In this newsletter:
Benchtest 02.2021, the demise of fund backed housing loans, survivor benefits from other funds and more...

NAMFISA levies payable in March and April

  • Funds with year-end of March 2021 need to have submitted their 2nd levy returns and payments by 23 April 2021;
  • Funds with year-end of September 2021 need to have submitted their 1st levy returns and payments by 23 April 2021; and
  • Funds with year-end of April 2020 need to submit their final levy returns and payments by 30 April 2021.
NAMFISA pension funds industry meeting
– 24 March 2021

Take note that the next industry meeting for fund trustees, principal officers and other fund agents will take place from 8h30 to 11h00 at a venue still to be confirmed. The meeting will be held face-to-face but provisions have been made for virtual attendance.

  • Find notice of the meeting here...

  • Find the agenda for the meeting here…

Click here to join the meeting from your mobile or PC.

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
UPDATED May 2020

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...

RFS invites the public to report inappropriate conduct
Retirement Fund Solutions (RFS) Namibia is founded on uncompromising values which all Directors, management and staff promise to uphold at all times. As a valued stakeholder, we request you to report unethical behaviour, any misconduct, involving any officer or employee of RFS.
Our reporting is outsourced to an independent investigator to ensure your anonymity and preserve confidentiality.

We request that you please report any of the following:

  • Requests for payments in exchange for faster delivery of service
  • Falsifying of documents
  • False declarations
  • Soliciting of gifts
  • Bribery
  • Theft
  • Concealment of required information
  • Concealment of errors
  • Threats
  • Verbal abuse
  • Racism
  • Sexism
  • Breaches of confidentiality
  • Nepotism
  • Cronyism
  • Any other unethical conduct. 

In keeping with the company’s strict governance code of conduct, we invite stakeholders to report any misconduct by completing the form on our website at this link, that will be sent to the following contact.
Independent Chairperson: Audit-, Risk and Compliance Committee

Check out our 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...

If you need any assistance with your personal financial planning, you are welcome to get in touch with Annemarie Nel (tel 061-446 073) or with Kristof Lerch (tel 061-446 042)

Dear reader

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

  • FIMA bits and bites – SME’s to be hit by demise of fund backed housing loans
  • FIMA bits and bites – can benefits for survivors be provided from another retirement fund?
  • What to expect of global investment markets in 2021?

In ‘News from RFS, read about’ -

  • RFS receives broker awards
  • Staff movements

In ‘News from NAMFISA, read about’ –

  • Pension funds industry meeting held 26 November 2020

In ‘Legal snippets’ read -

  • Can a survivor’s annuity be redistributed?

In media snippets, read –

  • Mentally prepare for retirement: 21 tips – Part 3
  • 5 Strategies to help you avoid running out of money in retirement;
  • Goldman staff wanted in the office;
  • Will ‘copycat economics’ in emerging markets have to end?
  • The ‘habit loop’ – your key to change.
...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

Monthly Review of Portfolio Performance
to 28 February 2021

In February 2021 the average prudential balanced portfolio returned 2.6% (January 2021: 2.3%). Top performer is Nam Coronation Balanced Plus Fund with 4.3%, while Stanlib Managed Fund with 1.5% takes the bottom spot. For the 3-month period, NAM Coronation Balanced Plus Fund takes the top spot, outperforming the ‘average’ by roughly 3.5%. On the other end of the scale Stanlib Managed Fund underperformed the ‘average’ by 1.9%. Note that these returns are before (gross of) asset management fees.

Read part 6 of the Monthly Review of Portfolio Performance to 28 February 2021  to find out what our investment views are. Download it here...

Why the prudential balanced portfolio is the answer for pension funds

A typical statement made by fund members, in particular when markets are not doing so well, is that the Benchmark Default portfolio has been performing poorly over the past so many years and should have rather been invested in the money market.
Well, when someone makes such a statement, one needs to establish what the commentator’s benchmark is for saying that the portfolio has been doing poorly. One also needs to understand what this portfolio aims to achieve before one can put such a statement into context. This statement is similar to saying ‘my Ferrari’s fuel consumption is horrific’. Really an empty statement when made out of context. The fuel consumption of a Ferrari will certainly be significantly higher than that of a 1.4 litre Golf TSI. Would you not have expected this, when comparing the technical specs of these two cars, particularly in terms of engine output? It’s simply an unreasonable comparison and a matter of ‘horses for courses’!

