the case may be, report to the Centre-
(i)   the grounds for the suspicion or belief; and
(ii)   the prescribed particulars concerning the transaction or suspicious activity.

RFS Anti-Money Laundering policy defines suspicious transactions as unusual transactions such as the following:any cash transactions of more than N$500 per transaction (physical form of currency or cash deposits)
  • any transactions that cannot be directly linked to a member of the Fund,
  • any direct transactions by the member with the Fund (i.e. not via employer) such as additional voluntary contributions or housing loan repayments,
  • deposits into Fund’s bank account with subsequent request for refund,
  • frequent changes to payment instructions,
  • any other transactions not in the ordinary course of business with the Fund/ Fund Rules which raises suspicion.
As per FIA section 33, any person who knows or reasonably ought to have known or suspect that, as a result of a transaction concluded by it, or a suspicious activity observed by it, it has received or is about to receive the proceeds of unlawful activities or has been used or is about to be used in any other way for money laundering or financing of terrorism purposes, has an obligation to report this suspicious transaction or suspicious activity.

Evidently, in the case of any pension fund administered by RFS the obligation to report any suspicious transaction, rests both on the fund (more specifically its principal officer as executive officer of the fund) and on RFS. Since RFS only administers the transactions on behalf of the Fund and does not deal directly with the members, RFS will inform the principal officer (PO) of the fund about any suspicious transactions and request the PO to confirm and authorise the transaction. RFS procedures requires the PO to return a declaration and supporting documentation in the event that the PO has been able to satisfy himself that the source of the funds in question is legitimate.

Should the source not be considered legitimate by the PO or should this declaration not be returned, RFS will report the relevant transaction as a suspicious transaction without further reference to the PO, as this may be considered ‘whistle blowing’ that would constitute a punishable contravention of the FIA. Evidently, if the PO is not satisfied that the relevant transaction is legitimate, he is also under obligation to report the transaction to the FIC.

Suspicious transactions must be reported within 15 working days after the suspicion or belief of suspicion concerning the transaction arose that gave rise to the requirement to report.  The process of communicating with the PO, who in turn needs to communicate with the relevant member, must therefore be concluded expeditiously.
Carmen Diehl joined RFS in May 2017 as Manager: Internal Audit, Compliance and Risk Management. Carmen matriculated at DHPS in 2000. She obtained a B. Accounting (Honours) degree in 2004 at the University of Stellenbosch.  She started her articles with KPMG in 2005 and moved to EY in October 2006. She completed her articles with EY in 2008 and qualified as a chartered accountant (CA Nam). She joined Bravura Namibia Trading in 2008 as Financial Manager. From 2009 until 2012 she was employed by the O&L group as group financial manager: corporate finance, where after she joined Ohorongo Cement.

RFS sponsors panel discussion on FIM Bill

In collaboration with the international affairs department of NUST, RFS co-sponsored a panel discussion on the FIM Bill that was held at NUST lower Campus auditorium on 6 February. The panel comprised of Günter Pfeifer, director of RFS, Mary Ashikoto, legal and compliance officer at GIPF, Lovisa Indongo-Namandje, general manager pension funds and friendly societies at NAMFISA and Markus Hübscher, chief executive officer of Swiss Pension Fund SBB.

Günter Pfeifer of RFS raised a number of key concerns RFS foresees for funds, their sponsoring employers, trustees and service providers. Download the slides outlining these key concerns here...

Some of Günter’s concerns were echoed by Ms Ashikoto of GIPF who also pointed out that elsewhere public funds like the GIPF operate under their own legislation while the GIPF currently operates under the Pension Funds Act established for private funds.

Mr Hübscher spoke about the 3-pillar pension system in Switzerland. Ms Indongo-Namadje explained the rationale for and benefits of the FIM Bill and expressed her conviction that NAMFISA is ‘ready to take-off’ with the FIM Act having done everything a good pilot would to before take-off.

Lazarus Amukeshe provided some background to this occasion in Business News of the Namibian. Click here for more...

