2025-02

  
Issued February 2025
 
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In this newsletter...
  Benchtest 01.2025 – squandering of pension money, a new start of the FIMA, survey outcome and more...  
 
Jump to...
     
IMPORTANT NOTES AND REMINDERS
 
  NAMFISA levies
  • Funds with February 2024 year-ends must submit their 2nd levy returns and payments by 25 March 2025;
  • Funds with August 2024 year-ends must submit their 1st levy returns and payments by 25 March 2025;
  • Funds with March 2024 year-ends must submit their final levy returns and payments by 31 MARCH 2025.
Repo rate declines further in February 2025

Following the Bank of Namibia’s announcement of a cut in the Repo rate by 0.25% to 6.75%, the interest rate on funds’ direct loans will be reduced to 10.75%, and repayments will be adjusted accordingly as of 1 March 2025.

Interest rates under the VAT Act

The interest rate of VAT tax debits under section 53 of the VAT Act will be 10.75% and on tax credits 7% as of 1 February 2025, per Government Gazette no 8570.		   Registered service providers

Certain pension fund service providers must register with NAMFISA and report to NAMFISA. Download a list of service providers registered as of June 2024, here...

Retirement calculator

Use our web-based retirement and risk shortfall calculator for your personal retirement planning. Find it here...

If you need help with your financial planning, get in touch with
  • Annemarie Nel (tel 061-446 073)
  • Christina Linge (061-446 075)
  • Dennis Fabianus (061-446 098)
Toolbox for trustees

RFS provides comprehensive support for trustees. Find a list of download documents to assist with governance and management of private funds, registered as of June 2024, here...		  
  
IN THIS NEWSLETTER...
 
 
In this newsletter, we address the following topics:
  
 
 
In 'Tilman Friedrich's industry forum' we present...
  • Monthly review of portfolio performance – 31 January 2025
  • Market Outlook 2025: How to navigate opportunities and risks
  • Benchtest newsletter content survey
  • What do you do when a family member squanders his pension?
  • The FIM Act – a new start: RF.S.5.1 to RF.S.5.4
  • GEN.S.10.2 – Fit and proper requirements reissued
In Compliments, read...
  • A compliment from a trustee of a prominent fund
In ‘Benchmark: a note from Günter Pfeifer’, read about…
  • Important circulars and notices issued by the fund
In 'News from RFS', read about...
  • The Retirement Compass
  • Annemarie Nel obtains a postgraduate diploma in financial planning
  • RFS encourages complaints and fraud reporting
In News from NAMFISA read about...
  • GEN.S.10.2 – Fit and proper requirements reissued
   In 'Legal snippets', read about...
  • Will the all-new Marriage Act impact retirement funds?
  • Death Benefit Allocation - Nielsen v Alexander Forbes Retirement Fund
In 'Snippets for the pension funds industry,' read about...
  • Retirement funds are at risk
  • Market Outlook 2025: How to navigate opportunities and risks
  • South African markets poised for pleasant surprises in 2025?
In ‘Snippets of general interest', read about...
  • Holistic retirement planning – how much is enough?
    How much must you save to retire comfortably?
And make a point of reading what our clients say about us in the ‘Compliments’ section. It should give you a good appreciation of who and what we are!

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

Regards
Tilman Friedrich		  
 
TILMAN FRIEDRICH'S INDUSTRY FORUM
  
Monthly Review of Portfolio Performance
to 31 January 2025
  
  In January 2025, the average prudential balanced portfolio returned 1.6% (December 2024: 0.4%). The top performer is M&G Managed Fund, with 2.4%, while Stanlib Managed Fund, with 0.9%, takes the bottom spot. NAM Coronation Balanced Plus Fund took the top spot for the three months, outperforming the ‘average’ by roughly 2.2%. Momentum Namibia Growth Fund underperformed the ‘average’ by 0.7% on the other end of the scale. Note that these returns are before (gross of) asset management fees.

The Monthly Review of Portfolio Performance to 31 January 2025 reviews portfolio performances and provides insightful analyses. Download it here...		  
 
Market Outlook 2025: How to navigate opportunities and risks
  
  The political and economic environment has not changed since I expressed my views in this column last month, and I  stand by those views.  I concluded that the world faces many uncertainties that could severely impact economies and the financial market. During 2024, my main theme was that the world might drift into World War III. President Donald Trump’s election statements on the US waging never-ending costly wars and ending the Ukraine war within 24 hours dimmed the prospect of a major military confrontation somewhat. However, following his inauguration, his most recent rhetoric leaves doubt about his electioneering statements, and he has not yet ended the Ukraine war. A meeting between President Putin and President Trump may provide more direction.

Read paragraph 6 of the Monthly Review of Portfolio Performance to 31 January 2025 for our views on investment markets and global political developments. It also reviews portfolio performances and provides insightful analyses. Download it here...		  
  
Benchtest newsletter contents survey
 
  In February, we surveyed our newsletter readers better to understand their preferences regarding its content and presentation. We received 30 responses from our readership of around 300. Just under half the respondents were fund members. The balance comprised regulators, trustees and principal officers, HR practitioners, fund service providers and people reading the newsletter out of general interest.
 
