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| Issued March 2025 |
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| In this newsletter... |
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Benchtest 02.2025 – The FIMA restarted. What does fit and proper mean? And more... |
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| IMPORTANT NOTES AND REMINDERS |
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NAMFISA levies
- Funds with March 2024 year-ends must submit their 2nd levy returns and payments by 25 April 2025;
- Funds with September 2024 year-ends must submit their 1st levy returns and payments by 25 April 2025; and
- Funds with April 2024 year-ends must submit their final levy returns and payments by 30 April 2025.
Repo rate unchanged in March
The repo rate remained unchanged at 6.75% during March. The interest rate of 10.75% on funds’ direct loans and repayments will remain unchanged for March 2025.
Social Security rate changes
The Social Security Commission announced certain rate changes in the government gazette no. 8461 of 1 October 2024. These changes are effective on 1 March 2025 and are as follows:
- The minimum basic salary is deemed to be N$500 and the cap is N$11,000.
The minimum contribution is thus N$9, and the maximum N$198. |
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Interest rates under the VAT Act
The interest rate of VAT tax debits under section 53 of the VAT Act will be 10.5% and on tax credits 6.75% 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... |
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| IN THIS NEWSLETTER... |
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In this newsletter, we address the following topics:
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In 'Tilman Friedrich's industry forum' we present...
- Monthly review of portfolio performance – 28 February 2025
- The new world order and your investments
- The FIM Act – a new start: RF.S.5.5, RF.S.5.6, RF.S.5.7, and RF.S.5.9
- GEN.S.10.2 – Fit and proper: changes in qualification and experience requirements
In Compliments, read...
- A compliment from a fund member
In ‘Benchmark: a note from Günter Pfeifer’, read about…
- Charting the waters into the FIMA future
In 'News from RFS', read about...
- RFS long service awards
- The Retirement Compass
- RFS encourages complaints and fraud reporting
- Client circular RFS 2025.03-01 on system conversion progress
In News from NAMFISA read about...
- NAMFISA engages industry on RBS
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In 'Legal snippets', read about...
- Payment of death benefits
- Death benefit payment mode probed in De Jager v McDonalds (SA) Provident Fund
In 'Snippets for the pension funds industry,' read about...
- How to build a portfolio that works
- The art of asset allocation
In ‘Snippets of general interest', read about...
- Living annuities: a guide to making informed retirement decisions
- Who should administer your estate? A guide to choosing your executor
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 |
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| TILMAN FRIEDRICH'S INDUSTRY FORUM |
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Monthly Review of Portfolio Performance
to 28 February 2025 |
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In February 2025, the average prudential balanced portfolio returned minus 0.2% (January 2024: 1.6%). The top performer is the Allan Gray Balanced Fund, with 0.5%, while the Lebela Balanced Fund, with minus 0.8%, takes the bottom spot. NAM Coronation Balanced Plus Fund took the top spot for the three months, outperforming the ‘average’ by roughly 0.8%. The Stanlib Managed Fund underperformed the ‘average’ by 1.4% 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 28 February 2025 reviews portfolio performances and provides insightful analyses. Download it here... |
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| The new world order and your investments |
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The term "new world order" gained prominence during President George H.W. Bush's administration, particularly in the post-Cold War era and the Gulf War. In his 1991 State of the Union Address, President Bush shared his vision for this new order, emphasising a world where diverse nations collaborate to achieve universal aspirations such as peace, security, freedom, and the rule of law.
This envisioned order was characterised by strengthened international cooperation, collective security measures, and a commitment to resolving conflicts diplomatically. The aim was to move beyond the bipolar tensions of the Cold War, fostering a global environment where nations work together to uphold shared values and address common challenges.
In contrast, the new Trump administration's philosophy departs from this vision. President Trump's recent address to Congress highlighted a shift towards nationalism and a focus on American sovereignty. The administration's policies reflect a preference for bilateral agreements over multilateral institutions, emphasising "America First" principles. This approach includes reassessing traditional alliances and international commitments, focusing on protecting U.S. interests, reducing involvement in global governance structures, and unwinding all ‘woke’ practices and policies. At the recent Munich Security Conference, Vice President JD Vance gave further insight into the Trump administration’s new noble beliefs, criticising the European allies about their lack of democracy, suppression of free speech, failure to control mass migration and the resulting internal security challenges, practices of marginalising populist movements and restricting genuine democratic choice.
