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| Issued October 2023 | ||||
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| In this newsletter... | ||||
| Benchtest 09.2023 – best practice for retirement savings, provident fund tax loophole and more... | ||||
| Jump to... | ||||
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| IMPORTANT NOTES AND REMINDERS | ||||
NAMFISA levies
BON announced after its September meeting that the repo rate remains unchanged at 7.75%. The interest rate on funds’ direct loans remains at 11.75%. 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 2023, 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
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 2022, 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...
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In News from NAMFISA', read about...
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 | ||||
| Monthly Review of Portfolio Performance to 30 September 2023 |
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| In September 2023, the average prudential balanced portfolio returned -2.3% (August 2023: 0.4%). The top performer is Hangala Capital Absolute Balanced Fund, with -1.1%, while Namibia Coronation Balanced Plus Fund, with -4.0%, takes the bottom spot. For the three months, Allan Gray Namibia Fund takes the top spot, outperforming the 'average' by roughly 1.6%. On the other end of the scale, NinetyOne Managed Fund underperformed the 'average' by 1.9%. Note that these returns are before (gross of) asset management fees. (Refer to graphs 3.1.3 to 3.1.5 for a more insightful picture of the rolling long-term performances of the portfolios and the asset classes.) The Monthly Review of Portfolio Performance to 30 September 2023 reviews portfolio performances and provides insightful analyses. Download it here... |
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| How do you invest when the Namibia Dollar is weak and political risks are high? | ||||
| Investing when the Namibia Dollar is heavily undervalued and global tensions - such as those arising from the Ukraine and Palestine conflicts, and not to forget the Taiwan tensions between the US and China - requires a strategic approach prioritising capital preservation and wealth protection. Diversifying your assets across different currencies and international markets can help mitigate the impact of a Namibia dollar devaluation and economic instability in the Common Monetary Area. Consulting with a financial advisor specialising in international investments may also be beneficial in developing a tailored strategy. In the Monthly Review of Portfolio Performance to 30 September 2023, we elaborate on the strategies an investor should follow under the above circumstances. It also reflects the editor’s views on current developments and their impact on investment markets. Download the Monthly Review of Portfolio Performance to 30 September 2023, here... |
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| Best practices for maximising retirement savings and financial security | ||||
Maximising retirement savings and achieving financial security is a long-term goal that requires careful planning and disciplined financial management. Here are some best practices to help you on your journey to financial security and a comfortable retirement:
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| Tax evasion at retirement from a provident fund? | ||||
| When a provident fund member retires, he will be entitled to his total retirement benefit as a lump sum, and two-thirds will be taxed if he chooses to take it all in cash. Unfortunately, the Income Tax Act’s section 16(1)(z) offers a loophole. The retiring member can instruct the fund administrator to pay his tax-free one-third and transfer the remaining two-thirds to a preservation fund. Under section 16(1)(z), the transfer to a preservation fund is tax-free, and the Act or the NamRA’s administrative procedures do not require an indication if the transfer amount comprises the taxable portion. NamRA, therefore, cannot track the taxable portion transferred tax-free to a preservation fund. An unscrupulous adviser and fund member can now transfer the untaxed two-thirds to a pension, provident or retirement annuity fund. The member can then retire again from that fund and get another one-third paid out tax-free. Many years ago, the Inland Revenue Department (IRD), realised that advisers exploited the loophole. To uncover the full extent of this tax evasion scheme, IRD instructed all administrators to provide comprehensive details of all retirements for the preceding ten years. This instruction was the proverbial ‘cat amongst the pigeons’. The industry was up in arms and pulled every lever to lobby against the IRD’s instruction. Because of the editor’s nightmarish experience of extracting detailed 10-year history, RFS adopted an internal policy not to allow a provident fund to take a one-third tax-free portion and transfer the two-thirds taxable portion to a preservation fund, even if the fund rules permitted it. The internal policy requires the member to take all in cash or to transfer all to another fund. Although it will be difficult for NamRA to uncover members using the loophole to evade income tax, section 95 gives NamRA the power to tax any transaction that “…was entered into or carried out solely or mainly for the purposes of the avoidance or the postponement of the liability for the payment of any tax, duty or levy …”. Should this happen, NamRA will impose penalties and interest for the late tax payment. If the misuse occurred many years ago, the penalty and interest could add up to a substantial amount. NamRA could even withdraw the tax approval of the fund with severe consequences for the employer and its employees. I acknowledge that RFS’ internal policy restricting partial transfers from a provident fund at retirement has no legal basis. Still, it would not be in a fund’s or the member’s interest to overrule RFS’ internal policy, and we caution against it. |
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| COMPLIMENT | ||||
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Compliment from a Benchmark fund member
Dated 6 October 2023 |
“Good morning J Hope you are well. Thank you for the wonderful service that you have provided and always provide to me and all your customers. That's the reason I am transferring my pension from GIPF to RFS.” |
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Read more comments from our clients, here...