RFS Tigers representing RFS at volleyball-for-all for 21 years running

Since the company was established in 1999, it has never failed a year of supporting the annual volleyball-for-all tournament hosted by DTS on its sport fields. Here are some action photos from the 2020 tournament that should give you a feel for the team spirit amongst our staff!

If I were a pension fund member and read NAMFISA’S 2019 annual report... part 1

In September 2019 NAMFISA released its annual report on its supervision of non-bank financial institutions (NBFI’s) for the year ended 31 December 2018 (AR 2019), including its financial statements for the financial year ended 31 March 2019. In my opinion any pension fund member who reads AR 2019 will find much to take issue with. Assuming I was such a member, I share my “Top Ten Pet Peeves” in a two-part series.

Purpose of AR 2019

Is AR 2019 intended to serve as a comprehensive report to NBFI stakeholders on NAMFISA’s activities during the preceding year, i.e. to promote NAMFISA, highlight its financial performance and strategic goals and meet its statutory reporting requirements under the NAMFISA Act 3 of 2001 and the Pension Funds Act 24 of 1956? Is AR 2019 meant instead to provide an in-depth, evidence-based overview of NBFI’s? Given that AR 2019 is “grey literature” (material that organisations produce in-house and publish and distribute outside commercial publishing channels), it should provide stakeholders (NBFI’s) and other interested parties with information about NAMFISA’s activities and financial performance. More importantly, AR 2019 should also provide these parties with pertinent statistical data on NBFI’s and detailed high-level analysis thereof that provide a clear picture of the state of NBFI’s and meaningfully assist informed decision-making, even down to the level of the end-user of NBFI’s.

As a pension fund member, I would not want to have to look much further than a NAMFISA annual report to get a true picture of the state of pension funds and what how this impacts the continued security of my retirement savings. NAMFISA derives part of its funding from pension fund members. A member would thus want insight into NAMFISA’s finances and its operations in 2018, but I would also want to know the risks facing pension funds and what is being done to mitigate them. To my mind, AR 2019 is simply a summary of NAMFISA’s “to do list”; a ticking of the boxes showing what happened without any interpretation of why it happened or the context in which it happened.

Depersonalised reporting on pension funds

AR 2019’s pension fund reporting focuses almost exclusively on the assets held by pension funds.  There are no membership statistics! I would want to know about matters such as membership movements. What does the human face of the single biggest investor in capital markets look like? Who are the beneficiaries that retirement funds exist to serve? Are pension funds simply cash repositories or are they representative custodians of the savings of ordinary working people and their families? When pension funds are divorced from the beneficiaries that they exist to serve, there is a danger that pension funds may be perceived as mega-wealthy, independent NBFI’s with lots of cash to splash. Pension funds do not hold their assets for their own account but in trust for the thousands of beneficiaries belonging to them. Often these assets represent the life savings and primary means of support of such beneficiaries.

The disconnect between AR 2018 and AR 2019

The disconnect between the reporting topics in AR 2018 and AR 2019 makes it nigh impossible to track pension funds year-on-year. One needs only look at the stated key focus areas for evidence hereof. AR 2018 lists NAMFISA’s key focus areas for pension funds supervision in FY18/19 as implementation of the new legislation and Risk-Based Supervision (RBS), including enhancing the risk assessment framework, providing support on macro-prudential supervision and engaging stakeholders through industry forums. AR 2019 does not report on these at all, but instead lists ensuring that pension funds remained financially sound, that members’ interests were protected and contributing to the review and development of pertinent legislative instruments as key activities undertaken in FY18/19. NAMFISA focused attention on the various on- and off-site inspections that it conducted. Are we to assume that the FY18/19 key focus areas of AR 2018 are no longer relevant? Surely RBS and stakeholder engagement ought to remain key focus areas? While one could argue that the key activities undertaken during FY18/19 form part of RBS, management expert Peter Drucker has taught us that where clearly-defined, measurable goals are stated, performance in relation thereto should be tracked so that it can be managed and the necessary adjustments made. Improved performance requires reported measurement. Looking ahead to the key focus areas for FY19/20, it appears that financial stability remains a key focus area, but the emphasis will shift from pension funds to the external environment in which they operate (the financial markets and the regulatory regime). Isn’t the financial stability of each fund (and the unique internal factors affecting this) just as important as creating the right market conditions and regulatory controls for ensuring the overall financial stability of the pension industry? Shouldn’t the internal and external aspects simultaneously enjoy equal attention from NAMFISA?      