Read paragraph 6 of the Monthly Review of Portfolio Performance to 28 February 2025 for our views on investment markets and global political developments. It also reviews portfolio performances and provides insightful analyses. Download it here... |
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The FIM Act – a new start
Contributed by Carmen Diehl, C.A.(Namibia), Senior Manager: Risk Management and Compliance |
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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 has 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 has 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.5.5 Determination of the soundness of the financial position of a fund
- This statement applies to all funds registered under the Act.
- Summary:
- Provides for detailed requirements concerning the determination of financial soundness and the format of the valuator's certification of a rehabilitation plan.
- Various responsibilities are placed upon the board of trustees in this regard.
- What to do:
The fund’s valuator is to be requested to report on any implication of these requirements for the fund.
- RF.S.5.6 Requirements for the voluntary termination or dissolution of a fund
- This statement applies to all funds registered under the Act, to its board and principal officer and to a liquidator appointed under clause 5
- Summary:
- Detailed exposition of requirements and onerous conditions before a fund, or its participation in an umbrella fund, can be terminated.
- What to do:
Funds planning to terminate or dissolve may wish to expedite their decision to avoid these conditions and requirements.
- RF.S.5.7 Minimum benefits that a retirement fund must provide to its members
- This statement applies to all funds registered under the Act.
- Summary:
- The standard determines that every fund shall provide its members with the minimum benefit specified in the standard.
- The minimum benefit for a member who ceases to be a fund member before retirement shall not exceed the minimum individual reserve.
- The standard also defines how the minimum individual reserve is to be calculated. Essentially, this will outlaw vesting scales.
- Funds need to establish a policy for pension increases.
- What to do:
The fund’s valuator is to be requested to report on any implication of these requirements for the fund.
- RF.S.5.9 Beneficiary nomination form
- This statement applies to all funds registered under the Act.
- Summary:
- Section 276 of the FIM Act requires the payment of a benefit after notification of the member's death in line with the deceased member’s beneficiary nomination form.
- For this purpose, each member of the fund must complete a Beneficiary Nomination Form or No Change to Beneficiary Nomination Form annually and return it to the fund by 30 January each year.
- The standard sets out the format and content of the Beneficiary Nomination Form or No Change to Beneficiary Nomination Form
- What to do:
Trustees should consider amending their beneficiary nomination forms in line with the standard and the nomination process to meet the requirements of the standard.
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| GEN.S.10.2 – Fit and proper: changes in qualification and experience requirements |
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Key points to note regarding the qualifications and experience requirements under the Fit and Proper statement:
- NQF Level 7 Qualification: The outdated and the revised versions of this standard frequently mention a "Namibia Qualifications Authority (NQA) accredited NQF level 7 qualification". This generally indicates a bachelor's degree level qualification.
- Grade 12/NSSCO: The outdated and the revised versions also use Grade 12 (or an equivalent) or a "Namibia Senior Secondary Certificate Ordinary (NSSCO) or equivalent". This generally means a high school certificate.
- "Related Experience": The outdated and the revised versions use "related experience". This can be interpreted in multiple ways, so it would be important to understand NAMFISA's specific guidelines on what counts as "related".
- Market Entry Exam: This term is used in the revised version, and if present, it also means that it is one of the qualifications requirements.
- "None": In the outdated and the revised versions, the word "None" indicates that there are no qualification requirements. If experience is also present in that cell, only experience is needed.
Many current fund officials’ and service providers' qualifications were obtained before the NQA and NSSC frameworks were established. It is not clear how NAMFISA envisages managing the transition. Will NAMFISA require each person to have their qualifications assessed under the NQA framework? If so, the process will likely experience delays, potentially disqualifying the person from serving in any role subject to the fit and proper requirements for an extended time. This time delay could leave management bodies in a precarious situation where they cannot function due to the absence of a quorum. Financial institutions may be unable to continue a business relationship with a person obliged to register under the FIMA but whose qualification has not yet been assessed. Alternatively, NAMFISA will be the arbiter with extensive discretion on accepting or rejecting a person required to register. Both routes are undesirable but, unfortunately, unavoidable where regulation goes into as much detail.
