In this newsletter:
Benchtest 07.2021, FIMA and independence and more...

NAMFISA levies

  • Funds with August 2021 year-ends must submit their 2nd levy returns and payments by 24 September 2021;
  • Funds with February 2021 year-ends must submit their 1st levy returns and payments by 24 September 2021; and
  • Funds with September 2020 year-ends must submit their final levy returns and payments by 30 September 2021.
FIMA stalled?
We cannot report any further progress, and it appears the Act is still a work-in-progress.

Pension fund governance - a toolbox for trustees
  • Download the privacy policy here...
  • Download a draft rule dealing with the appointment of the board of trustees here...
  • Download the code of ethics policy here...
  • Download the generic communication policy here...
  • Download the generic risk management policy here...
  • Download the generic conflict-of-interest policy here...
  • Download the generic trustee performance appraisal form here…
  • Download the generic investment policy here...
  • Download the generic trustee code of conduct here...
  • Download the unclaimed benefits policy here...
  • Download the list of fund service providers duly registered by NAMFISA here... 
  • Download the Principal Officer performance appraisal form here...
  • Download the revised service provider self-assessment here...

Registered service providers
UPDATED June 2021

Certain pension fund service providers need to be registered by NAMFISA and need to report to NAMFISA regularly

These service providers are:-

  • Registered Investment Managers
  • Registered Stockbrokers
  • Registered Linked Investment Service Providers
  • Registered Unit Trust Management Companies
  • Registered Unlisted Investment Managers
  • Registered Special Purpose Vehicles
  • Registered Long-term brokers
  • Registered Long-term insurers

If you want to find out whether your service providers are registered, or whether you need to establish directly from NAMFISA because the service provider does not appear on the list, use this link...

Check out our retirement calculator

Our web based retirement and risk shortfall calculator has been enhanced and updated to assist you to determine how much you should contribute additionally, either by way of lump sum or regular salary based contribution, to get to your target income at retirement, death or disablement.

Try it out. Here is the link...

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

Dear reader

In this newsletter we address the following topics:

 In a note from our Managing Director, Marthinuz Fabianus examines the state of employers’ pension funds.

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

  • FIMA bits and bites – independence
  • Pension fund death benefits: the ITA and the PFA must be aligned

In our Benchmark column, read about

  • Our new, unique member communication platform!
  • Important Benchmark circulars issues

In ‘News from RFS’, read about -

  • Long service award – Veueza Kangueehi
  • RFS bids farewell to Mariana Auene
  • Important circulars issued

In ‘Legal snippets’ read about ‘Death benefit quantum questioned’

In media snippets, read –

  • Should I pay down my overdraft or increase the repayment?
  • Factors to take into account when moving after retirement
  • Raising your children to have a healthy relationship with money
  • Investing in a post COVID world
  • The compliment sandwich and four other common mistakes of leaders
...and make a point of reading what our clients say about us in the ‘Compliments’ section. It should give you a good appreciation of who and what we are!

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

Tilman Friedrich

Monthly Review of Portfolio Performance
to 31 July 2021

In July 2021, the average prudential balanced portfolio returned 1.9% (June 2021: 0.4%%). Top performer is NAM Coronation Balanced Plus Fund with 2.6%, while Allan Gray Balanced Fund with 1.3% takes the bottom spot. For the 3-months Momentum Namibia Growth Fund takes the top spot, outperforming the ‘average’ by roughly 1.2%. On the other end of the scale, NinetyOne Managed Fund underperformed the ‘average’ by 1.2%. Note that these returns are before (gross of) asset management fees.

The Monthly Review of Portfolio Performance to 31 July 2021 provides a full review of portfolio performances and other exciting analyses. Download it here...

Understanding Benchmark Retirement Fund Investments

In the last and the next few issues of our monthly Performance Review, I will provide background and guidance on investments to assist Benchmark Retirement Fund members taking charge of their fund investments.
  1. Parties to a fund and their roles and responsibilities
  2. Investment choice and return objectives
  3. Investment range and portfolio composition
  4. Performance characteristics of asset classes and portfolios
  5. The default portfolio
  6. The default portfolio vs the smooth growth portfolio
  7. Income replacement ratio and contribution rates
  8. Selection of investment managers
  9. Combining investment portfolios and when to switch
  10. Investment manager risks and manager diversification
  11. Performance measurement
In the previous three newsletters, I covered the first six topics. In this newsletter, I cover the topics “Income replacement ratio and contribution rates” and “Selection of investment managers”.