FIMA bits and bites – SME’s to be hit by demise of fund backed housing loans
FIMA regulation RF.R.5.10 provides that 75% of a member’s ‘minimum individual reserve’ must be preserved until the member’s normal retirement age in terms of the rules of the fund whose moneys were preserved. The Act itself states in section 277(1): “The board of a registered fund may deduct from a benefit to which a member or a beneficiary becomes entitled under the rules of the fund any amount” Amongst all the deductions, FIMA lists housing loans.
The legal environment under FIMA, with regard to housing loans, will thus change quite a bit from what it was under the PFA. This is despite a similar provision in the PFA, section 19(5)(c)(ii), that restricts the maximum loan to “…the amount of the benefit which the member would receive if he were to terminate his membership of the fund voluntarily or the market value of the immovable property concerned, whichever is the lesser amount;” Under the PFA, the maximum amount that can be borrowed from a pension fund is restricted to one-third of the member’s fund credit whereas in the case of a provident fund it can be equal to the member’s fund credit. This is the maximum benefit the member can take in cash, namely, when the member retires in each case respectively.
Under the FIMA, regulation RF.R.5.10 now places an even lower limit on the maximum amount a fund may lend for housing purposes, by restricting the amount a member may take in cash upon termination of membership to 25% of the member’s minimum individual reserve. Regulation RF.5.10 does not distinguish between a pension fund and a provident fund, so the restriction of 25% applies to both types of fund.
In practice, the limit set by the PFA and the FIMA is further reduced by income tax, as the fund that grants a loan would want to ascertain that it will be able to fully recover the outstanding housing loan balance when membership terminates. If it fails to achieve this the fund would have to take further steps to recover the loan such as legal action against the member and possibly even realising the outstanding balance through a sale in execution. Considering that for any member in a tax paying bracket, the income tax deductible on his or her benefits could be anything between 18% and 37%. Under the FIMA dispensation, depending on the member’s marginal tax rate, making provision for income tax in calculating the maximum loan a fund will be prepared to lend, means that the amount available will be reduced by between 4.5% and 9.5% to between 21.5% and 15.5% of the member’s minimum individual reserve. For all intents and purposes, funds would use a maximum of 15.5% to provide for all eventualities!
Under the PFA dispensation the maximum loan a pension fund can grant is restricted by the on-third than may be paid in cash, at retirement. However, that one-third is tax free and hence the loan can amount to one-third of the fund credit without running any risk. In the case of a provident fund, the maximum loan needs to be reduced by between by between 4.5% and 9.5% to between 91.5% and 85.5% of fund credit, depending on the member’s fund credit.
I foresee that funds will no longer grant loans under FIMA due to the severe restriction to effectively only 15.5% of a member’s minimum individual reserve. This will be a pity considering that there has been a lot of private building and renovation activity going on all over residential areas across Namibia, much of which funded with pension backed housing loans!

