2020 amm invite 600
  Benchtest Newsletter
Issued May 2022
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In this newsletter

Benchtest 04.2022, PFA vs FIMA; legislating around parliament; where are the employers? And more...

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Important notes & reminders

  Postponement of compulsory preservation
  • Minister Ipumbu Shiimi postpones compulsory preservation to "give adequate time for broader consultation".
NAMFISA levies
  • Funds with April 2021 year-ends must submit their 2nd levy returns and payments by 24 May 2022;
  • Funds with October 2021 year-ends must submit their 1st levy returns and payments by 24 May 2022; and
  • Funds with May 2021 year-ends must submit their final levy returns and payments by 31 May 2022.
RFS office closed on Friday 27 May
  • Please take note that our office is closed on Friday 27 May as per our circular RFS 2022.04-04.
  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)
  • Kristof Lerch (tel 061-446 042)
  • Christina Linge (061-446 6075)
Registered service providers

Certain pension fund service providers must register with NAMFISA and must report to NAMFISA regularly. Download a list of service providers registered as of June 2021, here...  

Toolbox for trustees

RFS provides comprehensive support for trustees. Find a list of download documents to assist with governance and management of private funds, here...



In this newsletter, we address the following topics:
  In 'Tilman Friedrich's industry forum' we present...
  • Monthly review of portfolio performance – 30 April 2022
  • Invest in what you consume to hedge against inflation
  • FIMA bits and bites – significant changes from PFA (part 1)
  • FIMA bits and bites – legislating around parliament
  • FIMA bits and bites – where are the employers?
  • FIMA bits and bites – who supervises the superviser?
  • Insured benefits outside the retirement fund – implications for the employer! 
In Benchmark – a note from Günter Pfeifer read about...
  • Important circulars the fund issued 
In 'News from RFS,' read about…
  • Important circulars issued by RFS
  In 'Legal snippets,' read about...
  • Tax approved housing schemes and pension backed housing loans 
In 'Snippets for the pension funds industry,' read about...
  • Should I invest 45% of my portfolio offshore?
    Russia – Ukraine conflict accelerated market shifts 
In ‘Snippets of general interest, read about...
  • S.A.’s current model for state firms is dying: ANC
  • If you want pliable SOE board members who ‘behave’, then say so
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
Tilman Friedrich's industry forum
Monthly Review of Portfolio Performance
to 30 April 2022