One cannot obtain an informed overview of the Industry

AR 2018 provided a comprehensive review of the industry, covering, amongst others, asset allocations, investment performance, funding levels, contributions, membership, benefits paid, liquidity and expenses. AR 2019, on the other hand, focuses on the increase in the asset base, asset allocations and market risk. With no continuity of reporting, one cannot obtain an updated overview of the industry.

In AR 2019, Table 1 shows 138 active pension funds as at 31 December 2018, while the Market size review records 134 active pension funds as at 31 December 2018. Which figure is correct? The term “active pension funds” is a misnomer since it denotes only domestic pension funds. Are the foreign funds registered by NAMFISA also active funds as opposed to dormant funds?

One cannot make year-on-year comparisons

The statistics provided in AR 2019 relate to investment holdings, complaints received and complaints resolved.    AR 2018’s statistics comprise an income statement, balance sheet and complaints received and resolved. How does one track the industry year-on-year in terms of say the proportion of the employer contributions allocated towards costs compared with that allocated to retirement funding? AR 2018 provides a detailed overview of pension funds’ expense ratios and cost experience from 2013 to 2017; AR 2019 does not reflect these statistics for 2018. I would like to know what any contribution not allocated toward my retirement benefits is paying for.

While pension fund-related complaints received by NAMFISA in 2018 dropped compared with 2017, the nature of the top five complaints received by NAMFISA and the drivers thereof remain unchanged. It would concern me that much of the consumer complaint section of AR 2019 appears to have been copied verbatim from AR 2018. At least three of these “repeat offenders” point to systemic weaknesses in the pension fund industry. How much longer will this continue? How will it be remedied? Has remediation started? AR 2019 does not state the size of the total membership base of pension funds nor the number of benefit claims
submitted to pension funds for the period under review. Without this information, how can a pension fund member assess if the 178 complaints received from pension fund beneficiaries are excessive or cause for concern?

Part 2 in this series looks at, among others, the meaning of risk-based supervision and the inherent dangers in statistics divorced form context. 

Note: The opinion of our readers does not necessarily reflect the opinion of RFS. We reserve the right to shorten and to edit letters received from our readers.

Prescription of death benefit claim of minor beneficiary

This matter deals with a determination of SA adjudicator in the case MA Hlatshwayo as complainant v Iscor Employees Umbrella Provident Fund as first respondent and another as second respondent.

The facts of this case are –
  • Deceased passed away on 14 November 2006;
  • The death benefit was paid to a person claimed to have been the spouse of deceased on12 October 2007;
  • Deceased’s older son was born on 6 February 1993 and the younger son on 9 May 1994, thus 13 and 12 years of age at date of death of their father;
  • The complaint was submitted to the tribunal on 9 June 2014;
  • The Children’s Act came into effect on 1 July 2007 and provides that the age of majority is 18 years.
  • Complainant was appointed guardian of the two minor sons by the executor of deceased’s estate, brother of deceased;
  • First respondent was unable to submit a copy of the resolutions the fund took with regard to the distribution of the death benefit.
Complainant submitted that fraud was committed in the allocation of the death benefit. He established from Home Affairs that deceased was never married. The mother of one son had already passed away while the mother of the second son lived with the parents of deceased. Deceased’s family was also not aware of the existence of deceased’s alleged wife and submitted that he was not married.

As complainant was unable to cooperation from first respondent’s officials, the family decided to wait until the deceased’s son reached age of majority before claiming the death benefit.