Follow this link to the monthly Performance Review and read paragraph 6

FIMA bits and bites – independence

FIMA requires that certain persons appointed to specific positions are independent. Independence applies to board members of financial institutions. Section 261 deals with a retirement fund’s board. While this section specifically prohibits persons in a contractual arrangement with a retirement fund to serve on such fund’s board of trustees, the section has no independence prescriptions. However, one-third of the board of directors of financial institutions that are companies, must be independent.

As per clause 3(2) (of General Standard 10.8 on independence), in relation to a financial institution (e.g., retirement fund, collective investment scheme, insurer, medical aid fund) or financial intermediary (e.g., fund administrator, insurance broker, stock broker, collective investment scheme manager or trustee), an individual is not considered independent if, in respect of an election or appointment to a position with that financial institution or financial intermediary, the individual:
  • is employed, or has, within the immediately preceding year, been employed by the financial institution or financial intermediary concerned, or
  • by an associate or affiliate of that financial institution or financial intermediary.
Financial institutions must consider soonest who on their board of trustees or directors is not independent and needs replacement. Alternatively, such person must sever his employment relationship with the financial institution, financial intermediary or an associate of either of them.
Tilman Friedrich is a chartered accountant and a Namibian Certified Financial Planner ® practitioner, specialising in the pensions field. Tilman is co-founder, shareholder and Chairman of the RFS Board, and retired chairperson, and now trustee, of the Benchmark Retirement Fund.


Compliment from a pensioner
Dated 29 April 2021

“Dear S,
 Thank you very much for your prompt and to the point reply. These days it becomes more regular that requests like mine are either ignored or only attended to after various reminders. Therefore I really appreciate people like you who take their customers’ needs serious. Please keep up the great work and service you are and always have provided to my requests. Thank you very much once again.”

Read more comments from our clients, here...

Our new, unique member communication platform!

If you are a member of an employer fund participating in the Benchmark Retirement Fund, follow these steps to register
  • Save Benchmark telephone number +264 61 446 000 on your smartphone;
  • Text ‘Hi’ to the Benchmark number on WhatsApp or per SMS;
  • Submit your identity number and tick box accepting terms and conditions;
  • Answer the security questions you will receive.
  • Have a look at any information of your interest.
…and tell us if you like what you see.

Or find it online, here...

If you would like to know more about this facility, call your relationship manager or client manager.

Don’t wait – register today!.

Important circulars issued by the Fund

RFS issued the following fund administration-related circulars to its clients over the last month.
  • Circular 202103 – Annual newsletter (on investment portfolios and performance)
Günter Pfeifer is Principal Officer and was formerly a trustee of the Benchmark Retirement Fund. He holds a Bachelor of Commerce (Cum Laude). He completed his articles with Deloitte & Touche. He completed the De Beers ‘Program For Management Development’ at Gordon Institute for Business Science, and the Advanced Development Program at the London Business School. He was formerly Financial Manager of De Beers Marine.

RFS bids farewell

RFS bids farewell to Mariana Auene, who leaves our employ to join I3 Consultants and Actuaries at the end of August 2021. We thank Mariana for the years she shared with us and wish her well with her future endeavours!.

Long service awards complement our business philosophy

RFS’ business is primarily about people and only secondarily about technology. Every time a fund changes its administrator, a substantial amount of information and knowledge is lost. Similarly, every time the administrator loses a staff member, it loses information and knowledge, also referred to as corporate memory. As a small Namibia-based organisation, we cannot compete with large multinationals technology-wise because of the economies of scale that global IT systems offer. To differentiate ourselves, we focus on personal service and on the persons delivering that service to foster customer acceptance and service satisfaction. This philosophy has proven itself in the market, and we place great emphasis on staff and corporate memory retention through long service.

The following staff member celebrated her fifth work anniversary at RFS! We express our sincere gratitude for her loyalty and support over the past 5 years to
  • Veueza Kangueehi
We look forward to Veueza continuing her value-addition to the Benchmark Retirement Fund for many years to come.

Important circulars issued by RFS

RFS issued the following fund administration-related circulars to its clients over the last month.
  • Circular 2021.07-09 – Merging of Old Mutual AGP Secure Series
  • Circular 2021.07-10 – Fund Signing Authorities
  • Circular 2021.07-11 – Confirmation of PI and Fidelity Insurance Cover
The Jar of Hope project

One of our staff members, Aliza Prinsloo, initiated and coordinated the Jar of Hope social responsibility project. Each Jar of Hope contained 750 ml instant stew mix, providing a full meal for four adults.