FIMA bits and bites – can benefits for survivors be provided from another retirement fund?
Currently it is common practice for funds to transfer the capital allocated, by the trustees in terms of section 37C, to dependants of a deceased member (or retirement/ resignation benefit, for that matter) to another fund to purchase a pension from that fund (or to preserve the resignation benefit, for that matter). The reason for this transaction is mostly that the fund the member belonged to at the time of his/ her death (or just before retirement), does not offer the payment of pensions due to lacking economies of scale for administering an own pensioners’ pool. Furthermore, the market nowadays offers so many different types of pensions, funds practically cannot offer in their own capacity. More recently, insurance companies have devised another channel allowing a fund to purchase a pension directly from an insurance company that then issues an annuity policy to the pensioner.
When assessing whether or not such a transaction is lawful, one has to firstly consider the provisions of FIMA, and currently of the Pension Funds Act (PFA), secondly one has to consider the provisions of the Income Tax Act (ITA) and lastly, one has to consider the provisions of the rules of the fund.
Assuming the rules of the fund allow or require the beneficiary of a death benefit to purchase a pension from another fund or from an insurer, one needs to consider the provisions of FIMA (or currently still of the PFA).
Section 276(2) of FIMA states as follows:
  • 276. (2) For the purpose of this section, payment by the board of a fund for the benefit of a dependant or nominee will be considered to be a payment to such dependant or nominee, if payment is made to -
    • (a) a trustee under the Trust Moneys Protection Act, nominated by -
      • (i)  the member;
      • (ii) subject to paragraph (iii), a major dependant or nominee; or
      • (iii) a person recognised in law or appointed by the court as a curator responsible for managing the affairs of a minor dependant or nominee or a major dependant or nominee not able to manage his or her own affairs;
    • (b) a person recognised in law or appointed by the court as the person responsible for managing the affairs of a dependant or a nominee; or
    • (c) a registered beneficiary fund.
 Section 37C of the Pension Funds Act contains a similar provision:
  • 37C. (2) For the purpose of this section, a payment by a registered fund to a dependant shall be deemed to include a payment made by the fund to a trustee contemplated in the Trust Moneys Protection Act, 1934 (Act 34 of 1934), for the benefit of a dependant contemplated in this section.
 On the face of it, FIMA section 276(2) and PFA section 37C say pretty much the same thing. However, there are fine differences between these two sections. Firstly, FIMA section 276(2) talks of payment for the benefit of a dependant or nominee, while PFA section 37C talks of payment to a dependant. Secondly, in the case of FIMA, the benefit can only be paid to a trust if the major beneficiary has designated the trust, but it can be paid to a beneficiary fund (which is a creature of FIMA) in the discretion of the trustees. In the case of the PFA, payment to a trust is in the trustees’ discretion although SA precedent directs that such payment must carry the consent of the major beneficiary which precedent then creates the same end result.
The FIMA phrase ‘payment for the benefit of’ from the outset provides that payment does not have to be made to the beneficiary exclusively, as then confirmed by the alternatives it provides for. The PFA, in the first instance, only provides for payment to the beneficiary but then deems a payment to a trust to also be a payment to the beneficiary. In short, both sections say exactly the same barring the fact that FIMA in addition to payment to a trust, also provides for payment to the guardian (natural or legal guardian).
Both laws provide for specific alternatives to payment to the beneficiary which in my view then implies that no payments may be affected to any other person or entity. Having said this, rationally, this would mean that all payments should be made in cash to the beneficiary. As we know, this does not happen ever though. Instead, payment is typically made to the beneficiary’s bank account. This is generally accepted to be payment to the beneficiary. Similarly, one can draw the circles wider. Is payment into the beneficiary’s fixed deposit or housing loan account with the same bank, or another bank, or payment into his unit trust account not also payment to the beneficiary? And further even – is payment into his account with an attorney or payment to his hardware store account payment to the beneficiary? ‘Closer to home’ then – is payment to another fund for the benefit of the beneficiary payment to the beneficiary?
I am sure there will be legal precedent on some or even most of these questions. Rationally, I would argue that payment to any registered financial institution for the account of the beneficiary will pass the test of any court. Payment to an attorney’s trust account for the benefit of the beneficiary will probably also pass the test whereas payment to the hardware shop will probably not pass the test.
All lawful payments to an entity other than physical payment to the beneficiary, have one requirement and that is, the beneficiary (or legal guardian on behalf of a beneficiary) must direct to which lawful person payment must be made for the benefit or account of the beneficiary. This corroborates the legal precent I refer to above.
Having concluded that payment of a death benefit (and other pension benefits) can be paid to registered financial institutions and attorneys, as argued above, one now needs to determine whether the payment to be made for the benefit of a beneficiary may be made in terms of the ITA. Any payment in contravention of the ITA exposes the payor fund to it being deregistered for income tax purpose and thus no longer enjoying all the tax benefits the ITA offers to tax approved funds only. The ITA, in section 16(1)(z), provides for the transfer of a benefit that has accrued to the beneficiary and is taxable on its taxable portion, from one approved fund to certain other approved funds, tax free. Where these conditions are not met, the taxable portion must be taxed before affecting payment, in other words, payment to any person other than another approved fund attracts income tax on the taxable portion of the benefit.
Insurance companies sell annuities to persons who are due a benefit from an approved fund. These policies are not approved funds as contemplated in section 16(1)(z) of the ITA. Obviously, this will require the fund to pay over (transfer) the benefit to the insurance policy, which it not an approved fund and would thus mean that any taxable portion of the benefit should be taxed. I have fought a battle over many years against such transfers with the insurance companies, drawing in both Inland Revenue and NAMFISA. The insurance companies argued that if the rules require the beneficiary to arrange ultimate payment of the benefit to the beneficiary, from an insurance company, no benefit accrues to the beneficiary There is thus no issue about a potentially taxable benefit and despite money being moved (transferred physically) to the insurance company, this is not a transfer as contemplated in section 16(1)(z). Both NAMFISA and Inland Revenue have gone with the argument of the insurance companies, and have condoned such transactions between approved funds and insurance products. I still believe both NAMFISA and Inland Revenue were wrong in condoning such transactions on the basis of 3 arguments. Firstly, no registered financial institution has the same level of protection of pension fund moneys as the Pension Funds Act and such transactions raise the risk to the beneficiary way beyond what it would have been had the money remained in a pension fund. Secondly, every registered financial institution, other than a pension fund, is subject to taxation on moneys other than moneys derived from business carried on with any tax approved fund. Benefits of a beneficiary transferred by an approved fund to an insurance product in the name of the beneficiary, in my interpretation does not meet the aforesaid exclusion and should thus be taxable business. It may at best be said to have been derived from an approved pension fund at the date of the transfer, but thereafter it is no longer business with the transferor fund. Thirdly, investments in an insurance policy are not subject to investment regulation 13 at fund level, which is aimed at minimising potential investment losses for the investor, who may end up becoming a burden to the state!
 I will advise funds to ascertain that their rules do provide for the beneficiary of a death benefit (or retirement benefit) to direct the fund to transfer the benefit to an insurance product, or to another approved fund, or as provided for in section 37C of the PFA (or section 276 (2) of FIMA), if funds want to offer alternatives not specifically referred to in these laws.