In April 2022, the average prudential balanced portfolio returned -0.7% (March 2022: -1.0%). The top performer is Allan Gray Balanced Fund with 1.2%, while NAM Coronation Balanced Plus Fund with -2.4% takes the bottom spot. For the 3-months Hangala Prescient Absolute Balanced Fund takes the top spot, outperforming the ‘average’ by roughly 1.2%. NAM Coronation Balanced Plus Fund underperformed the ‘average’ by 1.6% 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 30 April 2022 provides a full review of portfolio performances and other insightful analyses.  Download it here...
Invest in what you consume to hedge against inflation?
Little has changed in global investment markets since last month’s commentary. Energy costs, inflation, and international interest rates, including S.A. and Namibia, continue to increase. Food shortages are growing, and the Ukraine crisis shows no sign of remission; instead, it is heating up further.
The Ukraine crisis is just a symptom of politics that investors must understand before investing. Politics constitute the outer framework within which economies and markets operate. As much as one may think that we live in a free-market economy, the market is not really free as the political framework sets it narrow constraints.
The Monthly Review of Portfolio Performance to 30 April 2022 provides a full review of portfolio performances and other insightful analyses. Download it here...
 FIMA bits and bites – compulsory preservation postponed
One must give it to Dr Job Amupanda. When he speaks out on something, people listen, even at the highest levels of government. Although RFS spoke on this in our newsletters no-one bothered to listen. I trust we can take the credit through raising the matter again in this newsletter two months ago. We know and understand our environment. We always new that unions will not accept compulsory preservation. Unfortunately, even union members on boards of trustees did not bother to pay attention to our cautioning, or they under-estimated the potential resistance from their members.
Like all things in life have two sides, so does compulsory preservation. For those who can afford to preserve, compulsory preservation is in their and the country’s interest. But, where people cannot afford it, compulsory preservation is simply inappropriate. The trick is to find a formula addressing both sides of this coin and hopefully a good answer will come out of the further consultation (unfortunately there was no consultation before).
I must add again though, this will not be the last time we will hear unions and other stakeholders shout and scream about surprises coming out of FIMA; for years to come.
I suggest we still have an opportunity to go back to the drawing board with FIMA. The key principles of this monstrous law must be properly understood and considered for starters. As a point in case: the omnibus principle. It is a great principle for a regulator and its 200, or so, staff members. It’s a monster for everyone else, our courts, the legal fraternity, the regulated subjects and all investors in non-banking financial institutions, and that is probably 500,000 subjecst! As another point in case: the regulator will become the judge, the jury and the executioners and can legislate around parliament! This very principle was bemoaned by a parliamentarian recently in the compulsory preservation discourse.
FIMA bits and bites – significant changes from PFA (part 1)
The FIMA introduces significant changes from the Pension Funds Act to the retirement funds industry and all stakeholders. These changes will raise the cost levels of retirement funds significantly, which members will ultimately bear. This newsletter and the following one will present an overview of these wide-ranging changes.
  • The board of trustees -
    • The duties of the board of a fund are now defined
    • The board of trustees, principal officer, and other offices must meet fit and proper requirements as determined by NAMFISA
    • Certain persons (administrator, actuary, valuator, and others) may not serve on the board of trustees
    • The members must elect at least half of the number of board members
    • A trustee must inform NAMFISA on becoming aware of any material matter seriously prejudicing the financial viability of the fund
    • The board must advise NAMFISA when it replaces a trustee or terminates his service and must give the reasons for the removal of a trustee before the expiration of his term    
  • Enhanced reporting requirements -
    • The fund must submit an annual report to NAMFISA
    • The fund must report to its members-
      • An annual report with minimum prescribed information
      • Annual benefit statement with minimum prescribed information;
      • A quarterly report on contributions with minimum prescribed information
    • The fund must provide the following documents to each member, free of charge-
      • The rules of the fund
      • Any rule amendments
      • The most recent annual financial statements
      • The most recent valuation report
  • Payment of benefits –
    • The fund must affect the transfer of a member’s benefits within 60 days from receipt of a prescribed notice of transfer, and prescribed penalty interest applies on any transfer after 60 days
  • Payment of contributions –
    • The employer must pay prescribed penalty interest on the payment of contributions from day eight after becoming due
  • Allocation of death benefits –
    • Funds must apply a vastly different death claims process
  • Damages or losses caused by an employee –
    • The employer cannot claim against a member’s benefit anymore for any reason
  • Beneficiary nomination form –
    • Every member must submit a beneficiary nomination form annually
  • Fund administrators must register with NAMFISA and -
    • The shareholders, every other person who controls the fund administrator, the principal officer, and other fund officers, and the directors of the fund administrator must meet prescribed fit and proper requirements
    • Must have relevant qualifications and experience
    • Have a fiduciary responsibility to the fund
    • Must avoid any conflict of interest
    • Must maintain proper records
    • Must employ adequately trained staff
    • Must maintain adequate financial resources for commitments and risks
    • Provide monthly reports on administration services to the board of the retirement funds 
FIMA bits and bites – legislating around parliament
The media hype Dr Job Amupanda recently caused rudely awoke a dozing community. Now no one wants to have known about the FIMA. Yet, RFS has been cautioning about this law for years. For years, RFS has tried to draw decision-makers and stakeholders’ attention to the FIMA and its numerous regulations and standards, and more of these are to come! Together with the RFIN, RFS tried to mobilise the parliament’s appropriate standing committee, unfortunately to no avail. Perhaps an incident where the former Minister of Finance nearly assaulted a parliamentarian who dared to question the lacking consultation did not promote the parliamentarian’s courage to any further challenges of the FIMA.
The FIMA affords NAMFISA carte blanche to legislate around parliament. RFS cautioned that such an approach is not reflective of a parliamentary democracy. Dr. Amupanda picked up on the compulsory preservation packaged as the Minister’s regulation, thereby circumventing the parliament. Interestingly, this unpopular determination was still a NAMFISA standard when first released for comment. To date, NAMFISA issued 38 standards that impact the retirement funds industry alone. There are numerous more standards and regulations applicable to the other financial services industries covered in the FIMA. Who will take the trouble to work through all of these from the worker’s perspective? Much will come to the fore in drips and drabs over the coming years! 
FIMA bits and bites – where are the employers?
In our previous newsletter, I highlighted the impact of the FIMA on employers, and it was not the first time! I fail to understand how employers can let this happen without resisting. Employers voluntarily participate in retirement funds to provide for needs employees typically neglect to provide for even though it is in their best interests. Why should employers now face the severe punishment the FIMA holds in store for doing something that benefits their employees, the government, and our economy? Employers will only realise how expensive the FIMA really is compared to the old Pension Funds Act in time to come.