We sincerely thank the thirty respondents for their time and views!
 
As one may expect, most ‘nos’ (i.e. the least satisfied with the current contents and presentation) came from fund members (61 of 125). Members want a shorter newsletter, do not read the technical columns and the compliments and do not want to pay for it.
 
If one removes the fund members from the ‘nos’, one may conclude that the other reader categories are generally satisfied with the contents and presentation of the newsletter.
 
While we take note of the member respondents’ preferences, we must point out that the newsletter is aimed at retirement industry professionals. We also produce the Retirement Compass targeting fund members as its readership.		  
 
What do you do when a family member squanders his pension
 
  A reader recently posed the following dilemma:
 
“I am acting on behalf on my father who receives a monthly annuity from the fund. We are faced with a predicament at home due to my father's spending habits or prodigal tendencies when it comes to his pension salary that he receives monthly from the fund. My father is not using his money to take care of himself or the household needs. He spends almost everything on alcohol and cigarettes. The situation is worrisome and we as a family has now step in to try and help. One of the ways we suggest is to create a separate savings account for him so that he can save part of his funds monthly. Now, I just want to find out if the pension fund has possible measures in place that we can take to create this saving plan on his behalf taking into consideration the legal implications? Does the pension fund have a rehabilitation programme in place for the pensioners? We just want to assist him to be assisted in managing his funds efficiently or appoint someone to help him in this regard. I will be looking forward to your response.”
 
Our response:
 
The predicament indicates that the family member has an addiction. Numerous other addictions also cause people to neglect their wellness and health. For example, the US has a severe problem with fentanyl. This potent synthetic opioid is being illicitly smuggled into the United States from Mexico and, to a lesser extent, Canada. In response to the escalating opioid crisis, President Donald Trump has announced plans to impose tariffs on goods from Mexico, Canada, and China to pressurise these countries to combat the production and flow of fentanyl into the U.S. Fentanyl is significantly more potent than heroin, making even small amounts potentially lethal. While the US has criminalised the possession, distribution and trafficking of fentanyl, it still recorded over 100,000 fatalities from an overdose of fentanyl in 2023. Despite fentanyl being an illegal substance and its use being criminalised, people still use and die from it.
 
Alcohol and cigarettes are not illegal substances in Namibia, and their use and misuse are left to the discretion of the citizens. Namibian law-enforcement agencies cannot assist when someone chooses to misuse legal substances despite them creating addictions. The best this reader’s family can hope for is the pensioner’s willingness to cooperate. When the pensioner cooperates, the suggested route of setting up a savings plan could be feasible. However, the Pension Funds Act provides for the strict protection of a member’s benefits under Sections 37A, B and D. It would require that the savings plan be in the pensioner's name. Furthermore, the pensioner must authorise one or more family members to transact on the savings plan. He could even exclude himself from transacting on his savings plan.
 
Suppose the pensioner is not willing to cooperate and is not of sound mind. In that case, the only route available to the family is to have a court declare the pensioner unfit to manage his affairs and appoint a curator or guardian to look after his affairs.
 
Curatorship and guardianship are not quite the same, and it may be useful for the family to understand the main difference and decide if one or the other could be a viable route to take,
 
Feature Guardianship Curatorship
Who it applies to Minors or fully incapacitated adults Adults with limited capacity
Main focus Personal care, welfare, and sometimes finances Financial and property management
Decision-making power Full decision-making control Limited to financial affairs
Legal supervision Usually, ongoing court oversight Often involves periodic court reporting
 
 
 
The FIM Act – a new start
Contributed by Carmen Diehl, C.A.(Namibia), Senior Manager: Risk Management and Compliance
 
 
The FIMA (Act 2 of 2021) was promulgated in Government Gazette no. 7645 on 1 October 2021. The Minister of Finance has not yet set a date for it to become effective. It hibernated ever since, but following last year’s elections, we will see action on it again in 2025, once the new Minister of Finance has been appointed and found his feet. NAMFISA, however, has not been idle, spending a lot of time revising and issuing FIMA standards and regulations. In the next few issues of this newsletter, we will present the latest status on the standards and regulations and provide a brief overview.
 