What to expect of global investment markets in 2021?

Review of investment markets
The inauguration of a new president of the United States has brough about quite a change to the outlook for global financial markets, particularly since he can speak with authority knowing that the Democrats now have a majority in both houses of parliament. President Biden intends to spend another US$ 1.9 trn to stimulate the US economy, and that is nearly 10% of US GDP. As the result global equity markets have responded positively to the new outlook. The SA Allshare index increased by 9.5% over the last 2 months, the SP&500 increased by 33.3%, the Dax increased by 5.2%, the Nikkei increased by 38.3% leaving only the FTSE that actually declined by nearly 25%. Similarly, the US 10-year bond yield increased by 27.1%, which for an investor unfortunately presented a severe capital depreciation. I expect that the US moves will force the hand of other developed countries to employ similar measures, not only to stimulate their economies but also to protect their currencies. The day of reckoning therefore seems to have been pushed forward by at least another year and the reversion to an equilibrium between the various asset classes is nowhere in sight. While the economies of most developing countries are still reeling under the consequences of COVID-19, the Chinese economy seems to be picking up speed and as the result global commodity prices are also on an upward trend. This of course is good news for commodity-based economies such as SA and also Namibia. As I pointed out in last month’s column, the easy money floating around, that is currently stimulating global bourses and other asset classes, but particularly in specific large cap technology shares. So while it might appear that some bourses linger at dwindling hights, this tremendous growth was not across the board and there are still lots of opportunities to be found elsewhere.
Monetary stimulus so far has failed to get the global economies going though, more lately exacerbated by the COVID induced slump in the global economy. Fiscal stimulus may now be a more effective way of achieving this goal and that seems to be the route President Biden intends to go and other developed countries are likely to go as well.
Following the media closely, one will have noticed how the talk about economic metrics such as the fiscal deficit of 3% and a cap on debt to GDP of around 60% is nowhere referred to anymore. In any event there are only few countries in the world that still meets these metrics. While the global debt to GDP ratio increased by only about 3% from 310% to 320% following the global financial crisis, it then shot up by 11% following the COVID-19 pandemic. In this column in an earlier Performance Review journal, I also showed that Namibia is sailing very close to the wind with its debt situation already. Namibia of course cannot print money while the US in particular, and to a lesser extent the other developed countries have the means to manage excessive debt by determining the interest rate they have to pay on borrowed money.
At this point it is likely that new fiscal stimulus in the US, likely to be followed by other developing countries, will provide an underpin to global equity markets as the result of which equities should do well for this year, at least in line with the expected uptick in the economies. The expectation is that the gradual opening up of developed economies will stimulate consumption and get their economies going again, which is envisaged towards the end of this year. I believe the hope is that inflation will then pick up and will help in reducing the real value of government debt that has now been built up since the global financial crisis. This will then provide the room for a gradual return to an equilibrium between the different asset classes and a return to normality in asset valuations and risk adjusted investment returns. I expect this to be a long, drawn-out process though that will put a cap on investor over-exuberance for a number of years to come. As interest rates will then start to increase central banks will need to reduce their balance sheets by reducing excessive liquidity in the financial markets. Investors will no longer be able to bloat equity valuations by borrowing at near zero interest rates and generating a net return from the appreciation of their investments. This will be the time for a correction of valuations and return to normality, which as we know, drove up the values of specific shares only but not the market across the board.

So, what has changed since last month? Firstly, equity markets recovered nicely. Secondly the Rand recovered nicely as well. The general outlook has improved as the result of a new economic policy inaugurated by the new US president that is positive for equities. Europe is still locked down and its economy is in the doldrum but China is starting to move ahead. With this, global commodity prices are moving ahead as well and this will be positive for the Namibian and SA economies that are commodity based. Form an investors point of view, we are probably about where we were before Corona struck but now our economies are due to arise out of an even deeper trough than they had been in after the global financial crisis. This also makes for a positive outlook. The joker in this game is: what measures will be taken by fiscal and monetary authorities to return economic metrics back to normality? No one knows yet what this joker entails and when it will be pulled out of the pack of cards, but it is unlikely that this will happen soon. Consequently, I also do not expect a material uptick in inflation this year or in interest rates, but certainly also not any further decline in either of these rates.
Under these circumstances I remain optimistic about the prospects of equities, being a mirror of the real economy, and believing that there is not much scope for a further decline in global economies. We have already seen interest rates ticking up and I will therefore be dovish on fixed interest investments. The Rand has regained its pre-Corona posture, following its severe depreciation last year, opening up an opportunity to now revert to full global diversification.