Here is a detailed breakdown by institution and role under Schedule 1, Part A of the standard relevant to the retirement funds industry:
Insurance Agent or Corporate Insurance Agent:
| Role |
The revised version - Qualification |
The revised version - Experience |
| Insurance broker and members of the board of a corporate insurance broker |
NSSCO or equivalent with commercial subjects
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3 years related management, insurance, or the financial services and markets sector.
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| Market entry exam. |
5 years experience as an insurance intermediary or related experience in the financial services and markets sector. |
| Principal Officer |
NSSCO or equivalent with commercial subjects
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3 years related management, insurance, or the financial services and markets sector.
OR
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| Market entry exam. |
5 years related management, insurance, or the financial services and markets sector. |
| Other Key Person |
NSSCO or equivalent with commercial subjects
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3 years related management, insurance, finance, marketing, sales or the financial services and markets sector
OR
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| Market entry exam. |
5 years related management, insurance, finance, marketing, sales or the financial services and markets sector |
Summary of Changes:
Market Entry Exam: the "Market Entry Exam" now replaces "None" as a form of qualification in the revised version.Clarification of Experience: The revised version has "the financial services or markets sector" in the first cell of experience, adding “or” instead of “and”.
2. Chapter 5 and Fund Administrators
| Role |
The revised version - Qualification |
The revised version - Experience |
| Beneficiary Fund or Retirement Fund - Member of Board |
NSSCO or equivalent with commercial subjects and Completion of Trustee Toolkit |
Minimum of three years’ experience in the financial services, markets or beneficiary funds or retirement funds sector |
| Beneficiary Fund or Retirement Fund - Principal Officer |
Relevant NQA NQF level 7 (Finance, Commerce, Accounting, Law, Economics or related)
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3 years related business management or financial services and markets sector
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NSSCO or equivalent with commercial subjects
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5 years experience as an insurance intermediary or related experience in the financial services and markets sector. |
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None
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10 years related management, insurance, or financial services sector.
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| Beneficiary Fund or Retirement Fund - Valuator |
Designated Actuary or Member of a category of occupations specified in the standards.
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Minimum of three years’ experience in the corporate or financial services and markets sectors.
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| Fund Administrator - Member of Board |
NSSCO or equivalent with commercial or business-related subjects. |
Minimum of three years’ experience in the financial services or markets sector or any other relevant sector. |
| Fund Administrator - Principal Officer |
Relevant NQA NQF level 7 (Finance, Commerce, Accounting, Law, Economics or related)
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3 years related experience in the financial services and markets sector or any other relevant sector
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| NSSCO or equivalent with commercial or business-related subjects. |
5 years experience in fund administration, legal, financial consulting, compliance management, risk management, corporate governance, auditing, financial sector regulation, or other related experience. |
| Fund Administrator - Other Key Person |
NSSCO or equivalent with Commercial or Business related subjects
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3 years’ experience in the financial services or markets sector, or other relevant sector;
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| None. |
Minimum of five years’ experience in pension fund administration, legal, financial consulting, compliance management, risk management, corporate governance, auditing, financial sector regulation, or other related experience. |
Summary of Changes:
- Clarification of Experience: The revised version has many additions to clarify the required experience in various parts of this section. The general trend is adding “or markets sector” to many cells instead of “and markets sector”.
Qualifications for Other Key Person: The revised version replaces Grade 12 with an NSSCO. |
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| COMPLIMENT |
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Compliment from a fund member
Dated 18 February 2025
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“Dear Me Rukero
Thank you very much for the information regarding the switch from the current Investment Portfolio to the new Portfolio. It is correct and according to instructions, thank you.
I would also like to take this opportunity to thank you, your colleagues and Benchmark / RFS staff for excellent service over many years.
