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  Benchtest Newsletter
Issued May 2023
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In this newsletter

Benchtest 04.2023 – the National Pension Fund, FIMA standards’ changes, unpaid contributions, and more...

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Important notes & reminders

  NAMFISA levies
  • Funds with May 2023 year-ends must submit their 2nd levy returns and payments by 23 June 2023;
  • Funds with November 2023 year-ends must submit their 1st levy returns and payments by 23 June 2023;
  • and funds with June 2022 year-ends must submit their final levy returns and payments by 30 June 2023.
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 2022, 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 6075)
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 2022, here...



In this newsletter, we address the following topics:
  In 'A note from the Managing Director' read about...
  • Social Security discusses the National Pension Fund
In 'Tilman Friedrich's industry forum' we present...
  • Monthly review of portfolio performance – 30 April 2023
  • Tread carefully until the dust settles
  • FIMA bits and bites – the latest changes to subordinate legislation
  • How do unpaid contributions impact a fund’s administration?
  • The ILO’s National Pension Fund model” 
In Compliments, read...
  • A compliment from a pensions administration officer
In ‘Benchmark: a note from Günter Pfeifer’, read about…
  • Call on fund members to take advantage of the Benefit Counsellor information offering
In 'News from RFS', read about...
  • Long-service awards complement our business philosophy
  • Annemarie Nel scoops another award – error correction
  In 'Legal snippets,' read about...
  • Payment of pension benefits into jointly held accounts
  • FSCA interpretation ruling 1 of 2020 on S 37C
In 'Snippets for the pension funds industry,' read about...
  • SA pension system fails to compete on a global level
  • Seven worst mistakes for retirement planning
In ‘Snippets of general interest', read about...
  • New rules for CMA cross-border payments
  • Risk attitude versus return altitude
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
Marthinuz Fabianus
A note from the Managing Director
Social Security discusses the National Pension Fund
The Social Security Commission (SSC) and the Ministry of Labour, Industrial Relations & Employment Creation (MLIREC), held an information-sharing meeting on the National Pension Fund (NPF) with employer and labour representative bodies at the SSC office on, 26 April 2023.
The meeting was attended by the Deputy Minister of MLIREC, the acting Executive Director of the ministry, the Special Advisor (SA) to the minister, the CEO of the SSC  and representatives of various invited employer and labour organisations.
The acting Executive Director of MLIREC Mr Othniel Podewiltz who holds the position of Employment Equity Commissioner was the session’s moderator. In his introductory remarks, he pointed out that he does not at this stage expect positions to be taken by the parties present. He pointed out that the purpose of the session was to present the two alternative designs for the NPF, one recommended by the ILO and the other by the SSC. He stated that in the next 2-3 months, more detailed discussions will be held with stakeholders on the two designs, with the view to adopting the preferred design and presenting that to the Cabinet for approval.
The Deputy Minister of MLIREC, Hon. Hafeni Ndemuula repeated Mr. Podewiltz’s message, adding that given the poverty levels in the country, we need the NPF and that an agreement needs to be reached on the design that best meets the needs of Namibian workers.
The chief actuary in the social protection unit of the ILO then presented the two proposed designs from the ILO and the SSC respectively. However, as a point of departure, the ILO expert made no secret of the fact that they expect member states to offer social protection in line with the minimum standards prescribed by the ILO. He presented the ILO design based primarily on the ILO standards. This envisages that a government must offer a non-contributory universal pension coverage to all citizens (which Namibia currently provides) as 1st pillar. A 2nd pillar should be a compulsory, contributory, defined benefit pension fund that offers certain minimum benefits upon retirement and income benefits to members upon permanent incapacity, and an income to dependents upon death. The 3rd pillar will be voluntary occupational pension and other private retirement saving arrangements and must be regulated by the government. Namibia currently offers the 1st and the 3rd pillar, whilst the 2nd pillar is provided for in the SSC Act but not implemented as yet.
He presented a complexly structured, compulsory, defined benefit pension fund arrangement as the 2nd pillar for Namibia. This envisages a total contribution of 15.9% of (capped) salary. He expressed his clear preference for the defined benefit design, arguing that the Canadian 2nd pillar fund is a model fund, having withstood the negative impact of market collapses during the 2008/9 financial crisis. He argued by comparison, that DC funds provide inferior replacement ratio outcomes at retirement, should a member retire shortly after a market crash.
He then presented the SSC-recommended defined contribution pension fund arrangement for Namibia’s NPF. SSC envisages a total contribution of 13%, of which 2% is to be allocated towards compulsory administration and risk benefits. Members of an employer-sponsored fund with a contribution rate of more than 13% are exempted from participation in the NPF retirement provision section. All employees not belonging to an employer-sponsored fund contributing more than 13% will belong to the NPF.
The ILO expert did not try to compare the two designs but commented at the end that the SSC design does not offer the required minimum guaranteed outcomes, a specific requirement of the ILO.
After a number of questions and comments from the audience, the session was concluded with the promise that copies of the presentations will be provided electronically.
In terms of the way forward, workshops with stakeholders (employer federations and labour unions) are planned to be held during June 2023 with the help of ILO experts, where it is expected to reach an agreement on the final proposed design of the NPF. The final design will then be presented to the cabinet and once accepted, implemented subject to amendments to certain laws. Ms. Ya Toivo as SA to the minister commented that a proposal of the governance structure is also available and will be discussed by SSC and MLIREC, a comment not taken kindly by the labour unions who demanded that all stakeholders be provided with the proposal as being an integral part of the NPF design.  
Let us hope the process will remain inclusive and truly consultative!  