The prevailing severe investor bias towards a handful of ‘in vogue’ shares and a whole number of other shares that followed their ‘slip stream’, requires stock picking skills rather than the shot gun approach of index management and the focus should be on good quality, fairly valued or cheap companies with high dividend yields.
Tilman Friedrich is a 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 fund
Dated 18 February 2021

“Morning J..,

Kindly please find attached. I’m very pleased to have you on our [..] team, I call myself privileged to work with you, you are just on another level. J.. thank you very much for your service, much appreciated.

Read more comments from our clients, here...

RFS receives broker award
Metropolitan Retail awarded RFS and Ms Annemarie Nel, Manager: Retail, a certificate of recognition for dedication, commitment and performance in the Corporate Brokerages Category and Individual Brokers Category. We extend our appreciation to Annemarie and thank Metropolitan for this gesture!

Annemarie Nel accepting the broker award from Metropolitan Namibia Broker Manager Theo Gurirab on the left and Martin Negombe from Metropolitan Namibia, on the right.

Staff movements


It’s been quiet over the past year with regard to staff movements and more so with regard to resignations. We regret to advise that Benchmark Product Manager and Principal Officer of the Fund, Paul-Gordon /Guidao-‡Oab, tendered his resignation for the end of May. Paul-Gordon will be joining Old Mutual in its business development office. We thank Paul-Gordon for the role he played in the company and the Benchmark Retirement Fund during the 4 years of his tenure at RFS, and wish him well in his future career.

10-year company anniversaries

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 and knowledge is lost. Similarly, every time the administrator loses a staff member, it loses information and knowledge, also referred to as corporate memory. 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 foster 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 member celebrated her work anniversary of 10 years at RFS! We express our sincere gratitude for her loyalty and support over the past 10 years to:
  • Enda van Wyk
We look forward to Enda continuing her value-addition to her portfolio of key clients of the Benchmark Retirement Fund!

Important administrative circulars issued by RFS

RFS has not issued any fund administration related circulars to its clients over the last month.

Pension funds industry meeting held 26 November 2020
NAMFISA held a face-to-face industry meeting on Wednesday 26 November. It is to be noted that the meeting was very poorly attended by only 14 funds.
Here are a few notes on key matters discussed, as per draft minutes distributed by NAMFISA:
  1. Complaints: 508 claims received for 6-month period to end September of which 77 against funds of which 95% were resolved; 57 in favour of funds, 16 in favour of complainants. Industry requested NAMFISA to launch an education drive to reduce number of unwarranted complaints against funds. NAMFISA suggests fund must do more to explain processes, to use plain language and provide access to information such as benefit statements.
  2. Status of Bills:
    a. NAMFISA Act signed by President, to be published in gazette.
    b. FIMA only still to be signed by President, then published in gazette.
    c. Financial Service Adjudicator Bill being considered by National Assembly.
  3. Administration of Estates Act: NAMFISA has been in touch with Ministers of Finance and justice regarding a copy of latest version of the Bill but no response to date.
  4. Rule amendments: Affidavits required from funds in support of rule amendment must once again be signed by board chairperson.
  5. Housing loans circular PI/PF/3/2003: This circular, which relates to interpretation of housing loans and guarantees, is due to be replaced. (This has since happened as reported in last month’s circular.)
  6. Quarterly ERS returns: 5 of 81 active funds submitted their returns late and were penalized. Average exposure to Namibia only 41%, should be 45%; exposure to unlisted investments was 3.9% and over maximum allowed of 2.5%.
  7. Access to National Population Register: Ministry of Home Affairs is prepared to offer access for funds to verify certain member related information. This requires an interface to be established towards which funds are expected to contribute. While service providers see a benefit, funds are of a different opinion but the financial implication first has to be established by the Ministry. RFIN is driving this and will provide feedback to its members.
If you missed the meeting,
  • find the presentation by NAMFISA here...
  • and find the draft minutes here...

Can a survivor’s annuity be redistributed?