How to make the Jars of Hope

  • 1 cup rice
  • 1 soup mix
  • 1 cup lentils
  • 1 unwrapped stock cube
  • 1 packet soup powder
  • Add 4 Jars of water to stew
  • Add 5 Jars of water to make soup
  • Cooking time 40 to 45 min
Our staff filled 100 Jars of Hope and donated these to the following five charities:
  • Future Hope
  • Orlindie Children Home
  • Freedom Land
  • Hospice for Hope
  • SPES Charity !

In the pictures above, RFS staff members hand over the Jars of Hope to some appreciative charities. RFS extends a sincere thank you to all involved in this project for this worthy initiative!

Quantum of death benefit questioned

This case deals with a complaint by Gannie (“the Complainant”) against Road Freight and Logistics Industry Provident Fund (‘the Fund), Salt Employee Benefits (“the Administrator”), and Stratostaff (Pty) Ltd (“the Employer”)

This complaint concerns the deceased member’s benefit quantum.

Facts of complaint

The member passed away on 24 August 2016. The deceased was in the Employer’s employ from 11 March 2013 until his date of death. The adjudicator requested all respondents to respond to the complaint, but only the Administrator responded. According to the Administrator, the deceased became a member of the Fund in September 2013. The Administrator allocated all contributions from September 2013 to August 2014 to the deceased. It calculated the death benefit as twice the annual salary plus the deceased’s “individual account”. The Administrator paid this amount to the fund-designated beneficiaries. The Complainant was dissatisfied with the amount the Administrator calculated.

Matter to be determined by the tribunal

The tribunal had to determine whether the Administrator calculated the death benefit in terms of the Fund rules. According to the Administrator, membership commenced in September 2013, while according to the Complainant, membership should have commenced in March 2013.

The tribunal concluded.

  • The tribunal confirmed that the rules of a fund determine the benefit payable to the member.
  • The membership rule determines that the fund is compulsory for all employees of participating employers who meet rule-defined requirements.
  • The contribution rule determines that members shall contribute monthly at the rate defined in the rule. The member’s employer shall contribute monthly for each member in service at the rule-defined rate. The employer must pay its and the members’ contributions into the fund within seven days, as provided in the Pension Funds Act.
  • The Pension Funds Act requires the employer to pay contributions and submit schedules to the fund, and the fund must pay out benefits to the members.
  • The death benefit rule determines that the benefit must comprise twice the member’s annual salary and the member’s individual account value.
Findings of the Tribunal

The deceased’s service commenced in March 2013, and he passed away in August 2014. The Administrator received and allocated contributions for the deceased member from September 2013 to August 2014. The rules obliged the employee to participate in the Fund. The Employer was obliged to register the deceased as a member of the Fund and to pay contributions on his behalf from March 2013 to August 2014. The Employer is consequently in arrears with contributions from March 2013 to August 2013. The Employer owes a duty of good faith but breached that duty by not paying over the contributions timeously. The tribunal successfully reconstructed Fund’s benefit calculation applying the Administrator’s information and the rules’ prescriptions. It found that the dispute only affected the member’s fund credit and that the Fund must pay the outstanding contributions according to Pension Funds Act, section 37 C.

Order of the Tribunal
The Fund must register the deceased member from March 2013 to August 2014.
  • The Employer must submit all outstanding contribution schedules.
  • The Fund must reconstruct the deceased’s contribution schedules from March 2013 to August 2014 within two weeks.
  • The Fund must compute the deceased’s outstanding contributions and the late payment interest owed by the Employer within one week of receiving the contribution schedules and submit it to the Employer within three days of having done the calculation.
  • The Employer must pay the outstanding contributions and late payment interest within two weeks of receiving the Fund’s calculation.
  • The Fund must pay the outstanding death benefit to the beneficiaries within two weeks of receiving the Employer’s payment and provide the Complainant with a breakdown of the death benefit.
Read the determination here...

Should I pay down my overdraft or increase the repayment?

If your salary provides you the capacity to apply some of this excess monthly income, it is a good idea to reduce your debt. The question is ‘which debt do I tackle first?’

It is best to try and settle the more expensive debt first, e.g., the overdraft probably has a higher interest rate than the bond.

If your bond has an access facility, the facility can be used to settle the overdraft. Try to keep the ‘overdraft portion’ of the bond repayments as high as you can.

Don’t keep your total bond repayments at the same level they were before you consolidated the debt.

If you have little retirement savings, focus both on ensuring your bond will be fully repaid by the time you retire and on accumulating some retirement savings.