Have employers’ organisations done enough informing and mobilising their members?
FIMA bits and bites – who supervises the supervisor
Following the media hype on compulsory preservation, NAMFISA explained that it had consulted stakeholders on the FIMA and its standards and regulations. Various stakeholders said in the media that NAMFISA had not consulted them. Where is the truth?
I experienced the process as follows. NAMFISA circulated the FIMA and its standards and regulations to RFS and the Benchmark Retirement Fund and invited us to comment on these documents. I do not know who else received such invitations but being technical and complex material, I am not aware that NAMFISA invited the unions or employers to comment. Commentators were straight-jacketed from the start through a predetermined format for submitting comments. The prescribed format discourages commenting. While it is often simple to identify a concern, suggesting how to deal with it as the prescribed format requires is not so simple. One then had to submit the comments to NAMFISA, who would consider them and decide on the fate of the comment in its wisdom. In my understanding, that is not consultation. I expect consultation to be an exchange of thoughts and the finding of the midway. Alternatively, I would suggest that NAMFISA should have forwarded stakeholders’ submissions and its contrasting views to relevant experts and policymakers in its line ministry, but that did not happen either.
Insured benefits outside the retirement fund – implications for the employer
The rather inconspicuous NAMFISA directive PF/DIR/01/2022 cites a few sections of the Pension Funds Act and directs that pension funds must observe these sections in their rules. Of course, one must observe the law! No one would argue with that!
The snag of the directive is how NAMFISA interprets and applies the law whenever a fund submits rules or rule amendments for approval. In short, NAMFISA decided at the beginning of last year that industry practice of the past 30-plus years, and condoned by NAMFISA all along, is inconsistent with the Pension Funds Act. Since last year, NAMFISA stopped approving rules and rule amendments.
While all know what they may not do, it is not clear what one may do, particularly because of past industry practice that is no longer allowed. NAMFISA officials have insinuated that funds can retain insured benefits within the fund but only if the fund assumes all risks, terms, conditions, and exclusions the insurer does not carry. If funds were to do that, NAMFISA really would have a problem managing the risks that funds have taken upon themselves. Of course, level-headed trustees would never have their fund assume any risks they cannot place with an insurer.
So, more and more funds, in collaboration with the employer, are now moving the insured benefits out of the fund to employer-owned insurance policies.
Employers may not be aware of what this could entail.
Firstly, such an arrangement may have tax implications regarding the premium paid by the employer. Could it become a taxable fringe benefit for the employee? When the insurer pays out a lump sum that ends up with the employee or his survivors, is it taxable in the hands of the employer, the employee, or maybe even both? If the employer receives the lump sum and pays it to the employee or his beneficiaries, is he taxable on the receipt, and can he deduct the payment to the employee? There is no argument about an income benefit as it is an annuity, which is taxable in the recipient’s hands.
Secondly, removing the insured benefits from the retirement fund means that the employer must amend the employment contract. Sometimes a separate employer-owned policy cannot mirror the pension fund benefits. In any event, it will not offer the legal and procedural protections that the pension fund provides. Employees may see this as a change in conditions of employment, particularly in a unionised environment. That means that the employer must institute the Labour Act requirements for a change in conditions of employment.
Lastly, the employer must now process two payments with administrative and accounting implications. The employer must put new procedures and controls in place. The employer may want to engage a broker to assist in dealing with the insurance company.