Marthinuz Fabianus graduated from Namibian University of Science & Technology with a Diploma in Commerce and Bachelors in Business Management. He completed a senior management development programme at University of Stellenbosch and various short courses including a macro-economic policy course which he completed at the International Training Centre of the ILO in Turin, Italy. Marthinuz serves as trustee on the board of the Benchmark Retirement Fund and served two separate terms on the board of the Retirement Funds Institute of Namibia. Marthinuz also served as a Commissioner on the Social Security Commission from 2015-2017.
Tilman Friedrich's industry forum
Monthly Review of Portfolio Performance
to 30 April 2023

In April 2023, the average prudential balanced portfolio returned 2.3% (March 2023: 0.3%). The top performer is Allan Gray Balanced Fund with 3.1%, while Hangala Capital Absolute Balanced Fund with 1.9% takes the bottom spot. For the three months Allan Gray Balanced Fund takes the top spot, outperforming the 'average' by roughly 2.1%. M&G Managed 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 2023 provides a full review of portfolio performances and other insightful analyses.  Download it here...
Tread carefully until the dust settles
In the last few columns, I expressed my concerns about the consequences of the Ukraine conflict, which is just one symptom of bigger global developments. China, Russia, South Africa, Brazil, and a few other countries are trying to break the shackles of the US hegemony. Will the US just be watching these efforts, or will it use all its means, including those of the collective West, to prevent the shackles from being broken? I cannot see the US just watching its global hegemony being dismantled. But how far are its adversaries prepared to go? Russia has shown that it is not prepared to return on its resolve to break the US shackles. South Africa just experienced a serious decline in the Rand exchange rate from 18.39 to 19.31 during the second week of May after rumours that it entered into an arms deal with Russia. Is this a sign of what countries siding with the US adversaries can expect to happen, and will they have the means to withstand the US and the collective West’s pressures?
Given these severe global uncertainties, an investor should tread carefully until the dust settles and consider the possibility of a market crash in his investment decisions…

The Monthly Review of Portfolio Performance to 3o April 2023 also reflects the editor’s views on current developments and their impact on investment markets. Download it here...
FIMA bits and bites – the latest changes to subordinate legislation
Contributed by Carmen Diehl
Senior Manager: Fund Accounting and Compliance
Background and status of FIMA subordinate legislation:
NAMFISA invited its regulated industry impacted by the implementation of the Financial Institutions and Markets Act No 2 of 2021 (‘FIMA’) (‘Industry’) to comment on FIMA subordinate legislation.

NAMFISA uploaded the revised standards and regulations incorporating NAMFISA responses on Industry representations on the NAMFISA website. 