A special "Thank you" to Annemarie Nel for her, always, prompt response and advice / assistance with all my questions and concerns! She's a Mainstay!
It makes me proud to be able to say "Benchmark got my back..."
I truly believe that my decision to invest in the Benchmark Retirement Fund will be in my best interest in the long run.
Kind regards and take care.
Lourina.”
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Read more comments from our clients, here...
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| BENCHMARK: A NOTE FROM GÜNTER PFEIFER |
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| Charting the waters into the FIMA future |
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The fund’s trustees recently held another strategic planning meeting at Hotel Am Weinberg to chart the fund’s future in anticipation of daunting challenges with the prospects of the National Pension Fund and the likely implementation of the FIMA. Fund members can rest assured that the trustees are not taking lightly their fiduciary duty to act in the best interests of its members and are working hard not to be caught off guard by these developments.
In the photo, from left to right: Tilman Friedrich, Sophia Amoo-Chimunda (PO), Marthinuz Fabianus, Günter Pfeifer (consultant), Malverene Theron, Afra Schimming-Chase, and Hermann Hentschel. |
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| Circulars issued by the Fund |
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The Benchmark Retirement Fund did not issue any new circular or announcement after -
- 202502 – Risk benefits provided via the fund
Clients are welcome to contact us if they require a copy of any circular. |
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| NEWS FROM RFS |
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| Long service awards complement our business philosophy |
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RFS places a high value on its employees and recognises the importance of their contributions to the company’s success. Long service awards are a great way to acknowledge and celebrate the commitment and loyalty of employees who have been with the company for a significant time.
In addition to recognising employees’ contributions, long service awards can be a powerful retention tool, demonstrating that the company values and appreciates its employees’ dedication and hard work. These awards create a positive and motivating work environment where employees feel supported and encouraged to continue to grow and develop within the company.
In February, March and April, RFS recognises the following anniversaries:
- Drolina Röchter, twentieth anniversary on 1 February 2025;
- Jolene Dias-Farmer, tenth anniversary on 1 February 2025;
- Elbie Taljaard, tenth anniversary on 1 March 2025;
- Faith Gamxamus, tenth anniversary on 1 April 2025;
- Jamerene Maletzky, fifth anniversary on 3 February 2025;
- Thomas Kesslau, fifth anniversary on 2 March 2025.
We sincerely thank each one for their dedication, loyalty, and support since joining RFS. We look forward to their contribution to the good of RFS, our clients, and our colleagues in the future! |
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| RFS encourages complaints and fraud reporting |
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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. |
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| The RETIREMENT COMPASS |
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RFS Fund Administrators sponsor this newsletter as part of their 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.
This issue covers the following insightful articles:
- Risk benefits through a retirement fund or an employer-owned scheme;
- How Namibia’s oil discovery could affect retirement savings;
- Retirement savings in southern Africa.
Don’t miss out on the latest Retirement Compass (vol 2, no 1) here... |
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| Important circulars issued by RFS |
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RFS issued the following circular:
- RFS 2025.03-01 - Subject: System Migration Update – Progress & Future Enhancements
Clients are welcome to contact us if they require a copy of any circular. |
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| NEWS FROM NAMFISA |
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| NAMFISA engages industry on RBS |
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NAMFISA invited trustees, principal officers, other officers of pension funds, and service providers of pension funds to the NAMFISA Risk-based Supervisory Framework engagement. The engagement occurred at the Hilton Hotel on 27 February 2025.
NAMFISA embarked on this project to keep aligned with global changes in the financial landscape and deliver on its mandate more effectively and efficiently.
Until now, NAMFISA has followed a more compliance-based approach in their supervisory interventions. A compliance-based approach is reactive, whereas a risk-based approach is more forward-looking and addresses emerging risks in regulated entities.
Under the risk-based approach, more attention and focus will be placed on entities with a higher risk rating. This will continue until the entity satisfactorily addresses the identified deficiencies, and consequently, the overall risk is reduced to an acceptable level.