First respondent submitted that the tribunal does not have jurisdiction to investigate the complaint at it had prescribed. In arguing its case first respondent tried to convince the tribunal that it had used well established guiding factors as derived from case law and applied by the adjudicator, being  -
  • The ages of the beneficiaries;
  • The extent of their dependency on the deceased;
  • The future earnings capacity of the beneficiaries;
  • The beneficiaries’ relationship to the deceased;
  • The financial status of the beneficiaries, and
  • The amount available for distribution.
Furthermore, first respondent argued that, in making its decision the board considered all relevant information, ignored all irrelevant facts and did not rigidly adhere to a policy or fetter its discretion, again to underscore that the board applied all well- established principles.

In its determination, the tribunal pointed out the following with reference to the possible time barring of the complaint due to prescription –
  • The complainant had a period of 3 years from the date of payment of the benefit to lodge a complaint, subject to the provisions of the Prescription Act, 68 of 1969 [which applies in Namibia as well] being considered according to the way the Prescription Act envisages the 3-year period;
  • As complainant is an adult and there was no attempt by complainant to argue that time barring should be interrupted, his complaint is time barred to the extent that he acts in his personal capacity;
  • Complainant did not act in his personal capacity but on behalf of the minor sons who were minors at date of death of their father;
  • The Prescription Act provides that the period of prescription shall not run if the person is a minor and prescription against a minor shall only commence to run at the time the minor attains age of majority.
In applying the principles of the Prescription Act, the tribunal concluded that –
  • The prescription period in respect of the older son born 0n 6 February 1993 started to run on 7 February 2011 and ended on 6 February 2014, 4 months before the complaint was submitted and hence any claim by the older son had prescribed;
  • The prescription period in respect of the younger son born 0n 9 May 1994 started to run on 10 May 2012 and ended on 9 May 2015, some 11 months after the complaint was submitted and hence the claim by the younger son was submitted in time;
Besides reconfirming the principles cited by the first respondent with regard to the manner in which trustees have to dispose of their duty to dispose of a death benefit, the tribunal concluded as follows:
  • First respondent did not provide any evidence that deceased was married or that the alleged wife was dependent on him;
  • First respondent did not provide any proof of its actions proving that no proper investigation was done;
  • First respondent is directed to investigate the allocation of the death benefits, taking into consideration the younger son and to effect an equitable distribution.
In conclusion, since the benefit was already paid to the alleged wife of deceased, the cost of the benefit that will now have to be allocated to the younger son will have to borne by the fund in the first instance and then try to recover the amount incorrectly paid to the alleged spouse. In this column in last month’s newsletter (“Can a retirement fund recover a death benefit already paid?”), concluding that “...Essentially, a fund would have to follow a common law enrichment action, which would present very narrow constraints for any action taken and is very likely to lead to the fund suffering losses...” as it is unlikely able to recover full costs or interest/investment opportunity lost.

Download the determination here...

Trustees who adopt a “business as usual” approach to arrear retirement fund contributions are reckless and can be held liable
By Andreen Moncur BA (Law)

While there is no legal precedent in Namibia or South Africa for holding pension fund Trustees liable for actions akin to “reckless trading” as envisaged in the Companies Act 28 of 2004, or for regarding Trustees as “delinquent directors” when it comes to contribution default by an employer, Trustees do face risks when employers default on payment. The employer is contractually bound by the fund rules and owes a debt of contributions in terms of the Pension Funds Act 24 of 1956 (the PFA). The PFA imposes a statutory duty to pay on the employer or other party responsible for payment, without imposing a corresponding duty on the fund or the trustees to collect the contributions due. The Act also does not provide any mechanism for funds to collect arrears. In the last ten years or so, the trajectory of South African pension fund legislation on the subject of arrear employer contributions has been one that seeks to hold the employer criminally liable for contribution arrears and potentially liable in a civil action for any losses suffered by the fund and its members in consequence of the employer’s default. Not, so in Namibia, where Namibian Trustees run the risk of being held liable for failure to deal with employer contribution default in a timely manner and in the best interests of the pension fund and its member.