Since the changes to subordinate legislation are extensive, we will bring these to you in the next few newsletters. This is the second contribution. The previous one appeared in Benchtest 02.2023.
Main changes identified that affect administrators and funds:

Regulation / standard Change
  • RF.S.5.2
    Requirement for an investigation by and the report of a valuator on the financial position of a fund and the form of a summary of such report
  • Addition of clause 6 which requires: “A report referred to in section 272(3) of the Act (Rule amendment that affects the financial position of the fund) must, in addition to the requirements of clause 4 or 5 as applicable, include an assessment of the impact of any amended, rescinded or additional rule on the soundness of the financial position of the fund.”
  • RF.S.5.3
    Minimum information that must be furnished to a fund by an employer with respect to the payment of contributions
  • Clause 3(a): Contribution schedules should contain the full names instead of the initials of each member in addition to the previous requirements.
  • RF.S.5.4
    Requirements for rules of a fund and any amendment of such rules
  • Clause 3(i) of the previous version required the rules of the fund to provide for the nature and extent of retirement benefits.
  • The revised standard requires the rules to also provide for “the conditions under which any member or other person may become entitled to any retirement benefit”.
  • RF.S.5.4
    Requirements for rules of a fund and any amendment of such rules
  • Clause 5 was amended to state that all funds must amend their rules to comply with this standard within 12 months (previously 6 months) of the date on which this standard comes into effect.
  • RF.S.5.7
    Minimum benefits that a fund must provide to its members
  • Clause 15 of the previous version required that the retirement benefit increase of retired members of defined benefit funds must be at least equal to inflation.
  • The revised version adds that the above requirement should be aimed for, subject to the affordability of the fund.
  • RF.S.5.9
    Compulsory beneficiary nomination forms
  • Clause 3: A No Change to Beneficiary Nomination Form indicating that no changes are made to the latest existing beneficiary nomination form completed by the member was added.
  • Clause 4: Funds are therefore required to send out both forms to the members annually.
  • Either one of the forms must be returned by the member on or before 30 January each year.
  • RF.S.5.13
    Requirements of a communications strategy to be adopted by the board of a fund to ensure that adequate and appropriate information is communicated to members, employers and sponsors
  • “Qualified financial institution” and “qualified retirement income provider” replaced with “retirement income provider”
  • Definition of “qualified financial institution”: means a financial institution registered under the Act that complies with the requirements of Regulation No. RF.R.5.10 The preservation of retirement benefits
  • Definition of “retirement income provider”: means a registered insurer or other registered retirement fund.
  • RF.S.5.15
    Requirements for report of the board to NAMFISA
  • Clause 3(2) was added in the revised version, requiring the management report findings by the auditors of the fund, referred to in clause 3(1)(b)(v), to be submitted separately to NAMFISA within three months of the fund’s financial year-end.
  • RF.S.5.15
    Requirements for report of the board to NAMFISA

  • Clause 3(1)(b)(vi) “a brief analysis of the fund’s gains and losses during the year under review” no longer required to be disclosed in the annual report to NAMFISA.
  • RF.S.5.17
    Categories of persons having an interest in the compliance of a fund with the provisions of section 270(7) (Payment of contributions)
  • Requirement to send the report to auditor and valuator of the fund was removed

Editor's Comment
With the changes and new standards issued, the number of compliance requirements we identified increased from just over 600 to 758! It goes beyond anyone’s imagination and substantiates the fact that FIMA does not constitute a move from compliance to risk-based supervision but rather the opposite!

Something has gone seriously wrong with this monstrous new law. We should stand back now and ask ourselves, “Is this what Namibia can afford and needs and what we want to achieve?” I fear that we have gone so far down the path and have invested so much energy and resources that we will rather close our eyes and carry on, whatever the consequences may be!

How do unpaid contributions impact a fund’s administration?
Compulsory occupational retirement fund rules usually require the employer to calculate and deduct the employee’s contribution at a specified percentage of the employee’s ‘pensionable salary’. The ‘pensionable salary’ is usually defined as the basic salary plus such amounts as the employer considers to be pensionable (e.g., commission or bonuses) and it would be one-twelfth of the annual ‘pensionable salary’. In addition, the employer would be required to calculate its contribution at a specified percentage of the employees’ ‘pensionable salary’ and pay its and the employees’ contributions over to the fund within seven days of the end of the period to which the contributions relate.
The fund rules would then usually direct that the employee’s contributions and a specified or derived portion of the employer’s contributions must be allocated to the member’s fund credit. The rules then prescribe that contributions allocated to the member’s fund credit must be invested. They describe how the member’s fund credit must be built up with the contributions and interest as determined by the fund or its actuary. When a benefit becomes due to a member, it will be derived from the value of the member’s fund credit plus any additional benefit provided by an insurance company (e.g., in the event of death or disablement). In short, the rules envisage a monthly processing cycle.
So, what happens if the employer does not pay the employees’ and their contributions as described above? Does the administrator ‘down tools’ and stop updating the members’ fund credits because the fund did not receive any contributions? What happens when a benefit becomes due to a member?
The fund’s rules are the contract between the employer, the fund members, and the fund. The employer is thus contractually obliged to determine and pay the contributions monthly, as specified in the rules, and non-payment contravenes the rules and the Pension Funds Act. Rules can never make provisions for contributions not being paid as it would acknowledge that one may breach the law. The administrator must therefore update the members’ fund credit as if the employer had paid the contributions and any benefit becoming payable must be paid as if the contributions were received. The unpaid contributions must be recorded as an unpaid contribution debtor.