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| BENCHMARK: A NOTE FROM GÜNTER PFEIFER | ||||
| The Benefit Counsellor is now even more user-friendly | ||||
| The Benchmark Retirement Fund recently successfully migrated to the new Benefit Counsellor Platform. The most significant change occurred in the WhatsApp interface, which now also offers all the online options and menus. If you are a member, please play with the WhatsApp feature to see what it offers. |
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| Benchmark and RFS welcome prestigious new participating employers | ||||
The Benchmark Retirement Fund (BRF) and RFS Fund Administrators (Pty) Ltd (RFS) are pleased to announce the addition of the following prestigious new clients as participating employers of the BRF and welcome the companies and all their employees:
Benchmark has a proven track record of success in helping businesses of all sizes to improve their employee benefit programs. Benchmark and RFS are committed to these new clients with the highest level of service and support and are confident that this partnership will be mutually beneficial. Benchmark and RFS look forward to a long and successful partnership with their new clients. |
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| Benchmark appoints new trustee | ||||
| The Board of Trustees announced the appointment of Mr. Hermann Hentschel as independent trustee to the Benchmark Retirement Fund effective 1 November 2023. Mr. Hentschel brings a wealth of experience to the Benchmark Board, having served as Chairperson of the FirstRand Namibia Board, Vice Chairperson of the FirstRand Namibia Pension Fund, and Trustee on the O&L Pension Fund. Mr. Hentschel holds a Master of Science in Leadership and Change Management and a B-Com (Hons) in Management Accounting. He is an associate member of the Chartered Institute of Management Accountants (CIMA). The Board welcomes Mr. Hentschel to the Board and looks forward to the value he will add to the Benchmark Retirement Fund. |
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| Important circulars issued by the Fund | ||||
The Benchmark Retirement Fund issued the following circulars in September:
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| NEWS FROM RFS | ||||
| Saying goodbye is never easy! | ||||
| We regret having to bid goodbye to Austin Thirion, who has served our clients in various capacities over the past ten years. Austin left RFS’ employ at the end of September to pursue other interests. We are grateful for Austin's dedication and commitment to RFS and our customers during this time. He will be missed greatly. We thank Austin for his dedication to the company and our clients and wish him all the best in his future endeavours. |
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| Staff improving their competencies | ||||
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RFS prioritises its staff's ongoing education and professional development. As Nelson Mandela once said, "Education is the greatest equaliser," and by investing in the education and training of its employees, RFS is helping to create a more skilled and knowledgeable workforce.
By supporting its staff in their pursuit of further education, RFS is also investing in the long-term success of its business. As staff members become more skilled and knowledgeable, they are better equipped to provide high-quality service to clients and to help the company stay competitive in a rapidly changing market. We wholeheartedly congratulate
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| Staff participate in the Paratus Namibian Cycle Classic | ||||
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Five cyclists represented RFS at this year’s Paratus Namibian Cycle Classic. We congratulate them on achieving their personal goals and proudly flying the RFS flag.
In the picture from left to right are Giovanni van Wyk (30 km), Timothy Wallenstein (60 km), Rudigar van Wyk (30 km), Aliza (30 km), and Marius Prinsloo (30 km). |
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| RFS helps souls connect | ||||
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Singing is the language of the heart, a universal expression of human emotion. It transcends barriers and connects souls, carrying the power to heal, uplift, and inspire. Through song, we find our truest selves, and in the process, we touch the hearts of others. Singing is not just a skill; it's a gift, a treasure that enriches our lives and brings people closer together. Andrea Bocelli, an Italian tenor and one of the most successful opera singers in the world, once said, "Singing is my passion, my first love and the secret of my energy. Music to me is like finding my inner self, my soul."
RFS has supported the Windhoek Men’s Choir (WMC) for many years. Over these years, the choir travelled Namibia far and wide, lighting up people’s hearts and lives. On 23 September, the WMC and the Camerata Vocale Ensemble staged the Spring Serenade evening at de Kayak in Olympia, as seen in the pictures below |
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| Annemarie Nel does it again | ||||
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Annemarie Nel, RFS manager: retail, scooped another Metropolitan Galaxy certificate of recognition in gold for 2022/2023. Well done, Annemarie; we are proud of you and that your client service focus is seen by others, too! We congratulate her for a well-deserved award. Keep up the excellent work!
In the picture below, Metropolitan’s Anna Mbandi hands over the award to Annemarie. |
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| RFS donates to Future Hope CYDC | ||||
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RFS recently donated inkjet printers, cartridges and office chairs to the Future Hope Child and Youth Development Centre. It is an initiative by Pastor Chris Claassen and his wife Wilmarien in Okuryangava and other informal settlements of Windhoek. They have set up a church building in the meantime and continue to provide soup and bread to the community weekly. RFS was involved in previous sponsorships of blankets and food items about three years back.
Thanking RFS for its generous donation, pastor Claassen said: “We will use this to print worksheets for the Sunday school classes we are currently conducting at our soup kitchen at Future Hope Church of the Nazarene in the Okuryangava suburb of Windhoek. We regularly host Vacation Bible Schools during school holidays, where this equipment will greatly benefit us. We aim to open a preschool in this informal settlement by next year to establish a nurturing environment for children in this area. Below is Veueza Kangueehi from RFS handing over printers and cartridges and a picture of a Vacation Bible School conducted during the winter school holidays. |
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| Important circulars issued by RFS | ||||
RFS issued the following circulars in July:
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| NEWS FROM NAMFISA | ||||
| 14 September industry meeting minutes | ||||
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NAMFISA recently circulated the minutes of the Industry Meeting of 14 September 2023. The meeting was poorly attended, with only nine pension funds being represented.