Interest rates are quite low at the moment so it’s a good time to try and get ahead of your bond repayments. Calculate how much you can pay extra by paying more than the required amount. The best way to do this is to set up an extra debit order.

It is much better doing it this way than waiting for the end of the month to “see how much is left” to transfer to your bond account.

Save into a retirement product like a pension/provident or retirement annuity (RA) you effectively save pre-tax money.

A certified financial planner professional will be able to help you establish how much you should be saving now to ensure you can maintain your lifestyle in retirement.

Read the full article by Rick Briers-Danks in Moneyweb of 28 July 2021, here…

Factors to take into account when moving after retirement

“Decisions on where to live when you retire are going to affect the quality of your retirement and should be made with great care, as there are a host of reasons and choices available that could determine a stress-free retirement….” Consider the following factors:
  1. Moving to a retirement village: You must take factors like security, personal relationships, relatives, climate and health into account.
  2. Remain in your house: This is usually a good option if your current home meets your demands and your current financial needs are not affected. Financially, it mostly makes sense to stay where you are and take more regular holidays to your favourite spots.
  3. How is your money invested: Being property rich and cash poor should be considered. Being debt-free at retirement should be a major consideration in all your retirement planning.
  4. Location of your retirement home: Although moving to a rural area, where properties are relatively cheap and living costs more affordable, the availability of medical and other services should be taken into consideration.
  5. Cost of living of area: A great rule of thumb is to join Facebook groups in the area(s) you would like to move to, to pick up on average prices and problems related to that area and factors that can influence your health (high taxes, weather, terrain, vegetation re pollen).
  6. Security of area: Elderly people are considered soft targets by criminals, so if you feel unsafe and can afford it, you should move to a safer environment.
  7. Friends and family are important: Consult your family and friends about your intended move.
  8. Maintaining your lifestyle: take account of the following: i) facilities in your new neighbourhood such as hospitals, libraries and shops and the distances you are from these facilities; ii) downsizing is a good idea, but make space at the new property for both you and your partner for hobbies or post-retirement work; iii) the ability to lock up and go if you want to travel, and, iv) pets.
  9. The design of your new house: A level property with no external and internal stairs is preferred and bathrooms and the kitchen should be accessible for easy cleaning and maintenance.
Read the article by Wouter Fourie of Ascor Independent Wealth Managers in Moneyweb of 2 August 2021, here…

Raising your children to have a healthy relationship with money

“As parents, we all want our children to have a healthy relationship with money so that they can enter adulthood with a positive view and a clear understanding of money and how it can be effectively used to achieve their goals. While we know that money won’t necessarily make them happy, through our words and actions we can provide them with a better chance of developing a positive connection with money and a deeper understanding of the role it can serve in their adult lives.

Talk openly about money: It is important to talk openly, albeit age-appropriately, with your children about money and finances to demonstrate that financial matters need not be shrouded in secrecy or mystery…

Allow them to make their own decisions: If you’re paying your children an allowance or pocket money, avoid trying to micro-manage the way in which they choose to spend their money.

Demonstrate honesty: Be sure to always demonstrate honesty when it comes to money so that your children know that it is never okay to cheat, conceal or tell untruths about money.

Let them see you using your money for good: It is important for your children to see you using your money and/or resources for good.

Demonstrate a work-life balance: Demonstrating a healthy work-life balance will help your children develop a healthy sense that a career can be rewarding and pleasurable and that it is possible to make money doing something that you enjoy.

Show them that a budget is not punishment: Speak about the household budget in a positive manner so that your children develop a healthy respect for budgeting.

Don’t compare your finances to others: Avoid judging other people on the amount of money that they earn or by their accumulated wealth as this may lead your children to believe there is a link between money and self-esteem.

Don’t bicker or fight about money: Arguing with your partner or spouse about money can lead your children to associate money with tension and discord.

Don’t make them feel guilty for buying something: Encourage your children to make smart money decisions by encouraging them to do their market research, compare prices, check the quality, and assess whether their desired purchase is a ‘want’ or a ‘need’.

Allow them to experience work in exchange for money: Getting children to appreciate the value of money is an age-old challenge. That said, one of the surest ways of helping anyone appreciate its value is to allow them to work or do chores in exchange for money.

Don’t kill their entrepreneurial dreams: Do everything you can to encourage their entrepreneurial ambitions by allowing them to share their ideas without fear of ridicule.

Don’t let them believe that finding a rich partner is an acceptable path to financial freedom: Raising your children to believe that the only way to wealth is to find a rich partner is a recipe for disaster.