 A problem arises if the non-payment of contributions results in the fund’s investments being less than the members’ aggregate fund credit. If the investments earned interest of 10% but the investments only represent 90% of the members’ aggregate fund credit, the fund only earned 10% on 90 while it must allocate 10% to the member’s 100, creating a shortfall of 10% on 10. To pay the member’s benefit of 100, the fund would use other members’ money to make up the shortfall of 10% on 10. If the fund were to be liquidated immediately after paying the member’s 100, the remaining members would have to contribute to the shortfall. In such a situation, the trustees are ‘trading recklessly’ in Companies Act terminology and are in breach of their fiduciary duties if they continue doing fund business while contributions remain unpaid and the fund builds up a shortfall.
If members incur a loss upon the fund’s liquidation, they may sue the trustees jointly and severally for breaching their fiduciary duties. They may be found to breach their fiduciary duties if they do not institute legal action against the employer and should consider instituting the fund's liquidation. Unfortunately, a liquidation is usually a drawn-out process and members will only be paid their benefits at the end of the process.

The ILO’s National Pension Fund model
As per our notes in the MD’s column on a recent information-sharing session hosted by the SSC and the Ministry of Labour, the ILO, supported by Ministry of Labour Minister, seems to be intent on imposing its model for a National Pension Fund.
Initially, the SSC also favoured a defined benefit model with no exemptions. The reason for a defined benefit model was that it would allow for extensive cross-subsidisation, where the higher income brackets would subsidise the benefits of the lower income brackets. However, in a true tri-partite spirit (government, unions, and employers), the parties developed a hybrid model. This model envisaged limited cross-subsidisation of management costs and risk benefits. It envisaged that 2% of a total contribution of 13% of remuneration, up to the prevailing MSD cap, would be appropriated to fund management costs and to offer certain minimum death and disability benefits to members and survivors, capped on the MSD remuneration cap. The 11% balance would have been allocated to each member’s savings portion to accumulate for retirement. The 2% would have been a compulsory contribution by every employee. Employer funds with a total contribution rate of more than 13% would have been able to obtain an exemption for the retirement savings portion.
Unfortunately, it seems that our ‘indigenous model’ did not find favour with the Minister of Labour, advised by his special adviser, who prefers the ILO’s defined benefit system and the exclusion of any exemption. In addition, the ILO talks about a much higher total contribution rate of 15.9%. The fact that the three parties represented on the NPF steering committee compromised on a hybrid model seems to be of no interest to the ILO’s actuary who made his views very clear - or was it a matter of ‘whose bread I eat, his song I sing’?
The ILO actuary opined that the Canadian defined benefit model has proven its resilience during the global financial crisis and that the SSC model does not offer the required guaranteed minimum income. By comparison, defined contribution funds provide inferior replacement ratio outcomes at retirement, should a member retire shortly after a market crash. Given that defined contribution and defined benefit funds invest in the same assets, the ILO actuary’s assertion about the better resilience of defined benefit funds during market volatility is simplistic, at best. When markets crash, it impacts both types of funds equally. The only difference is that a defined benefit fund applies more extensive cross-subsidisation. Those that have built up a substantial retirement kitty, would then pay for those that have not by the time of a market crash. Of course, the same result can be achieved in a defined contribution fund through investment smoothing. A convincing argument for a defined contribution fund is that it promotes the ownership principle of the free-market economic model, while the defined benefit fund is based on ‘socialist principles’. The socialist economic model ignores human nature and has proven unsuccessful worldwide.
Besides the philosophical arguments against the socialist, defined benefit model, the defined benefit fund would start off with a large actuarial deficit as members will be entitled to benefits without having contributed or having contributed very little yet. All defined benefit systems in the developed world are facing serious funding challenges and, undoubtedly, Canada must experience the same challenges as a developed country. As we have recently seen happening in France, when the government addressed these challenges from its aging population by raising the retirement age, it was confronted with serious social unrest.
We may naively believe that Africa is on a different demographic trajectory, but the graph below shows that Africa’s population is also aging, even if at a slower pace than most of the world. It will undoubtedly follow the trajectory of the rest of the world. A defined benefit fund will thus not only start off with a large deficit but will also face the challenge of an aging population where fewer and fewer young people must fund the benefits of more and more old people.