This is a summary of main provisions of draft standards and regulations under the FIM Act and implication for retirement funds
 
  • Standards Chapter 5: Retirement Funds
  • RF.S.5.1 Calculation of ‘actuarial surplus’ 
    • This statement applies to all defined benefit funds.
    • Summary:
      This standard applies to defined benefit funds. The standard sets out the calculation of actuarial surplus or actuarial deficit. 
    • What to do:
      This provision is only applicable to defined benefit funds.
  • RF.S.5.2 Requirements for investigation by and report of a valuator
    • This statement applies to all registered funds required to be investigated by a valuator, the valuator and any independent valuator appointed by NAMFISA.
    • Summary:
    • Provides detailed requirements concerning valuator reports for defined benefit and contribution funds.
      • A special actuarial report required in terms of section 272(3) of the Act (rule amendment affecting the financial position of a fund) must include an assessment of the impact of the rule amendment on the financial position of the fund, in addition to the usual requirements of the valuator report.
      • The valuator report must include the valuator's certification of the determination of technical provisions and funding ratio and the valuator's certification of the schedule of contributions (adequacy of contribution rates).
    • What to do:
      The fund’s valuator is requested to report on any implication of these requirements. 
  • RF.S.5.3 Minimum information that must be furnished to a fund by an employer with respect to the payment of contributionsThis statement applies to all registered funds.
    • This statement applies to all registerd funds.
    • Summary:
      This standard specifies the monthly information employers must submit to the fund administrator regarding the contributions paid to the fund and membership changes. This includes details such as the member's full name, identity number, date of birth, marital status, membership number, contribution amounts, dates of joining or terminating membership,  updated beneficiary nomination forms, contact details of the member and next of kin, salary information, and any additional voluntary contributions. 
    • What to do:
      Employers should evaluate whether their system generates the information required by the standard and, if not, implement the system changes necessary to comply with this standard.     
  • RF.S.5.4 Requirements for rules of a fund and any amendment of such rules 
    • This statement applies to all registered funds and their boards, principal officers and fund administrators.
    • Summary:
      • The standard sets out the detailed requirements for the content and format of the rules of a fund.
      • Funds must amend their rules to comply with this standard within 12 months of the date it takes effect.
      • The standard specifies the format for printing the rules, and the certification required on the first page or cover.
      • The standard also provides the requirements for rule amendments.
      • The fund's principal officer must communicate rule amendments to members within one month of implementation. 
    • What to do:
      Trustees should revise their fund’s rules in line with the requirements of this standard to identify any changes required thereto once the standard becomes effective.
 
GEN.S.10.2 – Fit and proper requirements reissued
 
  This statement applies to any person registered under the FIMA and to directors, members of a board, principal officers, other officers, trustees, custodians, auditors and valuators of financial institutions and financial intermediaries, and any other person subject to the FIMA.

Definitions (Clause 1):
  • Key Person Definition: The previous version defines a “key person” as "any person responsible for managing or overseeing, either alone or together with another responsible person, the activities of a financial institution... and includes those individuals or other entities holding more than 20% of the voting rights". The new version replaces this with "the directors, members of a board, principal officers, officers, trustees, custodians, auditors, valuators, and includes those individuals or other entities holding more than 25% of the financial institution or financial intermediary’s voting rights". The new definitions narrow the rather broad concept of a ‘person responsible for managing or overseeing’.
  • "Act" Definition: In the new version, the definition of "Act" explicitly states that it "must be read with the regulations prescribed under the Act and the standards and other subordinate measures issued by NAMFISA under the Act." The previous version reads that ‘Act’ includes regulations and standards. The earlier definition implied that these additional measures are integral to the Act. The new definition means that while these extra measures are relevant for understanding and applying the Act, they are not necessarily part of it.
  • "listed individual": The revised version added an “and” at the end of paragraph (m)(i). All three sub-paragraphs must now be considered when applying this definition.
Applicability (Clause 2):
  • The previous version includes "any other person who is or may become subject to the Act" as a point of applicability. This is absent in the new version. NAMFISA would now have to re-issue this standard should it want any other identified person to become subject to it.
Assessment Requirements (Clause 3):
  • Individual or Key Person Assessment: The previous version states that NAMFISA’s assessment must satisfy itself on reasonable grounds of "all relevant matters including, but not limited to: (a) competence and capability; (b) honesty, integrity, fairness and ethical behaviour; and (c) financial soundness". The new version says, "NAMFISA must determine, concerning the criteria described above, that the appointment of the individual or key person is likely not to negatively affect the sound and prudent management of the financial institution or financial intermediary." With this change, NAMFISA has created more discretion for itself should any decision concerning an individual or key person be challenged.
  • Continuing Education: The previous version includes a specific sub-clause (3) that requires individuals to comply with continuing education and training requirements. This is not present in the new version. The change makes it less onerous for trustees to continue serving. A continuing education obligation would not have been a bad principle but would have created an ongoing monitoring obligation for NAMFISA.Assessment 
Requirements for an Entity (Clause 5):
  • Policy Requirement: Both documents require a fitness and propriety policy. However, the previous version explicitly states the policy must include compliance with continuing education criteria and that the policy should be part of the risk management framework. The new version states that a documented policy must be in place. The change makes it less onerous for trustees to continue serving. A continuing education obligation would not have been a bad principle but would have created an ongoing monitoring obligation for NAMFISA.
Disqualification Criteria (Clause 6):
  • The previous version uses "seriousness of the failure", whereas the new version uses "extent of the failure". ‘Seriousness of failure’ would measure the severity of the consequences of the failure. ‘Extent of the failure’ would measure how widespread or comprehensive the failure is. So now, the monetary effect of a failure is not measured, only how frequently it occurs.
Rehabilitation Criteria (Clause 10):
  • The previous version has "...inability to conform to societal rules when considered in light of the conduct in question". In contrast, the new version has "an inability to reform when considered in light of the conduct in question". The previous version suggests that given their circumstances (e.g., psychological state, lack of capacity, or external pressures), the person cannot follow the rules in the first place. The new version suggests that the person is unlikely to correct his behaviour even after intervention, punishment, or awareness.