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| LEGAL SNIPPETS |
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| Payment of death benefits |
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Section 37C of the Pension Funds Act outlines the distribution of death benefits from pension funds, ensuring that these benefits are allocated fairly among dependants and nominees. The Act creates various scenarios for the payment of these benefits, each with specific guidelines regarding the timing of payments.
- Dependants Identified Within 12 Months:
Suppose the fund's trustees identify one or more dependants within 12 months of the member's death. In that case, they are responsible for distributing the death benefit fairly and equitably among the dependants. The Act does not specify an exact timeframe for payment in this scenario, but trustees are expected to act promptly once dependants are identified. Payment can be made before and after the twelve months, depending on their certainty of identifying all dependants. Dependants only have twelve months to come forward. However, if the trustees become aware of a dependant within the twelve months but have not traced them after twelve months, they must continue their efforts to trace the dependant id there is any reasonable chance of doing so.
- No Dependants Identified; Nominees Exist:
When no dependants are identified within 12 months, but the member has nominated beneficiaries, the trustees may distribute the benefit to these nominees. However, if a nominee is not a dependant, they are only entitled to the benefit if they were nominated in writing to the fund and the member did not have any dependants. The Act does not specify an exact timeframe for payment in this scenario. However, trustees are expected to act promptly once the 12-month period has elapsed because dependants may still come forward until the end of the 12 months. Before paying dependants under this scenario, the trustees must establish if the deceased’s estate is solvent. If it is not solvent, the fund may have to pay a portion to the estate.
- No Dependants or Nominees Identified Within 12 Months:
If, after 12 months, no dependants or nominees have been identified, the benefit must be paid into the deceased member's estate. This ensures that the funds are managed according to the member's will or, if no will exists, by intestate succession laws. The Act does not specify an exact timeframe for payment in this scenario, but trustees are expected to act promptly once the 12-month period has elapsed.
- Minor Dependants:
When a benefit is payable to a minor dependant, the trustees have discretion regarding the mode of payment. They may choose to pay the benefit into a trust for the minor's benefit, pay it to a guardian, or manage the funds within the pension fund until the minor reaches majority age (18). The Act does not specify an exact timeframe for payment in this scenario, but trustees are expected to act promptly once they have determined the appropriate mode of payment. South African legal precedent indicates that trustees would have to pay the benefit to the minor’s guardian if they prefer to and can manage the capital.
- Major Dependants or Nominees:
The trustees must distribute the benefit directly to adult dependants or nominees. The Act does not specify an exact timeframe for payment in this scenario, but trustees are expected to act promptly once they have identified all dependants and nominees.
- No Dependants, Member Nominated a Person for Only a Portion of the Benefit:
When a member passes away without any dependants but has nominated an individual to receive a portion of the death benefit, the trustees must distribute the benefit as follows:
- To the Nominee: The nominated individual will receive the specified portion of the benefit, provided the nomination was made in writing to the fund and the nominee is alive at the time of the distribution.
- Residual Benefit: The remainder of the benefit, which was not allocated to any nominee, must be paid into the deceased member’s estate. This ensures that the unallocated funds are managed according to the member’s will or, if no will exists, by intestate succession laws.
In all scenarios, while the Act provides 12 months for trustees to identify dependants and nominees, it does not explicitly mandate the exact timing of payments. Trustees are expected to act diligently and distribute benefits as soon as reasonably possible after completing their investigations and making equitable decisions.
Under Section 37C of the Pension Funds Act, the distribution of a deceased member’s death benefit is primarily aimed at ensuring that dependants are not left without support, even if this overrides the member’s wishes.
Key Considerations:
- Nominee’s Eligibility: The nominee must be alive when the trustees decide to distribute the benefit. If the nominee predeceased the member or is otherwise ineligible, the portion intended for them would revert to the deceased member’s estate.
- Trustees’ Discretion: While the nomination provides guidance, trustees are not strictly bound. However, without dependants, they must honour the member’s nomination for the specified portion.
- Estate Solvency: The trustees must ensure that the deceased member’s estate is solvent before allocating any portion of the death benefit to a nominee. If the estate is insolvent, the benefit may be used to settle outstanding debts.