Let’s first examine the South African legal landscape. The South African courts and Pension Funds Adjudicator have firmly entrenched the view that a pension fund cannot be held liable to pay benefits if it has not received contributions. Instead the defaulting employer has been ordered to settle its arrears with the fund so that the fund can pay the correct benefit due to the member as per the rules. While attachment orders have been issued against employer assets, these have never been issued against pension fund assets (recognising that a pension fund has no assets but is the custodian of member assets) nor against the personal assets of pension fund Trustees. While South African pension legislation requires the Principal Officer or other monitoring person to be vigilant and report late payment, non-payment and under payment of contributions to the Financial Sector Conduct Authority and to inform the fund members thereof, neither the fund’s Principal Officer nor its Trustees must actively pursue defaulting employers or collect arrears. Non-payment of pension fund contributions is a criminal offence in South Africa that employer officials/directors and not pension fund Trustees can be convicted of. The argument has been made in SA that Trustees can be held liable for breach of fiduciary duties (both statutory and common law) for failing to manage contribution arrears, but the courts and the Pension Funds Adjudicator have been silent on this matter; presumably because they know that most pension funds are not in a position to actively pursue arrears collection.

Turning to the Namibian landscape, it appears that NAMFISA holds a very different view, effectively expecting the Fund (Trustees) to sue for arrears. While the PFA does not require this, NAMFISA Directive PI/PF/06/2015 requires the fund’s Board of Trustees to take all reasonable steps to ensure the payment of all contributions on time and the full recovery of all outstanding contributions. The Board must also notify all affected members of any late or non-payment of contributions within one month of the last date that a contribution was due. Therein lies the rub; the expression “all reasonable steps” could well be interpreted to mean that the Trustees must sue the employer for the arrears or at the very least obtain a default judgment and cost order against the employer. But this must also be seen in the light of the fund’s prospect for successful recovery. Legal action with little or no prospect of success would be reckless. This is a key consideration in a defined contribution fund, where the members would effectively bear the cost of recovery of arrears until and unless they can be recouped from the employer. Attempts by the fund to recover arrears that result in additional costs for the fund will prejudice the members even further when these attempts prove fruitless. While the Trustees have a fiduciary duty to administer the fund in the best interests  of the members, they are under no statutory  obligation to collect contributions. In a defined contribution fund, an attempt to sue for contributions could be seen as application of fund assets for a purpose other than that for which they are intended. This might potentially prejudice all members or at least those members for whom contributions are up to date. It is also not in the best interests of members to risk their vested benefits (it’s illegal). While it is not fair that members or a group of members are prejudiced by the employer’s default, it is also not fair to penalise other members whose employer is not in default (say in an umbrella find or where subsidiaries of the principal employer also participate) or to further risk the shares of all members unless one knows that the employer can and will pay if sued. Is it reasonable to erode members' retirement benefits further, given that the member is bearing the investment risk? In a defined contribution fund, the Trustees must manage the assets to ensure that members' benefits are not at undue risk. There is no fairy godmother who will magically restore members’ shares once these are gone. The best way for the Trustees to help the members where contribution arrears start mounting may well be to apply to court for its liquidation or to make the fund paid-up or partially paid-up. Trustees will have to weigh up what will best serve the best interests of the members of their fund.

The reckless trading principles of s430 of the Companies Act 28 of 2004 could be extrapolated and applied to fund Trustees because company directors and fund trustees are similar creatures and because of the broad reach of the NamCode. Although the NamCode is non-binding (adherence is voluntary), I believe the Namibian judiciary would in all likelihood rule that Trustees who fail to do everything in their power to address any contribution arrears have failed to identify, manage and mitigate risk as required by the NamCode and would hold the Trustees personally liable if the employer cannot pay or has ceased to exist. Of course, this does not preclude members from suing the Trustees for breach of the Trustees’ common law fiduciary duties. While the Trustees may be able to successfully defend such legal action, they are still at risk.