Watch your language: Be aware of the way in which you talk about money. Negative words and phrases can cause your child to develop a scarcity mentality which can severely limit their view of money and finance.

Honour your financial goals and commitments: Impress on your children the importance of honouring your financial commitments, paying bills on time, repaying loans, and paying your own way.

Don’t be scared to talk about your past money mistakes: We’ve all made financial mistakes, and it’s important that we share these mistakes with our children…”

Read the full article by Craig Torr of Crue Investments (Pty) Ltd in Moneyweb of 26 July 2021, here...

Investing in a post COVID world

“Inflation is the enemy of long-term investing and savers. If we look at the big picture, governments are in debt and they need inflation to lesson the burden of that debt, unfortunately. The Fed is talking about 2% as an inflation target. This was the target when inflation was 4-5% and at 2% the dollar depreciates and halves twice in a person’s life time. So it’s surprising that we have not had inflation up to now given the amount of free money in the world.

We study it intensely and our take is that governments have avoided deflation. Deflation was actually quite good but the governments avoided it because it is damaging for the heavily indebted…. The fed has made it clear they won’t increase rate, so from our side it’s clear that the Fed and governments generally will err on the side of letting inflation come through. However, the other deflationary forces are still there.

There is still a lot of cheap money around which will not necessarily go away. There is a lot of disruption around and there is a lot of base effect going on now – with growth, earnings and inflation numbers. We expect inflation above 2% for a while and it will be interesting to see what happens in a few years – will we come back and neutralise at 2%? In SA, the market is forecasting about 5.2 %. We think that is too high due to the base effects. We think we will get a return to about 4% inflation in SA. So this is not a runaway inflation or scare story but it is something we need to deal with so we must avoid assets that don’t do well in inflation. Equities that have pricing power are the place to be at the moment…

The difference we see in Chinese tech companies is that they are serving the Chinese consumer – so it’s a play on the Chinese consumer. China is moving from infrastructure-driven GDP to consumer- driven GDP and benefiting from that. China…

One of the things we have benefitted from and the reasons for the strength of the Rand was 14 months of trade surpluses. That’s been mainly driven by the fact that imports collapsed but export continued. So mining volumes and mining efficiency has held up surprisingly well which has been great for South Africa…

[With regard to property] we are seeing a huge reduction in the number of people going in to the office, which means that the companies don’t need the space anymore. This is as a result of reduction in head count, efficient technology and the work-from-home benefits to people’s quality of life. Cities have been overtraded and congestion is a problem. I think downtown real estate, particularly commercial has seen its best days…”

Subscribe to Cover magazine to read the full conversation with Dave Foord, in the July 2021 edition, page 48 here…

The compliment sandwich and four other common mistakes of leaders

“Most companies recognize the impact culture has on employee engagement, productivity, and performance. But while many leaders think they are cultivating an effective culture, some of their actions are actually culture mistakes.
Take the compliment sandwich, for instance. This is when feedback is provided by sandwiching “negative” feedback between two compliments.

There are many other examples of how leaders can inadvertently create culture missteps, some of which are outlined here. If you can recognize the pitfalls early on, you can adjust your leadership style and strategy to create your desired culture.

Failing to link culture to strategy

What behaviors do you want from your team to achieve that future vision? This process of linking the two helps you ensure that they are not working at cross purposes…

Moving too fast to achieve true alignment

Spending a few extra hours in conversation with the leadership team about what the strategy really is will not only yield better decisions about the company’s future but will also create a stronger level of team cohesion.

Relying on the artifacts

Authentic culture is everything to do with the interactions of human beings as they are doing the day-to-day work. Sometimes leaders lean too hard on artifacts and believe having isolated team-building events will create the kind of morale boost that they need.

Triangulating (even with good intentions)

No matter what the conversation might be when you’re talking about somebody, it can erode trust. The most effective thing for leaders to do is always encourage, invite, and even insist that employees talk directly to one another when they have interpersonal challenges.

Failing to invest

Culture shifts do not happen overnight, and real change begins from the inside out. By far and away, the biggest mistake the leaders make when it comes to culture is simply not investing in it. Most of the time, the biggest investment is actually the time it takes to have these important conversations.

Ultimately, culture can become harmful or ineffective if not planned out carefully and with purpose. Evaluate all culture initiatives based on their ability to drive business results, improve lives and increase employee engagement to determine if they are worth implementing.”

Read the full article by Laura Gallaher in Fast Company of 16 July here…

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

"Wealth is like sea-water; the more we drink, the thirstier we become; and the same is true of fame.” ~  Arthur Schopenhauer

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