Tilman Friedrich is a chartered accountant and a Namibian Certified Financial Planner® practitioner, specialising in the pensions field. He is co-founder, shareholder, and Chairman of the RFS Board and retired chairperson, and now a trustee of the Benchmark Retirement Fund.


From a principal officer
Dated 9 February 2022
  “Thank you for speedily actioning our members’ Certificates of Existence, B…!
Your meticulous professionalism is much valued!”

Read more comments from our clients here...


A note from Günter Pfeifer

Important circulars issued by the Fund

The Benchmark Retirement Fund issued the following circular. Clients are welcome to contact us if they require a copy of any circular.
  • 202203 – Default portfolio change – changes to the default investment portfolio 
  • 202204 – Compulsory preservation  
 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.

News from RFS

Important circulars issued by RFS
RFS issued the following circular. Clients are welcome to contact us if they require a copy of any circular.
  • RFS 2022.04-04: RFS office closure
  • RFS 2022.04-05: Road to FIMA implementation #3 – Late payment of contributions
  • RFS 2022.04-05: Cash Withdrawal after attaining Early Retirement Age

Legal snippets

Tax-approved housing schemes and pension backed housing loans
Many employers have tax-approved housing schemes that offer the employee a great tax benefit by having only two-thirds of the employee’s housing benefit taxed. Parallel to the employer’s housing scheme, the retirement fund sometimes offers housing loans to its members. Where the employer has a tax-approved housing scheme and the ‘employer’s’ retirement fund grants an employee a loan, the employee cannot claim an exemption on one-third of his retirement fund repayment.
When an employer approached NAMRA with the request to allow the employee to claim the one-third tax exemption of his housing loan repayment under the employer’s housing loan scheme, NAMRA explained its position as follows:
  1. “Section  16A. (1) of the Income Tax Act No. 24 of 1981 (the Income Tax Act)  provides for Taxation of housing benefits  and defines approved scheme and Housing benefit:
    1. For the purposes of this section-"approved scheme" means a scheme approved under subsection (4);
      "housing benefit" means any amount in cash or benefit or advantage paid  or granted under an approved scheme to an employee in respect of employment, which relates to-
      residential accommodation (excluding meals) provided by his or her employer, whether free of charge or for a rental consideration which is less than the rental value of such accommodation as determined by the Minister;
      (b) any cash payment  made or subsidy granted by his or her employer in respect of
      (i) any rental due by him or her for the lease of private residence; or
      (ii) the repayment of, or any interest due on, the amount of any loan obtained and used by him or her for thepurchase of aprivate residence; or 
      (c) a rate of interest which is less than an appropriate rate of interest as determined by the Minister, charged by his or her employer on a loan granted by such employer out of his or her own funds  to such employee and obtained and used by such employeefor  the purchase of aprivate  residence;
  2. Section 16A (4) states "The Minister shall not approve any scheme for thepurposes of this section unless he or she is satisfied that -
    (a) Such scheme is operated bonafide solely for the purpose of -
    (i) Providing assistance to an employee to lease or purchase aprivate residence; or

    (ii) Providing residential accommodation to an employee;
    (b) No housing benefit under the scheme will be granted in substitution for  any reward for services rendered which would otherwise have been granted to such employee; and
    (c) Such  private   residence  or  residential  accommodation  will  be occupied  by  such employee personally"
  3. The fund for [the company’s] employees is a registered pension fund does not fall within the ambit of in Section 16A of the Income Tax Act, (Act No. 24 of 1981).
  4. The fund do qualify as a scheme for the purposes of section 16A (4) of the Income Tax Act. The 1/3 tax exemption as provided for under section 16A (3) of the Income Tax Act cannot be extended to the fund Housing loan payment.” 
NAMRA rightly considers the employer and the fund as two different entities, even though there is a link between the two. The concession offered by section 16A relates specifically to a housing benefit an employer provides to his employee. The employee’s housing loan repayment to the [employer’s] pension fund has nothing to do with the employer. However, suppose the employer pays a housing allowance covering the employee’s housing loan interest payments. In that case, it should be irrelevant whether the loan is from the fund or any other financial institution, and NAMRA should then allow the employee to receive the one-third housing allowance tax-free under section 16A.(1)(b)(ii).