The following excerpt from the 2023 Allianz Global Pensions Report makes an important point: “These [aging population] numbers underline the importance of preparing pension systems for demographic change to guarantee their long-term financial sustainability and avoid overburdening future younger generations. At the same time, pension systems also have to remain adequate to guarantee a growing share of elderly people a decent living standard in old age. Pay-as-you-go financed pension systems, in which the contributions of the workforce population are used to finance the pensions of current retirees, are doomed to fail to meet these requirements. The challenge will be to find the right balance between guaranteeing sustainability and adequacy at the same time. In many industrialized countries, this implies cuts in benefit levels. In many rapidly aging emerging markets, the coverage of public pension systems and benefit levels are still rather low. However, in both cases, to secure a decent living standard in old-age, complementary capital-funded old-age provision is the only solution.”
Namibia’s labour situation will exacerbate the challenges faced by a defined benefit fund. According to ILO estimates, the average unemployment rate of around 260 countries worldwide was just over 6% in 2018, while Namibia’s unemployment rate was in excess of 33%. The unemployment rate does not account for 17% who are employed informally and 21% ‘vulnerably employed’, or another 38% (71% in total), most of whom will likely contribute very little to the NPF! 
Since the existing retirement funds industry currently accommodates over 330,000 members of our total labour force of one million (that is 33% of the labour force), it means that nearly every formally employed is already accommodated within the retirement funds industry. The likely NPF membership should be the same as the MSD fund’s membership, namely around 550,000. The difference of around 220,000 to the existing retirement funds industry membership will be drawn from those informally and ‘vulnerably employed’ persons who will hardly contribute to the NPF.
Using the ILO statistics, across the world, on average, 17 employed people support the social security benefits of one unemployed person. In Namibia, one employed person (33% of the labour force) will be burdened to support the NPF benefits of 2 people (67% of the labour force) if everyone receives benefits. Now, one may argue that only very few of the informally and vulnerably employed would contribute and be entitled to benefits. If that is the case, what is the purpose of setting up a huge NPF infrastructure for a vast majority of beneficiaries already catered for by occupational pension funds and ‘a handful’ of informally or vulnerably employed who can afford to contribute?
Putting it differently, less than 30% of what I must set aside will be used to fund my NPF benefits, while the balance will be used to fund others’ benefits. For people in the higher income brackets, the cross-subsidisation means that much less than 30% of one’s contributions will actually be used to provide benefits to them. The higher income brackets are usually more outspoken and politically influential and will undoubtedly, at some point, use that influence to protect their interests. Introducing a national pension fund when Namibia has such a low employment rate is an acknowledgment by the government that it failed in its employment creation efforts. Surely, it should be preferable and more productive to put a person into a job to look after his own retirement than setting up a huge NPF infrastructure to redistribute retirement capital from the formally employed to provide benefits to ‘a handful’ not formally employer but entitled to benefits.
Although I am not aware of any studies to assess the impact the envisaged defined benefit NPF without exemption may have on the existing retirement funds industry, we estimate that the industry will be decimated to only 40% of its current membership and 60% of its current assets.
In conclusion, the NPF will use the 330,000 members of the existing retirement funds industry to pay the benefits of 220,000 informally and vulnerably employed persons. It will result in the existing retirement funds industry being no longer economically viable.

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.
Compliment from a pensions administration officer
Dated 17 April 2023
  “Dear M,
Trust this mail finds you well.
At this time really M and team, how you take care of us, is first class. Cannot say thank you enough to RFS excellent services always. It’s a relationship that is a keeper.
Thank you so much for last week (and all other times and still to come) TEAM M. You people are just AMAZING!.....
I would think my e-mail transmitted early this morning but it was terrible today, hence my delayed appreciation.
Wish you all the best!”