Most readers will be quite familiar with the process of distributing a fund member’s death benefit. Currently section 37C directs how a death benefit is to be disposed of. In the process of deciding how to dispose of a fund member’s death benefit, the trustees must establish whether the member has nominated any person to receive a portion or the full death benefit, in writing, to the fund. Although the fund member’s beneficiary nomination form may be used by the trustees as guidance, the nomination form is not prescriptive, unless there were no dependants of the fund member at the time of his or her death. The nomination form and the member’s designated proportional allocation to nominees is only prescriptive if there were no dependants, but the member nominated persons who were not dependent on the member.
Importantly, the trustees must establish whether the member had any dependants at the time of his or her death. This requirement is unrelated to the member’s beneficiary nomination form. The beneficiary nomination form will assist the trustees but it cannot be relied on solely. In terms of the definition of ‘dependant’ in the Pension Funds Act, there are three categories of ‘dependant’. A legal dependant, a factual dependant and a prospective dependant. Legal dependency is clearly an objective assessment, factual dependency is a subjective assessment and prospective dependency can be either or. A person can of course also be both, a legal and a factual dependant.
Dependants typically rank higher in order of priority than nominees. As between these persons, the trustees must apply their discretion how the benefit will be distributed and in what proportions. Once the trustees have resolved how to distribute the fund member’s death benefit the allocated benefit vests in the relevant person/s and once paid, it will be extremely difficult and even impossible depending on how it was paid, for the trustees to correct an error they may have made in the original allocation.
The fact that circumstances relating to a beneficiary of the whole or a portion of the benefit may change subsequently to the allocation of the benefit by the trustees will not affect that beneficiary’s entitlement to the benefit allocation. For example, if the trustees’ assessed a dependant’s financial needs to be linked to his age and the time to him or her reaching majority and this person subsequently passes away, the trustees are expected to revisit their decision provided the benefit had not been paid already. Once the benefit has been paid any change in circumstances will have no impact. If the trustees’ allocation to a beneficiary was not linked to his or her needs but simply on the basis of fairness between the beneficiaries in terms of capital exceeding the amount required to meet all dependant’s needs, or an allocation in accordance with the beneficiary nomination, the subsequent death of the designated beneficiary cannot affect the trustees’ decision.
Where trustees have resolved that the benefit is to be paid to the designated beneficiary in the form of an annuity, or where the beneficiary has requested that it be paid in the form of an annuity and the trustees had acceded to the request, the subsequent death of the beneficiary creates an interesting situation. As set out in the aforegoing, the benefit vested in the beneficiary and his or her subsequent death does not change this fact. According to a legal opinion I had sight of, the beneficiary of a death benefit was not a member of the fund in terms of the definition of ‘member’ in the Pension Funds Act and hence the provisions of section 37C do not apply. Presumably this legal opinion refers to paragraph a. of the definition of ‘pension fund organisation’, that refers to ‘member’ as being “…any member or former member of the association…”. In contrast paragraph b. of same definition, casts the net wider referring to a member being “… a person who belongs or belonged to a class of persons for whose benefit that fund has been established…” Although I am not convinced the legal opinion is correct in this regard, I believe that since the source of the capital was a death benefit from the fund that is being paid in the form of an annuity instead of a lump sum, all future payments vest in the beneficiary, in as much as the original capital vested in the beneficiary, meaning that in the event of his or her death, it must devolve upon his or her estate. It cannot be distributed again in terms of section 37C by the trustees.
Interestingly FIMA appears to be less ambiguous. Section 276 provides for the disposition of benefits upon the death of a ‘member’. In FIMA, a member is defined as “an individual with a right to future benefits payable from the fund, and includes an active member and a retired member”. Beneficiaries of deceased members that receive an annuity from the fund
would have a right to future benefits payable from the fund at the time of death and therefore would be classified as a member under FIMA. Consequently, section 276 of FIMA would apply to benefits payable by the fund on the death of the beneficiary of the deceased member as well.

Mentally prepare for retirement: 21 tips – Part 3
In previous newsletters, we brought to you 5 tips for mentally preparing for retirement. In this newsletter we present the next 2 tips.

 “Retirement is a major life change, that not everyone is prepared for. The following guide contains excellent tips how to mentally prepare for retirement. As it is a lengthy document, it will be presented in multiple parts over the next few newsletters, so make sure you don’t miss any of these. (Note: the source of this guide in not known.)
  • To Mentally Prepare For retirement, You:
  • Start preparing in advance: 1 – 5 years
  • Think about what to do in retirement
  • Communicate with spouse & family about retirement
  • Know that retiring is a process
  • Discover your new identity & purpose in life
  • Create a plan & set goals
  • Replace work routines with new routines
  • Find a support team 
These are just a few tips, but to fully understand, you need to know more. And in this article, [the author] shares 21 tips where [he] thoroughly explains what you can do to prepare for retirement mentally in the best way possible.” 

“6. Be aware of the retirement transition process 

Retiring is a mental process. And to be mindful of this process and the stages of retirement makes you more mentally prepared. Going from 40+hours working life to having all the time and freedom in the world is a transition that doesn’t go overnight. It takes time to adjust and be comfortable again. How long that will take is different for everyone. 

But there are five common phases to the retirement transition process. And being aware makes you more mentally prepared for retirement. It gives you landmarks to help judge where you are and what lies ahead of you.

Five stages into retirement:

Phase 1: Pre-Retirement – This phase is a couple of years before retirement. You are probably in this phase right now where you come to the realization that retirement is coming soon. And that it’s not something far away anymore. In this phase, you have the opportunity to prepare for your retirement financially and emotionally, the best way possible. The better you’re prepared mentally, the better chance of transitioning into retirement more smoothly.