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| Death benefit payment mode probed in De Jager v McDonalds (SA) Provident Fund |
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Introduction:
This case deals with the Pension Funds Adjudicator’s determination in the complaint of AC De Jager v McDonalds (SA) Provident Fund & AON South Africa (Pty) Ltd. The case focuses on the mode of payment of a death benefit under section 37C of the Pension Funds Act, 24 of 1956 (“the Act”). It highlights key legal principles surrounding trustees' discretion in distributing death benefits and placing minor beneficiaries’ funds into a beneficiary fund.
Background of the Case:
- The complainant, AC De Jager, is the father of the deceased, LBJ De Jager, who passed away on 22 September 2009.
- At the time of his passing, the deceased was a member of the McDonald's (SA) Provident Fund (“first respondent”).
- The deceased left behind two minor daughters: Lucille Willemse and Terencine Felicia De Jager.
- A death benefit of R195,880.46 was available for distribution.
- The board of trustees decided to allocate the death benefit equally between the deceased’s children and place it in a beneficiary fund on their behalf.Each child’s mother would receive R2,000 monthly from the fund until the child reached 18
The Complaint:
- The complainant challenged the mode of payment of the death benefit, arguing that the method chosen by the trustees would not allow the deceased’s children to complete their tertiary education.
- He sought a reversal of the trustees’ decision and an alternative mode of payment that would ensure long-term financial support for the children.
The Respondents’ Position:
- The second respondent, AON South Africa (Pty) Ltd (fund administrator), provided a response detailing the trustees’ decision.
- An investigation was conducted under section 37C of the Act to identify the deceased’s dependants.
- The investigation confirmed that the deceased’s only dependants were his two minor children, who lived with their respective mothers.
- The financial circumstances of the children’s mothers were considered: one mother earned R300 per month, and the other was unemployed.
- The trustees resolved that placing the funds in a beneficiary fund would ensure structured financial support for the minors.
- Based on the R2,000 monthly allowance, the funds were estimated to last until December 2013 for Terencine and February 2014 for Lucille, aligning with their reaching the age of 18 in 2012.
- The trustees deemed their decision appropriate and did not find a reason to reconsider it.
Legal Provisions and Analysis:
- The distribution of death benefits is governed by section 37C of the Act, which ensures that dependants receive financial support rather than allowing benefits to become part of the deceased’s estate.
- Trustees are given discretionary powers to distribute death benefits equitably and determine the mode of payment in a manner that protects dependants’ financial well-being.
- Section 37C imposes three duties on trustees:
- Identify and trace dependants and nominated beneficiaries.
- Distribute the benefit equitably.
- Determine an appropriate mode of payment.
- Section 37C(2) allows payments to be made directly to legal guardians, trusts, or beneficiary funds registered under the Act.
- In this case, the trustees exercised their discretion in compliance with the Act by paying the benefits into a beneficiary fund [Note that beneficiary funds do not exist in Namibia].
- Section 37C(2)(a) deems payments into a beneficiary fund as valid and equivalent to payment to the dependant [Note that this section does not exist in Namibia, and payment to a beneficiary fund is not covered by the PFA]
Adjudicator’s Rationale and Decision:
- The adjudicator examined whether the trustees’ decision should be set aside.
- The law permits trustees to place minor beneficiaries’ funds in a beneficiary fund [not in Namibia].
- The trustees acted within their legal discretion and by section 37C(2)(a) of the Act.
- The tribunal found no basis to overturn the trustees’ decision.The complaint was dismissed.
Conclusion and Lessons for Pensions Law:
- This case reinforces the principle that trustees have wide discretion in the distribution and payment of death benefits, provided their decisions are reasonable and fair.
- It highlights the importance of structured financial support for minor beneficiaries and the role of beneficiary funds in safeguarding their interests.
- The decision clarifies that trustees’ actions, if in line with section 37C, will generally be upheld by the Pension Funds Adjudicator
This case is a fundamental example of how pension law protects vulnerable beneficiaries while balancing trustees’ discretion and legal compliance.