Read more comments from our clients here...
Benchmark: a note from Günter Pfeifer
Call on fund members to take advantage of the Benefit Counsellor information offering
Benchmark Retirement Fund members are encouraged to log into Benefit Counsellor at www.benchmark.benefitcounsellor.com.

There is a lot of interesting and important information on the platform:
  • See what benefits the fund offers you and your dependants and how much money you have in the fund.
  • Watch seven short education video clips that explain the fund’s workings.
  • Watch the asset manager presentations on the Ninety One balanced and opportunity funds and the NAM Coronation balanced, capital plus and balanced defensive funds.
  • Read the fund’s information covering announcements and reports (rules and amendments, annual financial statements, annual reports, actuarial valuations etc.) and the fund’s investment policy.
  • See if you can help a friend or family member whose name is on the unclaimed benefits list.
  • Print any form you need.
  • Do a financial wellness assessment of yourself.
  • Read frequently asked questions and answers.
  • View your benefit statement.
  • Read your fund’s member booklet explaining how your fund works.
  • Update your beneficiaries.
  • Get some advice for retirement.
  • Do some scenario planning on how much to draw safely after retirement without depleting your capital..
Important circulars issued by the Fund

The Benchmark Retirement Fund did not issue any circular after circular 202304 – ‘death benefits questions and answers’. Clients are welcome to contact us if they require a copy of any circular.
Günter Pfeifer was the Principal Officer and a trustee of the Benchmark Retirement Fund for many years. He holds a Bachelor of Commerce (Cum Laude). Günter completed his articles with Deloitte & Touche in Windhoek. 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
Long service awards complement our business philosophy

RFS’ business is primarily about people. Whenever a fund changes its administrator, it loses fund information and knowledge. Similarly, every time the administrator loses a staff member, our clients lose corporate memory. As a small Namibian organisation, we cannot compete with large multinationals technology-wise because of the economies of scale, and sophistication global IT systems offer. We differentiate ourselves through excellent personal service and commitment to our clients, and IT systems that are more flexible, versatile and adaptable, and more appropriate for the Namibian environment. We are proud of our staff retention as we know that it is the key to our success!

5 year anniversary
  • Monica von Flotow (1 June)
  • Stefanus Morris (1 June)
15 year anniversary
  • Aliza Prinsloo (1 June)
  • Maria Teixeira (1 June)
We express our sincere gratitude to Monica, Stefanus, Aliza, and Maria for their loyalty and support over the past five and fifteen years and look forward to their continued dedication and commitment to the company, our clients, and our colleagues!

Annemarie Nel scoops another award
Note that the person in the photograph on the left side is Evelina Tomas, MMN group head legal and company secretary, and not Ingah Ekandjo as reported in last month’s newsletter. Apologies to Ingah and Evelina!
Important circulars issued by RFS
RFS did not issue any circular after circular 2023.02-01 – ‘new standard forms’. Clients are welcome to contact us if they require a copy of any circular.

Legal snippets
Payment of pension benefits into jointly held accounts

The Pension Funds Act obliges the fund to ascertain that any benefit due to a member is paid to the member for his/her exclusive benefit. Typically the fund administrator is responsible for making payment on behalf of the fund and is well advised to ascertain that it complies with the Act by verifying the ownership of the bank account into which payment is to be made.

Payment directly into a bank account that is not subject to a person’s exclusive authority and control may be regarded as being made in contravention of the Pension Funds Act.

The Banks Act does not prohibit the maintenance of joint bank accounts by Namibian banks. It is therefore prudent that pension funds do not allow payment of pension benefits into a joint account as this may be a contravention of section 37A of the Pension Funds Act.

An indemnity by a member issued to a fund for making payment into a joint account at the request of the member will, in our opinion, not protect the fund against a claim by the member and/or a prospective beneficiary and should not be accepted by a fund.