Phase 2: Honeymoon – This is the phase where you just retired. The first couple of weeks or months where you really feel the sense of freedom. You celebrate your retirement with co-workers, friends, and family. You can expect mixed emotions in this phase: excitement, fear, anxiety. In general, every life change comes with feelings of discomfort. So, it’s very normal to have all different types of emotions. 

In the honeymoon phase, you want to enjoy your new life, but also have a long-term plan ready for how you want to spend your time in retirement. And start healthy new routines that will make your retirement happier, longer, and healthier. Read about what to do in the first week of retirement here.

Phase 3: Disappointment – For some retirees, the honeymoon phase is followed by a period of disappointment. The reality of retirement hits in. And the dreams they had before about retirement, aren’t the reality of their retirement right now. For them, retirement can feel disappointing and an anti-climax. These feelings can sometimes lead to depression. Most of the time, depression happens to retirees who didn’t prepare for retirement enough and didn’t fully know what retired life looked like. So that’s why it’s good that you’re taking the time for your retirement preparation.

Phase 4: Reorientation – This phase is where retirees are actively developing ideas and move towards a more balanced life. You’re orientating, thinking, and exploring new routes. You take action to the life you want to live, and you plan fulfilling activities that align with your dreams, identity, and your purpose in life. To live a happy retired life is staying active with a combination of mentally, physically, and social activities and routines. And to get inspiration on how to stay active in retirement you can read my article here. 

Phase 5: Stability - This is the stage of “retirement.” You’re not planning, preparing, and moving towards retirement; you’re living it and enjoying it. You’re satisfied and happy with who you are as a person, where you’re at in life, and you’re content with all the activities you’re doing in retirement. You’re feeling self-fulfilment.

It’s essential in any phase to be pro-active and take charge instead of waiting for a situation to unfold.

7. Discover your new identity 

In western society, what you do is more important or gives you more status compared to who you are as a person. And working for 30+ years or more within a specific field or job position gives you an identity. Your job likely has become a big part of you, and you feel a sense of loss of your identity once you retire. So to be more mentally prepared for retirement is knowing or discovering your identity. 

For people who have put all their time and energy into their job, can have a hard time in retirement figuring themselves out again. And other people who know their qualities, values, and personal characteristics outside of work will have less of a struggle with it. 

Getting to know yourself again is:
  • Questioning yourself: What do I like? What did I like to do in the past? What don’t I like? What are my core values? What are my talents, weaknesses, strengths?
  •  Knowing your body: your intuition can lead you to your dreams and desires. It’s a quiet voice and feeling that gets often over yelled by your thoughts in your head. Listening to your body and that soft voice can give you a lot of answers you’re looking for in life. Your gut is your source of knowledge. Know how to find this source.
  • Getting out of your comfort zone: the only way to find out what you want in life is trying things out. And that often means getting out of your comfort zone. Only by challenging yourself, you can learn more about yourself.  
  • Getting help: rediscovering yourself is very challenging, and sometimes you need a little bit of extra help to push you in the right direction. You can get help from family and friends or get professional advice from a life coach to re-figure yourself out again.…” 
Further parts of this interesting guide will follow in the coming newsletters.

5 strategies to help you avoid running out of money in retirement
Please note: While this article is written for a US audience, the principles are universally applicable.
  1. “Set up and follow a budget - …The first thing you should do is track how much you spend, making sure you include all of your monthly purchases from the biggest to the smallest. After you've got a good idea of how you're spending your money, you should categorize your expenses. Which are essentials like your rent or mortgage versus things that you just want, such as the newest cell-phone upgrade?... 
  2. Save more money before retiring- …If you are already contributing the most that you can to these accounts [tax favoured retirement savings] but have more that you can put aside, consider putting money into a non-retirement account. You will not get the same sort of tax savings but you will still be adding toward your retirement goals and if invested, you can also benefit from stock market growth and compound interest.  
  3. Continue investing for growth - …this means that if you retire at age 65, it's possible you could live far longer than 20 years in retirement! A big determinant of your risk tolerances and your asset-allocation model is your time horizon. If it is now longer because of increases in life expectancy, you can potentially stand a little more risk even after you've stopped working…
  4. Create multiple income streams - …Some people are lucky and have a pension that they can depend on, but most supplement their Social Security with their investment accounts. One way that income can come from your retirement accounts is in the form of a withdrawal. Any time you take money from your accounts, though, your balance is reduced, so you shouldn't take too much. A good withdrawal rate to aim for is 4%...
  5. Consider working part-time - …Even after doing all of this, it's possible that you won't have enough money for covering your expenses in retirement. If this is the case, think about working longer. As much as you may dread this, it's important that you remember that work in retirement can be redefined. After you retire, you only need to work enough to supplement the other income sources that you have…”
Read the full article by Diane Mtetwa in The Motley Fool of 26 January 2021, here...