Schedule 1 - Part A Competence and Capability:
  • Shareholder Exclusion: Both versions include the note about shareholders not being considered "key persons" unless they participate in management. Still, the previous version states "... if those persons hold more than 20% of the voting rights," while the new version uses "25%". The change now excludes persons who would not even have a blocking vote. The new version is slightly less onerous when assessing the competence and capability of the financial institution, intermediary, and NAMFISA.
  • Qualification and Experience Requirements: There are significant differences in the specific qualification and experience requirements for various roles, especially the level of qualification required and the amount of experience. The new version often stipulates a "Namibia Senior Secondary Certificate Ordinary (NSSCO) or equivalent", while the previous version usually states "Grade 12 with commercial or business-related subjects". The experience level and related experience are sometimes changed between the two. The new version now aligns the requirements with the Namibian educational system, excluding any other educational system.
  • Trustee Toolkit: The trustee toolkit is only mentioned in the new version for "Beneficiary Fund or Retirement Fund" and "Friendly Society" in that the board members must have completed it.
  • General: The structure is significantly altered from the previous version to the revised version, with most requirements not aligning. There are differences in phrasing, qualification, and required experience.
Schedule 1 - Part B (Honesty, integrity, fairness and ethical behaviour: individual or key person):
  • Concerning having been a board member of any deregistered entity, paragraph (i) includes "any legislative instrument" in the previous version but not in the new version, which uses the term "any law". ‘Law’ is a broad term that refers to a law enacted by Parliament. At the same time, a legislative instrument is a specific type of law, usually secondary or delegated legislation, made under the authority of an existing act of Parliament. FIMA standards and regulations should consequently now not be applied.
  • The previous version, paragraph (j), says "for any offence," while the new version says "for any financial crime".
Schedule 1 - Part C (Financial soundness):
  • The new version has a section on Part C relating to "Financial Soundness".
Schedule 1 - Part D (Conduct: Entity):
  • The paragraph with (i) includes "any legislative instrument" in The previous version but not in The new version, which uses the term "any law". ‘Law’ is a broad term that refers to a law enacted by Parliament. At the same time, a legislative instrument is a specific type of law, usually secondary or delegated legislation, made under the authority of an existing act of Parliament. FIMA standards and regulations should consequently now not be applied.
Schedules 2 and 3 - Part D (Conduct: Entity):
  • The previous version required "In case of a sole trader, certificate for Registration of Defensive Name date and number:" at A.7 of schedule 2. The new version requires a “Certificate of registration for Value Added Tax, Pay as You Earn requirement applicable for the sole proprietor.”
  • The outdated version has "Percentage shareholding or interest" at C.16, whereas The new version has "Percentage shareholding or interest and basis of joint control:".
  • The compliance questionnaire in section H of the previous version is not in the revised version.
In Summary

The new version introduces significant changes over the previous version, especially in the definition of "key person", assessment requirements and qualification/experience requirements in Schedule 1. In our next newsletters, we will examine these changes more closely. There are also changes to other schedules, both in content and layout.

Recommendation

It's crucial to carefully review the differences in the qualification and experience requirements detailed in Schedule 1. The changes to definitions like "key person" may also have a significant impact depending on how it was interpreted previously.		  
 
COMPLIMENT
 
 
Compliment from a trustee of a prominent retirement fund
Dated 25 June 2024
  
“Dear Carmen
 
Thank you for putting this forward for clarification. See my comments below in green.
 
We are nearly there.
 
I must acknowledge how much we appreciate your work, professionalism, and commitment.
 
Thank you
 
Lloyd”
 		  
  
 
Read more comments from our clients, here...
  
  
BENCHMARK: A NOTE FROM GÜNTER PFEIFER
 
Important circular and announcement issued by the Fund
 
  The Benchmark Retirement Fund issued the following new circular and announcement:
  • 202502 – Risk benefits provided via the fund
  • Everest Administration System Migration Update dated 29 January 2025
Clients are welcome to contact us if they require a copy of any circular.		  
 
NEWS FROM RFS
 
The RETIREMENT COMPASS
 
  RFS Fund Administrators sponsors this newsletter as part of our social responsibility and initiatives to support the retirement fund industry. It aims to provide members of funds managed by RFS Fund Administrators and other parties in their network with retirement funding and planning-related news and insights, presented understandably.

Read the latest Retirement Compass (vol 1, no 4) here...		  
  
Annemarie Nel obtains a postgraduate diploma in financial planning
  
 
We congratulate Annemarie on completing the Postgraduate Diploma in Financial Planning at the University of Stellenbosch and qualifying for the CFP® designation!
 