FSCA interpretation ruling 1 of 2020 on S 37C
“On 25 March 2022, the FSCA issued FSCA Interpretation Ruling 1 of 2020 (RF): Interpretation and Application of Section 37C of the Pension Funds Act, 1956. One of the purposes of the said Interpretation Ruling was to clarify when a benefit should be dealt with in terms of section 37C as opposed to being paid into the deceased estate of the member.
In this regard, the Interpretation Ruling states:
“Reference to “payable ...upon the death of a member” in section 37C means that it is the death of the member that resulted in the benefit becoming payable. If the fund received a written instruction from the member to pay out or to transfer the benefit prior to the member’s death, then it is that written instruction that caused the benefit to be payable (not the death of the member) and accordingly section 37C will not be applicable.”
In a complaint lodged with the Adjudicator, the deceased’s son complained that the Corporate Selection Umbrella Pension Fund (“fund”) intended to pay the deceased’s benefit into the deceased’s estate instead of dealing with it in terms of section 37C of the Act. He wanted the proceeds of the benefit to be used to purchase a living annuity for the deceased’s surviving spouse. He was informed by a financial adviser that the benefit from the fund (approx. R7 million) was payable to the deceased’s estate after tax. The letter from the financial adviser stated that taxation of the benefit as a retirement benefit would have a negative impact. He requested the Adjudicator to investigate the matter and order the fund to purchase a living annuity for the surviving spouse with the proceeds of the benefit.
The fund submitted that the deceased was its member because of his employment with the employer. He was registered as a member from 1 December 2004 to 28 February 2019 when he elected to retire. The retirement election was communicated by his financial adviser wherein he also indicated the intention to transfer his benefit to a preservation fund. The fund attached an email from the deceased’s financial adviser dated 1 April 2019 reflecting that the deceased was transferring his benefit to a preservation fund. The deceased passed away on 1 May 2019 whilst his request was being processed.

Accordingly, the Adjudicator held that section 37C was not applicable since an instruction had been received from the deceased member prior to his death to transfer, and it was correct for the fund to hold that the benefit would be paid to the deceased’s estate. The complaint was dismissed.”
From the South African Adjudicators 2022 Annual Report

Snippets for the pension fund industry
SA pension system fails to compete on a global level

South Africa’s pension system scored below average in a global study looking at the viability of 75 pension systems around the world, receiving a total score of 4.2 – out of a possible seven for the worst pension system – in comparison to the unweighted global average of 3.6.

The second edition of the Allianz Global Pension Report for 2023, released on Wednesday, notes that the country’s low ranking is an indication that the South African pension system is in “strong need [of] further reforms”.

The Allianz Pension Index (API) is anchored on the analysis of three pillars – country demographics and basic conditions, sustainability, and adequacy of the respective pension system. South Africa ranked unfavourably in all three pillars.

Unlike the best pension systems in the world – those in Denmark, The Netherlands and Sweden – which all scored below or around three points for each of three pillars, South Africa scored around four points.

Source: Allianz Global Pension Report 2023.

“Problems include the low coverage, the low benefit level and the lack of retirement savings, imperilling the adequacy of the system,” the report said…”
Download the full report for 2023 here…


Seven worst mistakes for retirement planning
There are many mistakes you need to avoid in order to retire comfortably. But of these hundreds of mistakes, here are the 7 worst mistakes you must avoid at all costs.
  1. Underestimating medical expenses
  2. Post-retirement spending spike
  3. Keeping too many cars
  4. Moving house
  5. Getting sold or scammed
  6. Putting savings in the wrong place
  7. Retiring too soon 
In this and the next newsletter, we will examine these last two worst mistakes and what you can do about them.
6. Putting Savings in the Wrong Place

Savings for retirement is one of the most important decisions that we make during our work life. But putting the saving in the wrong place can be very bad for our retirement planning too.
Inflation eats up 2% to 4% of our savings every year. In other words, your buying power gets smaller and smaller each year.
An average of a 3% inflation rate over 30 years on your current saving of $100,000 will have a buying power of $41,199. Your buying power has just reduced to less than half due to a 3% inflation rate!
Fear leads most people to put their money in the bank and avoid all other forms of investment that may cause them to lose money. Banks on other hand give an interest rate that is usually much lower than the inflation rate. In other words, by putting your savings in the bank, you are sure to lose money due to the inflation rate.
How to Fix