Having said all of this, my overarching concern (and probably the motivation for the 2015 NAMFISA Circular) is that members will be prejudiced if the pension fund Trustees fail to address employer contribution arrears. In the case of a defined benefit fund, there is a perception that the employer will always pick up the bill, whether on the front end by settling contribution arrears or on the back end by making good any actuarial shortfall. But what happens when the employer cannot pay or has ceased to exist? In a defined contribution fund this is not the case, particularly with regard to those members who are the last to exit the fund. Even if a defined contribution fund has a substantial employer reserve account that can be applied towards settling employer contribution debt, what happens when these reserves run out and the fund must be liquidated. The members will bear the costs of terminating the fund. If the fund is wound-up voluntarily or by court order, the members will be deferred creditors and may receive very little after all liquidation expenses and other creditors have been paid. When the prospects of recovering employer contribution debt are slim, it behoves the Trustees of the fund to consider a voluntary dissolution of the fund or to approach the courts if necessary under s 29 of the PFA while there are still sufficient funds to pay for termination of the fund without compromising members’ benefit entitlements. Bear in mind that if the employer does not pay the costs of dissolving the fund, members’ benefit entitlements will be applied first towards termination costs, then towards other creditors and then only towards member pay-outs.

Let’s look at an example. A fund has long outstanding employer contribution debt. A member of the fund with a share of N$2 million would receive nothing less than that if the fund were to be terminated while its assets are equal to or exceed its liabilities, including termination liabilities. If the fund’s liabilities exceed its assets at the time that the fund is terminated, the member might only receive N$1.8 million for argument’s sake. In such a case, if the member cannot recover the shortfall in his benefit from the employer, I believe he/she will sue the Trustees for breach of the fiduciary duty of care and succeed!

What is the best low-risk income generating investment for a retiree?

Structuring a retirement income product is one of the most important investment decisions we need to make in our lives. When retiring at 65, for example, this is only the start of another 20- to 30-year investment term. At retirement there are a few important decisions that will need to be made:
Selecting the appropriate investment product. As there are different tax implications with different products, as well as differences in accessibility, finding a suitable product for your individual needs is imperative. I advise speaking to a financial advisor to make an informed decision.Determining the monthly financial need and income drawing percentage.Choosing an investment strategy and underlying funds.

Firstly, the type of investment product will need to be selected. To make this decision, the source and the fund value of the investment need to be taken into account, as well as the tax table that is used at retirement...

An annual income of 2.5% to 17.5% of the fund value needs to be selected – and this income can only be amended annually on the anniversary date. The income received will still be taxable, and you are allowed to nominate beneficiaries on this investment should something happen to you...

Lastly, selecting an appropriate, well-diversified investment strategy will be very important. With any income-generating investment, it is important to find the correct balance between low-risk short-term structured funds, and longer-term growth assets that will ensure the capital is still earning an above-inflation return.

Read the full article by Elke Brink, in Moneyweb of 14 February 2019, here...

Pensions and politics are in an uneasy mix the world over

“I recently participated in a panel discussion of the International Pension & Employee Benefit Lawyers Association in Prague under the topic: “Pensions Crises: Many jurisdictions report that significant percentages of their populations are unable to retire with the level of dignity they would have liked and that future prospects for many fund members appear to be weakening.”

High-level participants agreed on certain conclusions:

The jurisdiction with the best results have:
  • A significant contributory state old-age pension, supplemented by occupational pensions arranged on a group basis;
  • Strict rules to enforce financial disciplines and avoid leakages; and
  • Significant economies of scale with limited individual choice.
Jurisdictions with poorer results have:
  • Less significant (contributory) state old-age pensions, supplemented by occupational pensions arranged on a group basis;
  • Fewer rules to enforce financial discipline and avoid leakages; and
  • Smaller economies of scale with more individual choice and retail options at retail prices.”
Read the full article by Kobus Hanekom in Today’s Trustee March – May 2017, here...