Well done, Annemarie! Your clients will now benefit from your firm technical foundation and the best advice!
  
  
RFS encourages complaints and fraud reporting
  
 
NAMFISA assists the public in resolving complaints regarding non-banking financial institutions such as RFS, the Benchmark Retirement Fund or RFS Financial Advisers. However, it expects any complainant to have first unsuccessfully approached the relevant financial institutions regarding the complaint before it would assist.
 
The RFS website was expanded recently to allow the public to lodge complaints.
 
The RFS website also allows the public to confidentially alert an independent professional adviser about any suspected or committed fraud a person may become aware of regarding RFS, the Benchmark Retirement Fund or RFS Financial Advisers. The adviser will inform RFS management of the report without disclosing the reporting person's identity.
  
  
Important circulars issued by RFS
  
  RFS issued no new circular after RFS 2024.10-07:
  • Confirmation of professional indemnity and fidelity insurance cover.
Clients are welcome to contact us if they require a copy of any circular.
NEWS FROM NAMFISA
  
GEN.S.10.2 – Fit and proper requirements reissued
  
 
NAMFISA published a revised version of GEN.S.10.2 “Fit and proper requirements for any person registered under the act, and for directors, members of a board, principal officers, other officers, trustees, custodians, auditors and valuators of financial institutions and financial intermediaries, and for any other person subject to the act.” in Government Gazette 8567 of 30 January 2025. It invites the public to submit comments by 3 March 2025 on its ‘Standard-Industry-Comments’ template.
 
  
LEGAL SNIPPETS
 
Will the all-new Marriage Act impact retirement funds?
 
  The all-new Marriage Act 14 of 2024 was promulgated in the Government Gazette no. 8548 pm on 30 December 2024.
 
It will replace the Marriage Act 25 of 1961 and all its amendments.  It repeals sections 23, 24 and 25 of the Married Persons Equality Act 1 of 1996 and amends sections (10) and 226 of the Child Care and Protection Act 3 of 2015. The Minister must still determine when it will come into operation.
 
Key Takeaway: The Act primarily deals with Namibia's legal framework and marriage processes. It does not directly impose new compliance requirements on pension funds themselves. However, it provides crucial context for verifying marital status, which is essential for accurate benefits administration, especially regarding spouse’s benefits, divorce settlements, and the recognition of various forms of marriage.
  • Definition of Marriage (Part 1): Be thoroughly familiar with the definitions of "marriage," "customary marriage," "foreign marriage," "divorce," and "other marital severance." These are critical for processing benefits related to:
    • Spouse’s benefits (e.g., survivor pensions, death benefits).
    • Divorce settlements and the division of pension assets.
    • Recognising different forms of marriage for benefit eligibility.
  • Proof of Marital Status (Parts 1 & 2): Establish clear procedures for obtaining and verifying proof of marital status, including:
    • Marriage certificates (as defined in the Act).
    • Divorce decrees.
    • Court orders related to other marital severances.
    • Pre-marriage confirmation (understand its role and limitations; it's not a guarantee of a valid marriage).
  • Objections to Marriage (Part 2): Be aware that formal objections to a marriage can occur, potentially invalidating it and impacting benefits. Have procedures for:
    • Handling situations where a marriage certificate is presented, but there's reason to believe the marriage might be contested.
    • Potentially delaying benefit payouts if a formal objection is known to be in process, pending the Registrar-General's decision.
  • Appeals Process (Part 2): Understand the appeals process related to pre-marriage confirmation refusals and cancellations, as these can cause delays that indirectly impact benefit eligibility timelines.
  • Cancellation of Pre-Marriage Confirmation (Part 2): Be aware that a pre-marriage confirmation can be cancelled after issuance but before the marriage.
  • Verification of Marriage Certificates (Parts 2 & 3): Maintain robust processes for verifying the authenticity of marriage certificates. The details required on the certificate can aid in this process.
  • Bigamous Marriages (Part 6): This section criminalises bigamy, reinforcing the importance of verification. If a bigamous marriage is discovered, benefits paid based on that marriage could be subject to recovery.
  • False Declarations (Part 6): Be aware that providing false information related to marriage is a criminal offence. This further emphasises the need for verification processes.
  • Indemnity (Part 7): Understand the indemnity provided to authorised persons acting in good faith under the Act.
  • Transitional Provision (Part 7): Be aware that marriages valid under previous laws remain valid.
Fund Management Considerations:
  • Advise on Documentation (Parts 1 & 2): 
    • Inform employees of the importance of providing accurate and up-to-date information regarding marital status and the necessary documentation.
    • Review internal policies and procedures for handling marital status changes and benefit payouts.
  • Inform Employees about the Marriage Process: Inform employees about:
    • The objection process and its potential impact on benefit payouts.
    • The role and limitations of the pre-marriage confirmation.
    • There is a possibility of delays due to appeals or cancellations.
  • Determine Contingency Plans: Consider contingency plans for handling benefit claims where marital status is disputed or uncertain.
  • Emphasise the Importance of Accurate Information: Reinforce the importance of employees providing accurate and complete information regarding their marital status and the potential consequences of giving false information (legal penalties).
  • Foreign National Marriages and "Good Faith" (Part 2 & 5): Marriages involving foreign nationals are subject to additional scrutiny, particularly regarding "good faith" (Section 18). This could have implications for benefits if a marriage is later deemed invalid for immigration purposes. Also, note the specific requirements for two foreign nationals marrying in Namibia.
  • Transitional Arrangements (Part 7): Explain to employees that existing valid marriages are recognised under the new law, ensuring no disruption to existing benefit arrangements.
  • Legal Consequences (Part 6): Inform clients about the legal consequences of bigamous marriages and providing false information about marriage.
  • "Good Faith" and Indemnity (Part 7): While the indemnity clause protects administrators acting in "good faith," ensure the fund’s procedures are robust and well-documented.
Key Actions for Funds:
  • Review and Update Procedures: Review and update internal procedures for handling marital status verification and benefit payouts to align with the new Act.
  • Training: Provide training to relevant staff on the Act's new definitions, processes, and implications.
  • Communication: Communicate clearly with employees and fund members about the importance of accurate marital status information and the required documentation. 
By understanding and implementing these guidelines, employers and funds can ensure compliance with the spirit of the Namibian Marriage Act and mitigate potential risks associated with inaccurate or disputed marital status information		  
   