The meeting minutes chaired by Ms. Lovisa Indongo-Namandje, General Manager of the Pension Funds and Friendly Societies Division at NAMFISA, provide an overview of the discussions and key points made during the meeting. Here are the summarised vital points:
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| LEGAL SNIPPETS | ||||
| Old Mutual vs Old Mutual Staff Pension Fund on withholding of benefit revisited | ||||
| In Benchtest 12.2021, we had an article on this topic and issued a circular to private fund clients and Benchmark participating employers. These documents were based on a legal opinion regarding the 'Old Mutual vs Old Mutual Staff Pension Fund and another'. We understood the legal opinion that there must either be a written employee acknowledgement or a judgment at the employee's exit date. This understanding questioned an SA judgment that indicated such a requirement would render section 37D(b) futile. Having read this case, Old Mutual sought an interdict against the OM Staff Pension Fund pending the outcome of an action which Old Mutual wished to institute against its former employee. The former employee had invested money on behalf of a client, one Ms N, which was not a good investment, resulting in Ms N losing a considerable amount. An investigation by Old Mutual showed that there had been misconduct by the former employee, who had resigned from Old Mutual. Old Mutual sought to prevent the pension fund from paying out the former employee's pension, pending the outcome of an action. It transpired from a letter written by Ms N that she would hold Old Mutual vicariously liable for the second respondent's conduct. After dwelling on the purpose of S37D(b) and its preconditions, Judge Maritz held that the threshold requirement contained in s 37D(b) was that the amount must be due by a member to his employer on the date of his retirement or on the date on which he ceased to be a member of the fund. In examining if that requirement has been satisfied, he concluded -
In the Old Mutual case, Ms N had not taken legal action by the time the matter was before the court. It then makes sense that the employer must refrain from withholding the benefit in anticipation of something that might never materialise. Based on the preceding information, a fund should thus not deny an employer a request to withhold a benefit purely because the employee has not acknowledged his wrongdoing or obtained judgment when the employee exited. |
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| Can an employer still withhold a benefit? | ||||
| The Pension Funds Act prohibits employers from depriving employees of retirement fund benefits. However, there is an exception to this prohibition, which allows retirement funds to withhold benefits from employees who have caused financial damage to their employer due to theft, fraud, dishonesty or dishonest misconduct. This can only occur where the employee has admitted liability in writing or the employer has obtained a judgment against the employee. The article discusses the case of Highveld Steel & Vanadium Corporation Limited v Oosthuizen, in which the court held that retirement fund trustees may exercise their discretion to withhold benefits from employees pending the outcome of legal action for damages, even if the employer has not yet obtained a judgment. Conclusion: An employer may still withhold a pension fund benefit if the employee has caused financial damage to the employer due to theft, fraud, dishonesty or dishonest misconduct, and the employer has either obtained a judgment against the employee or the employee has admitted liability in writing. However, even if the employer has not yet obtained a judgment, the trustees of the retirement fund may exercise their discretion to withhold benefits pending the outcome of legal action for damages. It is important to note that the trustees of the retirement fund have discretion in this matter, and they are not obliged to withhold benefits simply because the employer has requested them to do so. The trustees must consider all relevant factors, including the strength of the employer's case and the potential prejudice to the employee if benefits are withheld. If you are an employer considering withholding a pension fund benefit from an employee, you should seek legal advice to ensure you comply with the law. Read the article by Kenneth Coster and Nicolette van Vuuren of Webber Wentzel in Cover of 20 September, here... |
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| SNIPPETS FOR THE PENSION FUND INDUSTRY | ||||
| Don’t accept losses from virtue investing | ||||
The key messages of this article are as follows:
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| Key decisions to be made at retirement | ||||
The key messages in the article are:
Read the article by Eric Jordaan, Crue Investments, in Moneyweb of 16 November 2023, here... |
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| SNIPPETS OF GENERAL INTEREST | ||||
| 4 Financial mistakes young people make and how to avoid them | ||||
The key message from the article is that young people should be aware of the common financial mistakes that others have made and take steps to avoid them. These mistakes include:
Read the full article by Staff Writer in Businesstech of 7 October 2023, here... |
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| Ranking the top 10 universities in SA | ||||
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Webometrics has published its mid-year update to the global ranking of universities in 2023, with the University of Cape Town, yet again, coming out on top.
Webometrics said that the rankings are mainly based on three core indicators.
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| Read the full article by Luke Fraser in Businesstech of 13 September 2023, here... | ||||
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| AND FINALLY... | ||||
| Wisdom from great philosophers | ||||
| "The greatest happiness you can have is to know that you do not necessarily require happiness." ~ Johan Wolfgang von Goethe | ||||
| Unsubscribe If you do not want to receive these newsletters {unsubscribe}click here...{/unsubscribe} 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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