A balance of risk and reward might just be the answer to this. Banks usually give a low interest rate that will not beat inflation. This leads to saving for retirement a very tough task to do.
When it comes to retirement, diversification might be the best way possible to have the maximum reward and lowest risk.
Financial advisors can help you in this area, to help you plan for your retirement. But for me, as I like to learn about investing and maintain my own portfolio, I buy a mix of bonds, REITs, and ETFs. You can also read my other article on how I plan to earn $50,000 in passive income for retirement through investing.
Avoid buying individual stocks, if you are planning for retirement, as you will not know what will happen to that particular stock in the future. This holds true even for blue-chip stocks.
“You diversify by spreading your investments over different asset classes, some will go up, others go down, but your portfolio will smooth out the bumps in the market,”
If you are investing on your own, the best way to obtain this balance is to choose low-cost index funds.
7. Retiring too Soon

According to Social Security data, the average life expectancy is 79 and in the next 5 years, at least one member of a 65-year-old couple will live another 23 years, to age 88. What’s more surprising is that one-third of all retirees will live to age 92.
This means, if you are retiring at the age of 65 years, you are expected to have savings to cover 14 to 27 years in retirement.
That is a lot of years in retirement!
Imagine you start working at 25 and stop working at age of 65. You have worked 40 years of your life. And in these 40 years of your work life, you will need to cover your expenses of 14 to 27 years of your non-working life.
That is a lot of money you will require to achieve a comfortable retirement life.
How to Fix

Retirement is a time when you want to relax and enjoy. Unless you have no choice because of a health problem or are unable to find work, plan to keep working as long as possible to maximize your social security benefits.
The increase of benefits and minimizing of your nonworking years can mean a huge difference in your finances at your retirement.
Aim to work till 65 or 70 before you plan to retire unless you have another way to make an income to finance your retirement.
As for me, I choose to perform investment now to build up a passive income to help finance my life when I retire in the future.
Investing in Bonds, REITs or ETF gives dividends periodically and when done properly, it can be made into a passive income to finance your daily expenses.”

Read the article by Eric Jordaan of Crue Investments in Moneyweb of 23 February 2023, here…

Snippets of general interest

New rules for CMA cross-border payments

Namibian banks will soon roll out changes on how clients make and receive payments within the Common Monetary Area (CMA). The CMA comprises Namibia, Eswatini, Lesotho, and South Africa, allowing for payments between these countries to be made without exchange rate fluctuations. As per the changes, all cross-border Electronic Funds Transfer (EFT) payments processed and received by clients within the CMA will no longer be considered domestic payment methods. Instead, they will be initiated as Forex Transaction/Global Payments. FNB Namibia Payments Manager Albert Matongela explained that when making cross-border payments to other CMA countries (South Africa, Lesotho, and Eswatini), clients will need to capture and process payments on the Foreign Exchange (Forex) tab…”
Read the article in the Brief of 25 April at this download link…

Risk attitude versus return altitude
When it comes to investing, many investors simply want big rewards, without taking on any risk. But the reality is that to earn sufficient long-term returns, you do have to put your capital at some degree of risk. As they say, nothing ventured, nothing gained.

The extent to which you can tolerate risk is known as your risk profile, which is a useful, if imperfect, tool in structuring your investment portfolio. Your financial adviser will help you to determine your risk profile by examining the amount of risk needed to achieve your investment goals; how much risk you can afford to take; and your willingness to take on risk.

Another key factor that also plays a role is your investment time frame (also referred to as your time horizon). This is the time between when you first invest, and when you will need that money.  

Generally speaking, there are five basic risk profiles:

Low Risk: With these cash-type investments, investors can expect minimal losses, but also minimal returns that are unlikely to keep up with inflation…

Low-to-Medium Risk: This involves taking some risks but usually with reasonably stable growth that will keep up with inflation as the end goal…

Medium Risk: This entails experiencing some volatility and is typically associated with investment time frames of five years or more…

Medium-to-High Risk: Investment profiles that fall within the medium-to-high range can accept different levels of rewards and risks for up to 10 years…

High Risk: High-risk investment strategies involve long-term capital growth with significant fluctuations in value possible over extended periods of time (10+ years)…

Read the article by Sumayya Davenhill, Head of Marketing, M&G Investments in Cover of 15 March here...

And finally...
Funny anecdotes

ATTORNEY: Do you recall the time that you examined the body?
WITNESS: The autopsy started around 8:30 p.m.
ATTORNEY: Doctor, how many of your autopsies have you performed on dead people?
WITNESS : All of them. The live ones put up too much of a fight

From a book called 'Disorder in the American Courts' and are things people actually said in Court, word for word, taken down and now published by court reporters who had the torment of staying calm while these exchanges were actually taking place.


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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 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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