Death Benefit Allocation - Nielsen v Alexander Forbes Retirement Fund
 
  Introduction:

This article deals with the SA PFA’s review of the allocation of death benefits in the Nielsen v Alexander Forbes Retirement Fund case. This case highlights the complexities surrounding Section 37C of the Pension Funds Act, 24 of 1956, and the crucial role of the fund's board in ensuring equitable distribution.

Background of the Case:

Bruce Nielsen, the deceased, was a member of the Alexander Forbes Retirement Fund (Provident Section). He passed away, leaving behind a death benefit. He was survived by his two sons, one of whom was the complainant, and his life partner, Ina Knowles.

Complainant's Assertions:
  • Financial Independence: The complainant argued that Ina was not financially dependent on the deceased, as she was employed and owned two properties.
  • Income Disparity: The complainant claimed that Ina earned more than the deceased, making it unlikely that he supported her.
  • Deceased's Financial Struggles: The complainant asserted that the deceased struggled financially, drawing on his savings and receiving financial assistance from his ex-wife, who paid for his medical aid, and his sister. According to the complainant, this made it impossible for the deceased to have supported Ina.
  • Fraudulent Affidavit: The complainant alleged that the affidavit submitted by the deceased's driver, supporting Ina's dependency claim, was fraudulent. The driver, Frans Mangena, denied ever making the affidavit in the respondent's possession (Alexander Forbes). The complainant even submitted an affidavit from Frans stating that he did not make the original affidavit
Respondent's Assertions:
  • Factual Dependency: The respondent argued that Ina was a factual dependant, as she lived with the deceased and shared household expenses.
  • Board's Investigation: The respondent stated that their board conducted an investigation and considered various factors, including Ina's age, relationship with the deceased, and financial status, before determining her dependency.
  • Financial Hardship: The respondent claimed that Ina was financially worse off after the deceased's death, as she had to move out of their shared home and incur increased expenses.
Key Points of Contention:
  • Financial Dependence vs. Cohabitation: The complainant argued that cohabitation did not necessarily equate to financial dependence. At the same time, the respondent seemed to rely heavily on the fact that Ina and the deceased lived together.
  • Financial Assessment: The complainant questioned the thoroughness of the respondent's financial assessment of Ina, while the respondent maintained that they had considered her financial status.
  • Conflicting Evidence: The complainant raised concerns about the authenticity of an affidavit supporting Ina's dependency claim, while the respondent relied on this affidavit and several others as part of their evidence.
Relevant Legal Provisions and Rules:
  • Section 37C of the Pension Funds Act Governs the distribution of death benefits. It mandates the fund's board to identify beneficiaries (dependants and nominees), decide on a fair allocation, and determine the mode of payment within 12 months of the member's death.
  • Section 1 of the Pension Funds Act: Defines "dependant" broadly, including legal dependants (spouse, children), factual dependants (those financially dependent, regardless of legal obligation), and future dependants.
Adjudicator's Rationale:

The Pension Funds Adjudicator emphasised the board's duty to conduct a thorough investigation to identify all dependants and ensure equitable distribution. The Adjudicator highlighted the Sithole case's guidelines for equitable distribution, including consideration of age, relationship, dependency, deceased's wishes, and beneficiaries' financial affairs.

The Adjudicator found that both the sons and Ina qualified as dependants. The crucial point was the extent of Ina's dependency. The Adjudicator criticised the fund for failing to adequately investigate Ina's financial position, including her income, assets, and any financial support from other sources. Simply living together and sharing expenses did not automatically equate to financial dependency. The Adjudicator stressed that the primary objective of Section 37C is to protect financial dependants, necessitating a thorough assessment of each beneficiary's financial circumstances.