Goldman staff wanted in the office 

Goldman Sachs CEO David Solomon has told thousands of employees currently working remotely that he expects a return to the office by summer. The firm employs more than 40,000 people globally. Solomon recently said remote working was an "aberration" rather than a new normal and doesn't suit the bank's culture. The finance sector globally appears more eager than others for a return to workspaces, with JPMorgan Chase and Barclays voicing similar hopes. ? Here's what people are saying.

Will ‘copycat economics’ in emerging markets have to end?

 “How do policymakers in emerging economies decide how to run their countries? The answer has a lot to do with how policymakers in advanced economies do things.
There is a copycat tendency or, put more politely, a “demonstration effect”: the policy choices of governments in developed countries create a menu of options from which governments in emerging economies make choices. That fact makes for an uncomfortable prognosis these days. Developed countries are loosening policy to an extent that, if echoed by emerging economies, could end badly for some.
For most of the past few decades, the tendency among EM policymakers to take ideas from advanced economies has been remarkably helpful. One example of this is the history of trade liberalisation. In the 1960s and 1970s, the US and western European countries were busy cutting tariffs and reducing non-tariff barriers to trade. Seeing the fruits of this, developing countries followed suit in the 1980s and 1990s to boost growth rates…
What characterises policymaking in advanced economies these days is, on the one hand, a bias towards apparently unrestrained fiscal expansion; and, on the other, central banks that are cooperatively keeping the cost of that debt down through bond purchases.
This subordination of the central bank to the finance ministry has a name: “fiscal dominance”. The reason these countries can get away with this is they have something that emerging economies generally lack, namely monetary credibility. And that’s painful for countries such as Brazil and South Africa.
These two have exceptionally high public debt burdens: Citi estimates Brazil’s is nearly 95 per cent of gross domestic product, and South Africa’s is 75 per cent. Debt burdens this big are particularly worrying because in each of these countries the long-term inflation-adjusted interest rate is considerably higher than the rate at which these economies are likely to grow in the foreseeable future. That gap between the real interest rate and the real growth rate will cause problems over time.
So why can’t Brazil or South Africa just implement copycat economics and get their central banks to buy bonds, reduce the long-term interest rate to tolerable levels, and keep on spending?
The reason is that, because these countries’ lack of growth potential inhibits the credibility of their money, investors want compensation for the risk of owning Brazilian or South African debt. If yields get pushed down too low through intervention by central banks, investors will begin to feel unrewarded, and the result will be capital outflows and endlessly weakening currencies. In the end, the only response to this might have to be stopping money leaving the country by imposing capital controls…”
Read the full by David Lubin, in Financial Times, here…

The habit loop – your key to change 

“There it is again - that annoying habit that just won’t go away!

Believe it or not, there is method to the habit madness. It’s called the Habit Loop.
Often when we think about our behaviours or habits, we just see the action itself (eg. Waking up to Facebook posts - first thing in the morning).

The habit loop, however, splits every single habit or behaviour into 3 different parts. This helps you and me to not only understand our habits better but helps us unlearn them and even grow them.

Here are the 3 parts to the Habit Loop:
  1. Cue - I often refer to this as the ‘nudge’ or ‘prompt’. This is what happens before the behaviour, acting as a cue that invites you to perform the habit. In the above case of checking Facebook first thing in the morning, the cue would be the cell phone’s buzzing or the notifications that pile up on your home screen.
  2. Behaviour/Habit - This is the part that we see and witness, that we would term as the ‘habit’, e.g.  checking your phone as soon as you wake up or falling asleep to the blue light of your device shining on your face.
  3. Reward - This is possibly the least noticed part of a habit or behaviour. It is in essence a chemical reaction to your habit. What may be easier to notice is a feeling of accomplishment, pride, belonging etc. that performing the behaviour makes you feel, thus encouraging you to do it again. I sometimes refer to this as the ‘cookie’ you get from your brain for the behaviour. In our cell phone example, the reward would be a buzz of dopamine (feel-good hormone) that gets released when you have answered those texts and fulfilled your ‘obligations’ to respond and interact with others.
Now, it's one thing to know how the habit loop manifests itself, but the reason why it’s a powerful framework to understand is that we can use it change our habits!

Tip: When you wish to rearrange or unlearn that annoying habit that just won’t go away, begin by breaking it down into its 3 parts. Take your time with this.

Once that is done, consider how you might either 1. remove or quieten the cue or 2. introduce a new behaviour to respond to the cue, or even 3. consider removing or replacing the reward.

Excited to try this out?

Shoot us an email to arrange a quick call in the coming weeks. Zanele is happy to explore ideas with you on how your team can use the habit loop to build empowering rituals.”

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

"If the freedom of speech is taken away, then dumb and silent we may be led, like sheep to the slaughter” ~ George Washington

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