Snippets for the pension fund industry

 Should I invest 45% of my portfolio offshore?

“Why is offshore investing important?

Put simply, the ability to allocate to offshore markets presents long-term investors with an opportunity to better diversify the risk exposure of their investment portfolios and to enhance returns so that they reach retirement with a larger savings pot. Of course, diversification isn’t simply about going offshore; as with local investing, investors should consider blending asset classes that typically do not move in sync (i.e. their returns are not perfectly correlated) so that portfolio returns are protected when one asset class performs poorly and higher returns should come from other parts of the market, which should make it easier for investors to stay the course.

Table 1 shows the correlation between real returns for South African and global equities and bonds over the last 30 years.


Here we see that having a portfolio that is diversified across the major asset classes is likely to be a good approach over the long term, as no asset class is perfectly correlated with another, as one would expect. However, the key insight from this table is that there are benefits to allocating offshore both within one’s equity portfolio and one’s bond portfolio over the long term…”

Read the article by Earl van Zyl in Allan Gray Communications of 26 April 2022 here…

Russia-Ukraine conflict accelerates market shifts

 “In markets, the conflict has accelerated shifts that had already begun – towards higher inflation, shortages in energy and commodities, a retreat from globalisation, and rising geopolitical risk. We have worried about these risks for some time, and have sought to mitigate them in the fund.
The Fund [Orbis SICAV Global Balanced Fund] has fared much better than its 60/40 benchmark amid the conflict-related volatility. As already-high inflation has eclipsed 7% in the U.S., 10-year Treasury yields have risen from 1.5% in December 2021 to 2.3% today. That has punished global government bonds, which have lost 6.2%. It has also punished the richly priced growth stocks that are valued on future hopes rather than present profits. While global value shares are roughly flat this year, the Nasdaq is down 9%.
Those moves feel huge if you’re reading the headlines every day. But they have barely made a dent in the trends of recent decades. Bond yields remain near 120-year lows in the U.S., 260-year lows in the U.K., and 700-year lows globally. And over the past 15 years, the Nasdaq has only once been more richly priced relative to global value shares – and that was during the COVID-19 lockdowns…”

Read the article by Alec Cutler in Allan Gray Communications of 26 April 2022 here…  

Snippets of general interest

S.A.’s current model for state firms is dying: ANC
South Africa’s government should halt bailouts for state entities and review its ownership of more than 700 companies, according to a draft economic policy document compiled by the ruling party.
The current model for state firms “is dying,” the African National Congress, which is due to hold its national policy conference later this year, said in the document seen by Bloomberg. “The era of bail outs for state-owned enterprises is over.”
The call for an overhaul in the government’s approach comes after it sank billions of dollars into utilities such as power producer Eskom Holdings SOC Ltd. and the national airline with little return. Workers at the state arms maker haven’t been paid for 18 months and the state broadcaster, post office and oil company plan to cut jobs, the ANC said…”
Read the article by Bloomberg in Businesstech of 22 April here…
If you want pliable SOE board members who ‘behave’, then say so 

“Escom board member and head of Business Leadership S.A. (BLSA) Busisiwe Mavuso said on Monday that she will not be treated like a child and asked to “behave”, when CEO Andr  de Ruyter and the board were being blamed for the utility’s historic problem.
She was talking to Radio 702’s Bongani Bingwa about her confrontation with parliaments Standing Committee on Public Accounts chair Mkuleko Hlengwa on Friday after she said the ANC-lead government created “the mess”  Escom was in. She was then asked to leave the Meeting. “I am not going to be told to behave like I am a 12-year old naughty school girl. For crying out loud, I don’t even talk to my 10-year old son in that manner” she told Bingwa.
If we want SOEs to be filled with people who will behave and who will be pliable(…) we must say so. We must make those appointments accordingly. I do not sit in that Escom board as an ANC deployee as he (Hlengwa) puts it, apparently…”

Read the article by Ahmed Areff in Fin24 of 25 April 2022 here…

And finally...

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

"Who controls the past controls the future. Who controls the present controls the past."
~ George Orwell


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Whilst we have taken all reasonable measures to ensure that the results reflected herein are correct, Benchmark Retirement Fund and RFS Namibia (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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