Decision:

The Adjudicator set aside the fund's decision to allocate the entire benefit to Ina. The fund was ordered to reinvestigate the allocation, specifically considering Ina's financial position, and then re-allocate the benefit.

Key Takeaways:
  • Duty of Investigation: Pension fund boards have a fiduciary duty to conduct thorough investigations to identify all dependants and assess their financial needs.
  • Equitable Distribution: The distribution of death benefits must be equitable, considering all relevant factors outlined in case law, including the Sithole guidelines.
  • Factual Dependency: While cohabitation can be a factor, it's not the sole determinant of factual dependency. A comprehensive assessment of financial dependence is crucial.
  • Section 37C's Purpose: The primary goal of Section 37C is to protect those financially dependent on the deceased, ensuring their continued well-being.
  • Transparency: Boards must provide clear reasons for their allocation decisions and demonstrate that they considered all relevant factors.
In Summary:
  • Complainant's Argument: The complainant aimed to paint a picture of the deceased's financial struggles. By highlighting that his ex-wife covered his medical aid, the complainant implied that the deceased had limited resources and was, therefore, unlikely to be financially supporting Ina.
  • Respondent's Silence: The respondent did not address this claim in their submission. They focused on Ina and the deceased having shared a household and expenses but did not provide any evidence to counter the complainant's assertion about the deceased's financial situation.
  • Adjudicator's Focus: While acknowledging the complainant's claims, the Adjudicator primarily focused on the need for a thorough investigation into Ina's financial position.
This case is a reminder of the complexities inherent in death benefit allocations and the importance of meticulous investigation and equitable decision-making by pension fund boards.

Read the determination here...
 		  
SNIPPETS FOR THE PENSION FUND INDUSTRY
 
Retirement funds are at risk
 
  South African retirement funds face growing cyber threats due to outdated software, lack of cybersecurity awareness, and weak cyber attack planning. Toni Cantin, head of ICTS Academy, warns that as retirement funds rely more on technology, they become prime targets for cybercriminals.

Key Cyber Threats
  • Phishing – Fake emails trick trustees or staff into sharing login details.
  • Ransomware – Cybercriminals lock systems and demand payment for access.
  • Data Breaches – Hackers steal sensitive member information for fraud.A recent example occurred in February 2024 when the Government Employees Pension Fund (GEPF) suffered a security breach, disrupting payments and services.
Main Risks
  • Valuable Data – Retirement funds store personal and financial details, making them attractive targets.
  • Multiple Entry Points – Funds work with third-party administrators, IT providers, and investment managers, increasing vulnerabilities.
  • Outdated Systems & Poor Awareness – Many funds lack modern security measures and staff training to detect threats.
Best Practices for Cybersecurity
  • Risk Assessment – Identify system vulnerabilities and improve controls.
  • Staff Training – Teach employees to recognise cyber threats.
  • Multi-Factor Authentication (MFA) – Strengthen login security.
  • Access Restrictions – Limit system access to only necessary users.
  • Regular Software Updates – Prevent exploitation of outdated programs.
  • Secure Service Providers – Ensure third parties meet cybersecurity standards.
  • Incident Response Plan – Have a clear strategy to respond to cyberattacks.
  • Data Encryption & Backups – Protect sensitive data and ensure recovery after breaches.
Legal & Reputational Risks

Retirement funds must comply with South Africa’s Protection of Personal Information Act (POPIA), which requires strict data protection. Failure to secure data can result in fines, lawsuits, and reputational damage. Cantin stresses cybersecurity as a shared responsibility among trustees, administrators, and service providers.

Conclusion

Cybersecurity is a critical issue for South African retirement funds. Trustees must invest in strong security measures, train staff, and work with reliable service providers to protect members. Funds risk financial losses, operational disruptions, and legal consequences without these safeguards.

Read the full article by Bianke Neethling in Daily Investor of 16 February 2025 here...		  
 
Market Outlook 2025: How to Navigate Opportunities and Risks
  
  Looking ahead to 2025, global markets present a mix of opportunities and risks. While the US economy is showing strong growth, driven by consumer spending and a resilient labour market, inflation concerns, though muted, still exist, primarily driven by housing costs. The lingering effects of Trump-era tariffs are a risk but are unlikely to cause sustained inflation. The Federal Reserve is expected to proceed cautiously with monetary easing, and interest rates may remain higher than pre-COVID levels due to increased productivity.
 
Regarding investments, valuations for US and European equities are stretched, leading to a cautious outlook. Emerging market equities are a mixed bag, with some regions offering opportunities while others face challenges. However, South African equities are viewed favourably due to moderate valuations and improving investor sentiment.
 
US bonds are less attractive in the fixed-income category due to the inverted yield curve and limited demand. South African bonds, on the other hand, present a neutral to positive outlook with improving sentiment and available term premium.
 