Read the determination here... |
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| SNIPPETS FOR THE PENSION FUND INDUSTRY |
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| How to build a portfolio that works |
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This article emphasises that portfolio construction is not about chasing returns or picking the best fund managers but rather about creating an investment strategy that aligns with personal financial goals and sticking to it.
Key Steps in Portfolio Construction
- Defining the Mandate
- The first step is to determine the purpose of investing—whether for retirement, wealth preservation, or a mix of both.
- Clear investment goals help avoid short-term decisions that may not align with long-term objectives.
- Asset Allocation
- Asset allocation (choosing between shares, property, bonds and cash) is the biggest driver of long-term returns and should be based on research-backed principles.
- The key is to balance risk and return in a way that matches the investor's financial goals.
- Choosing Investments
- Picking individual funds or stocks comes last, not first.
- The challenge with actively managed funds is that performance fluctuates, requiring constant monitoring and decision-making.
- Studies show that frequently switching underperforming funds for top-performing ones often results in worse long-term returns.
Why a Passive Investing Approach Works
- Passive index funds provide a simple, low-cost way to gain market exposure without the need to pick and switch fund managers.
- By using index funds for the core asset allocation, investors avoid the risk of chasing past performance.
- Passive investing complements portfolio construction by reducing complexity and costs.
Final Advice
- Build a portfolio based on personal life goals.
- Follow a disciplined, research-backed asset allocation strategy.
- Avoid chasing past performance and unnecessary fund switching.
- A well-structured portfolio should stand the test of time with minimal adjustments.
Read the article by Mathew Matthee in Moneyweb on 20 February 2025 here... |
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| The art of asset allocation |
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This article raises the following key points when it comes to asset allocation.
- Top-Down Macro Approach
- Asset allocation starts with a macroeconomic perspective, analysing inflation, interest rates, GDP growth, and labour market health, particularly in the US.
- These factors influence corporate earnings, borrowing costs, and global risk-free rates, which impact all major asset classes.
- Fundamental Factors in Valuation
- Corporate earnings growth expectations, bond yields, cash rates, and property yields are key considerations when evaluating asset classes.
- Balancing Diversification and Returns
- Risk assets (equities, listed property) do not yield returns in a straight line.
- Diversification is crucial to mitigating periods of underperformance due to market volatility, economic downturns, inflation, or geopolitical risks.
- Strategic Asset Allocation (SAA)
- The long-term (7–10 years) approach is based on expected asset class growth through market cycles.
- Portfolios are structured according to different risk profiles: cautious, moderate, and aggressive.
- SAA is reviewed every two years to reassess market conditions and structural changes.
- Tactical Asset Allocation (TAA)
- Focuses on short-term market opportunities created by market dislocations.
- Example: In early 2024, SA government bonds were overweighted in portfolios when yields spiked before the election.
- The market overestimated sovereign risk, creating a buying opportunity. The position generated over 25% returns in a year.
Conclusion:
A well-structured asset allocation strategy integrates both long-term fundamentals (SAA) and short-term tactical adjustments (TAA) to optimise risk-adjusted returns.
Read the article by Rothea van Biljon of Jenwil BlueStar in Moneyweb of 7 February here... |
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| SNIPPETS OF GENERAL INTEREST |
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| The importance of holistic retirement planning (continued) |
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This article provides a comprehensive guide to living annuities, addressing key considerations for retirees making informed decisions about their retirement income. Differences applicable to Namibia are reflected in square brackets [ ].
- Eligibility:
- A living annuity can only be purchased with funds from a registered retirement fund (pension, provident, preservation, or retirement annuity).
- It cannot be funded from discretionary investments.
- Setup Process:
- Retirees must decide whether to withdraw a lump sum (up to one-third) and consider tax implications [currently not taxed].
- Since a living annuity does not guarantee sustainable lifetime income, retirees must plan for inflation and longevity risk.
- Investment platform selection, risk tolerance, and asset allocation are crucial for financial sustainability.
- Contribution Limits:
- Minimum investment requirements range between R50,000 and R100,000, depending on the provider.
- Additional contributions from discretionary savings are not allowed.
- Age Restrictions:
- No official age limit, but it is typically tied to retirement, often around age 55 [and up to 70, unless a pension fund provides the annuity].