Financial mistakes to avoid in your 50’s

For those who are planning to retire in their 60s, your 50s is the decade where your retirement picture starts to look a little clearer. Having spent thirty or so years accumulating your wealth, this decade is an important one when it comes to fleshing out the details of what retirement looks like for you. With only a few years left before retirement, now is not the time to make financial errors of judgement. Here are some financial mistakes to avoid in this all-important decade:

Thinking it’s too late to build wealth... nothing could be further from the truth – especially as one’s 50s are typically the highest income-earning decade. Quantifying your retirement funding deficit is a good place to start as this will help you understand what you are working towards...

Not having a Will... it makes sense to formally document how you want your assets distributed when you pass on. At the same time, consider signing a Living Will or Advance Healthcare Directive...

Not drafting an estate plan... Through effective estate planning, you can ensure liquidity in your estate, reduce tax...

Making bad money decisions... financial mistakes made early in your career can be rectified – but the same is not necessarily true for those made in the years preceding retirement...

Not developing a retirement plan... well-constructed retirement plan should take into consideration factors such as where you want to live, what retirement looks like for you, what type of support system you will have...

Being too conservative with your investments... Prematurely moving your invested assets into a more conservative portfolio could result in your investments not keeping pace with inflation which in turn will decrease the purchasing power of your capital over time...

Not reviewing your life insurance... In general, the need for life cover reduces at this life stage and a review of your life insurance will determine whether you are over-insured and/or paying unnecessary premiums...

Dipping into your retirement funds... Besides the tax consequences of withdrawing from your fund, taking out your money will interrupt the power of compounding...

Upgrading your lifestyle too much... channel some of your extra cash towards extra retirement savings. Healthcare costs in retirement, specifically frail care and home nursing, can never be underestimated...

Retiring too soon... many early retirees attest to suffering from boredom, depression, lack of purpose, disengagement and unfulfillment...

Planning to retire to your favourite holiday destination... before buying a retirement home in your favourite holiday town, spend time there during the week in the off-season. Without family, friends and holiday cheer...

Lending money to adult children...  ensure that you have a documented loan agreement in place and that lending them the money won’t compromise your financial future...

Not eliminating debt... ensure that all debt is paid off before you retire and your 50s are an excellent time to aggressively attack your debt...

Under-estimating your living expenses in retirement... While your fixed expenses such as bond and vehicle repayments are likely to fall away, other expenses such as retirement home levies, higher medical aid premiums, home nursing...

Keeping too much money in compulsory funds... It is always advisable to have a nest egg held in a discretionary fund, such as a unit trust portfolio, which can be used as an emergency fund and to pay for larger capital expenditure in retirement ... Do not be tempted to seek out investment opportunities that promise unrealistic market returns...

Falling for get-rich-quick scams... Do not be tempted to seek out investment opportunities that promise unrealistic market returns...

The ultimate low-risk, high-return investment

“...the FTSE/JSE All Share Index (Alsi) delivered an annualised return of 13.6% between January 1996 and November 2019. At an average inflation rate of 5.8%, this means that investors have earned real returns of 7.7% per year... From peak to trough in 1998, the Alsi fell 43.8%; between March 2002 and April 2003 it dropped 36.8%; and in 2008, it took just six months for the index to lose 46.4%...

The scale of these crashes would have scared many investors out of the market... PSG looked at what would have happened to the value of an investor’s money if they had withdrawn it after each of the three market crashes since 1996, and only re-entered the market a year or two later... An investor who stayed out of the market for one year after each crash before putting their money back in would have seen a real return of only 2.7% over the full period. In nominal terms, they would have a little more than a third of the money they would have had if they had stayed invested throughout... Historically, over any rolling five-year period, the JSE has never delivered a negative return. Over any rolling 10-year period, it has failed to deliver an above-inflation return only 5% of the time...

This shows that the risk of losing money for a long-term investor in equities is low. The potential gains from staying invested, on the other hand, are high. Over the last 90 years, the market has produced an annualised return of 13.8% per year... “

Read the full article by Patrick Cairns in Moneyweb of 31 January 2020 here...

Great quotes have an incredible ability to put things in perspective.

And this, our life, exempt from public haunt, finds tongues in trees, books in the running brooks, sermons in stones, and good in everything.
~ William Shakespeare

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