Finally, the South African Rand is seen as a strong investment opportunity due to its undervaluation, a favourable global environment for carry trades, and improved sentiment. The advice is to use hedging strategies to manage currency risks. Essentially, the article suggests a cautious approach to developed market equities, a more positive view of South African assets (equities and currency), and a nuanced approach to fixed income, emphasising the importance of managing currency risk.
 
Read the full article by Bastian Teichgreeber, CIO of Prescient Investment Management, in Cover, January 2025 edition...		  
 
South African markets poised for pleasant surprises in 2025?
  
  Despite global uncertainties, South Africa presents a compelling investment landscape heading into 2025, argues the author of this article. Key drivers include improvements in bonds and property, encouraging economic indicators like easing inflation and progress at Eskom and Transnet, greater political stability following the formation of the GNU, and a re-rating of local assets. While global risks, particularly surrounding the US and China, remain, the author suggests a tactical, diversified approach, focusing on undervalued opportunities and high-quality assets, could lead to strong performance in the coming year. Is South Africa the investment surprise of 2025? This article explores the factors driving this optimistic outlook and offers insights for investors seeking long-term growth.

Read the full article by Adrian Pask, CIO of PSG Wealth in Cover, February 10, 2025.		  
 
SNIPPETS OF GENERAL INTEREST
  
The importance of holistic retirement planning (continued)
  
  This article emphasises the importance of calculating how much you need to save for retirement to avoid financial insecurity, reliance on family or government, and a diminished quality of life.

Key Takeaways:
  • Why Retirement Planning Matters
    • Failing to plan can lead to running out of money, cutting back on essentials, and increased stress.
    • Starting early allows compound interest to work in your favour.
How to Determine Your Retirement Savings Goal
  • Step 1: Estimate Your Post-Retirement Budget
    • Adjust current expenses based on expected changes (e.g., reduced work costs but increased medical expenses).
    • A common rule of thumb is saving enough to replace 75% of pre-retirement income.
  • Step 2: Determine Your Retirement Duration
    • Factor in life expectancy and any dependents.
  • Step 3: Calculate the Capital Required
    • Use financial models or multipliers of final salary (e.g., at 65, men need 8x salary, women need 9x).
  • Step 4: Determine Monthly Savings Needed
    • Consider current savings, investment returns, and time left until retirement.
  1. Final Advice
  • Work with a financial advisor to account for inflation, taxes, and investment growth.
  • Saving early and consistently ensures financial security and a comfortable lifestyle in retirement.
Overall Message:

Proper retirement planning is essential to maintain financial independence and avoid hardship. Start early, calculate your needs, and save strategically to enjoy a secure retirement.

Source: Moneyweb, article series by Jaco Fouché, Jenwil Blue Star.		  
 
How much must you save to retire comfortably?
 
 
This article discusses the critical issue of retirement planning, particularly given the current economic climate in South Africa. A recent report highlights a concerning trend: only a small fraction of South Africans are on track for a comfortable retirement. This is largely due to a low national savings rate, exacerbated by economic pressures like high unemployment and household debt. Essentially, many people feel they can't afford to save.

A new "two-pot" pension system was recently introduced, allowing some access to retirement funds before retirement. While this might offer short-term relief, the substantial withdrawals we've seen since its implementation raise concerns about long-term financial security. It also highlights the immediate financial struggles many face. Another issue is the common practice of cashing out retirement savings when changing jobs, significantly impacting long-term growth.

The good news is that it's not too late to start or to adjust your current plan. Your thirties are a crucial time to focus on retirement savings. Financial experts recommend aiming to replace about 75% of your pre-retirement salary. For someone starting at 35, this could mean saving around 21% of your gross monthly income. For example, if your current salary is R40,000, you need to save roughly R8,000 per month, increasing with inflation, to target a R30,000 monthly retirement income (in today’s value) by age 65. This assumes a 10% annual investment growth rate.

It is important to remember that retirement planning isn't just about the numbers. Your thirties often involve significant life events like marriage, parenthood, and homeownership. One must balance retirement savings with these other financial priorities, such as children's education. We should also review your insurance coverage – life and disability insurance are crucial to protect your family's financial well-being.

The financial adviser must discuss his client’s current situation and goals and create a personalised plan considering all these factors. This is an ongoing process and must be reviewed, and the plan must be adjusted regularly as the client’s circumstances change. Despite the discouraging statistics, a comfortable retirement is achievable with proactive planning and consistent effort.

Read the full article by Malcolm Libera in Businesstech of 1 January 2025, here...
  
 
AND FINALLY...
  
Wise words from wise men
  
  "Act as if the maxim of your present sacrifice were to become, through your will, a universal law for the betterment of future generations." ~ Immanuel Kant (1724-1804)

This reflects Kant's emphasis on universalizability and the moral imperative to consider long-term consequences.		  
  
  
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Disclaimer
Whilst we have taken all reasonable measures to ensure that the results reflected herein are correct, Benchmark Retirement Fund and RFS Fund Administrators (Pty) Ltd do not accept any liability for the accuracy of the information and no decision should be taken on the basis of the information contained herein before confirming the detail with the relevant portfolio manager.