- Offshore Investment:
- Unlike pre-retirement funds, a living annuity is not subject to Regulation 28, allowing full offshore investment [does not apply to annuities from an approved fund, only if it is an insurance policy].
- However, investments must be in rand-denominated offshore feeder funds [does not apply].
- Withdrawal Rates:
- Withdrawals can range from 2.5% [5%] to 17.5% [20%] of the annuity’s value per year.
- Drawdown rates can be adjusted annually, but income needs must be balanced with capital sustainability [not required].
- Taxation:
- No tax is applied to investment gains within the annuity.
- Withdrawals are taxed as personal income at the retiree’s marginal tax rate.
- Age-related tax rebates may reduce the tax burden [not applicable].
- Transfers and Conversion:
- Transfers between providers are permitted tax-free under Section 37 [section 14] of the Pension Funds Act.
- A living annuity can be converted into a life annuity (providing guaranteed income), but this decision is irreversible.
- Withdrawals:
- Full cash withdrawal is only allowed if the annuity’s value falls below R125,000 [not applicable].
- Lump sum withdrawals are taxed based on SARS retirement withdrawal tax tables [not applicable].
- Estate Planning:
- Upon death, remaining funds go to nominated beneficiaries [does not apply to remaining capital from an approved fund, where S 37C applies, but only if it is an insurance policy].
- Beneficiaries can choose to withdraw the funds (taxable) or continue receiving annuity payments.
- If no beneficiary is named, the funds form part of the deceased’s estate [does not apply to remaining capital from an approved fund, where S 37C applies, but only if it is an insurance policy].
This guide highlights the flexibility and responsibilities associated with living annuities, emphasising the need for careful financial planning and professional advice to ensure long-term retirement security.
Read the article by Eric Jordaan of Crue Investments in Moneyweb of 27 February 2025 here... |
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| Who should administer your estate? A guide to choosing your executor. |
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This article provides a comprehensive guide to selecting an executor for an estate, emphasising the complexity and demands of the role. Key considerations include:
- Challenges of Multiple Executors – Appointing more than one executor can create logistical issues, conflicts of interest, and disagreements over interpreting the deceased’s wishes. A single executor or a professional fiduciary may be more efficient.
- Professional vs. Family Executors – While appointing a family member or friend is legally permitted, the Master of the High Court may require professional oversight if they lack expertise. Combining a trusted family member with a professional fiduciary as co-executors is a practical solution to ensure smooth administration.
- Location Considerations – Executors outside the country may face additional administrative hurdles, such as security bond requirements and notarisation costs. Appointing a local executor helps avoid delays and expenses.
- Executor Fees – Fees are legally capped at 3.5% (plus VAT) of the gross estate value plus a 6% (plus VAT) commission on all income collected, but they can be negotiated. Appointing a family member does not necessarily lower costs, and if a professional co-executor is required, fee-sharing arrangements may impact efficiency.
- Potential Issues with Family Member Executors – Family members may struggle with the role due to grief, emotional conflicts, or bias. A neutral executor may ensure fairness and avoid disputes if the estate involves multiple claimants (e.g., an ex-spouse or children from different marriages).
- Suitability of the Executor – Factors such as age, health, financial literacy, and administrative competence should be considered. Naming both a primary and an alternate executor ensures continuity.
- Required Skills – The executor must have legal knowledge (to interpret wills and succession laws), administrative ability (to handle estate documentation and deadlines), and financial expertise (to manage tax obligations, debt settlements, and asset distributions).
- Interpersonal Skills – Given the need to interact with beneficiaries, creditors, and potentially contentious family members, an executor must be diplomatic, resilient, and able to manage relationships without exacerbating tensions.
It is important to carefully evaluate an executor’s qualifications, location, and personal dynamics to ensure a smooth and conflict-free estate administration.
Read the article by Hannah Myburgh in Moneyweb of 28 February 2025 here...
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| AND FINALLY... |
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| Wise words from wise men |
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"A person who never made a mistake never tried anything new" ~ Albert Einstein (1879-1955) |
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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. |
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