Notes from a Namfisa Pension Fund Consultation Breakfast held on 17 March 2014 at Kalahari Sands
Prepared by Kai Friedrich C.A. (SA/Nam), CFP®

Namfisa was disappointed by the low attendance at the consultation session. They made it very clear that at least the Chairman of the Board of Trustees as well as the Principal Officer of the 101 or so Funds should attend these sessions in future. In future invites will be sent out to these two parties of each Fund.

Matters arising from the previous meeting

FIM Bill and Standards & Regulations project

• The FIM Bill is on the working schedule of the Parliament and should thus be tabled this year.
• The Standards and Regulations project was submitted to Namfisa’s Board but the Board was not satisfied with the results. The project is thus still work in progress. Namfisa did not provide a date when they intend to consult with industry on the standards and regulations but they expressed disappointment with their own progress.

Quarterly Pension Fund Reporting

• Namfisa has a capacity problem in their IT department as they only have one developer available for all the departments that require developments. The developer has started with developing the Pension Fund industry’s quarterly reporting requirements on ERS. The deadline for implementation of the quarterly reports will therefore again be postponed.
• Namfisa was asked to distribute the final reporting template to the industry as soon as possible. Some minor changes were made to the latest draft that was circulated.
• Namfisa will be implementing a 30 day deadline after quarter end for submission of the quarterly returns. They were not open to extend the deadline, at least for the first return which will naturally take longer to be compiled, and indicated that the industry can apply for exemption per the Regulation. Even the concerns by industry representatives about Namfisa being flooded with applications for exemption did not make Namfisa consider these concerns.
• Namfisa has to prepare a quarterly bulleting to its board and is working backwards from those deadlines to establish the 30 day reporting deadline for industry. They indicated that other industry players (like the medical aids) submit their quarterly returns within 30 days and therefore pension funds should be able to do the same. [We should establish how comprehensive the return for medical aids actually is]
• It was muted that Namfisa might request the first few quarterly returns to be completed on Excel while they get the ERS system developed. This was not confirmed during the meeting however.

Pension Fund Backed Housing Loans

• Namfisa drafted amendments to the Act to allow the granting of housing loans in un-proclaimed areas following directives from Ministry of Finance. It would be premature to provide the draft amendment to the industry before it has been properly drafted into law. t
• The provision in the Act will not mean that it would be mandatory for funds to allow their members to invest in property in un-proclaimed areas. Funds allowing their members to come up with policies to mitigate the accompanying risks.

Cancellation of registration of inactive funds

• Namfisa recently published names of 135 inactive funds in the local newspapers, to establish the status of the funds.
• They received responses for about 4 of the funds from administrators.
• If they do not receive a response after 30 days of publication they will deem the fund to be inactive and will deregister the fund (by the end of March 2014).

Industry challenges

• Namfisa raised concerns why resolutions regarding s14 transfers applications are received a lot later than the effective date of transfer in many cases.
• The Act does not provide for timelines in this regard; however it does provide timeframes for the appointment of auditors and actuaries. This topic was also discussed later during the meeting.

Tax related issues

• At the last industry meeting the industry requested written feedback from the Ministry of Finance about their comments made during the industry meeting held in March 2013.
• MoF indicated that they would not provide comments in the form of a letter but will rather issue new practice notes if there are no existing practice notes on certain issues.
• Namfisa will meet with the RoR on 18 March 2014 to follow up on these matters.

New Matters

Section 14 transfers

• Again a discussion arose as to the delay in applying for s14 transfers and the effective date thereof.
• Namfisa suggested that they would develop standard forms for funds to complete when applying for a s14 transfer to ease the process.
• Namfisa suggested that funds should submit all relevant documents (incl actuarial reports) not later than 90 days after the effective date of the s14 transfer
• Namfisa’s supervisory enforcement ladder
• This was circulated to the industry in February 2014 and was briefly discussed again, i.e. when Namfisa will intervene in the fund’s operations.

Regulations 26, 28 and 29

Some frequently asked questions were addressed by Namfisa. Refer to the Namfisa presentation.

• Namfisa confirmed that they will apply the see-through principle for reg 28 reporting and will require information and compliance at issuer level. Namfisa will assess reg 28 compliance at fund level (and not a member level).
• Namfisa indicated that property (incl unlisted property) will not qualify as unlisted investments required under reg 29.
• They also noted that the penalties levied as per Regulation 26 include weekends and public holidays as well, not only working days.
• The N$1,000 charged on non-compliance with reg 28 can be levied per instance of non-compliance per fund, not only per fund being non-compliant overall, i.e. for each instance of non-compliance Namfisa can charge N$ 1000 per day.
• On Regulation 29 Namfisa indicated that applications for registration of SPVs have been received, the industry will be informed about the status of these registrations.
• Namfisa reiterated that applications for exemption can be submitted ito of sub-regulation 10 of reg 28, but confirmed that exemptions regarding unlisted investments must be approved by the Minister of Finance.
• They will also apply the see-through principle on investments in foreign unit trusts.

Inspection Highlights
Namfisa provided an overview of the most common findings in their recent inspection reports

• Funds not paying levies
• Statutory returns are not submitted (on time)
• Fund rules do not specify frequency of meetings and Namfisa would like to see trustees of any fund meeting at least 4 times a year irrespective of size of fund
• Non-compliance to Regulation 28 provisions
• No assessment of BoT and/or PO performance on an annual basis
• Lack of governance policies (e.g. Risk Management, Investment etc.)
• Namfisa not being informed about changes in fund officials (including trustees)
• Minutes of meetings are not signed
• Funds operate on outdated service level agreements
• Namfisa would like to revisit and where necessary repeal all previous practice notes issued in the past, but this project depends on finding a resource for this purpose.
• Namfisa would like to provide standards of what needs to be covered in fund governance policies

Namfisa reiterated that PO’s and Chairpersons of the funds should at least be evaluated on an annual basis, the rest of the Board preferably as well.

Replacement Ratio for DC Funds

Namfisa wanted some feedback from the industry if this is taken into account when advising funds and their members. It was agreed that it is not always that easy as pension money might not always be the main source of income for members once they retire.

NAMFISA levies

• When Namfisa reconciles the levies paid to them they will use the member count as per the audited annual financial statements whereas payment made by the funds is often based on the latest member count. This causes differences (over or under payments).
• While it was suggested that the funds should also work on the audited numbers when making payments, Namfisa was not prepared to commit to this but said that funds should follow the gazette in this regard.
• When being asked whether Namfisa would be prepared to issue invoices for the levies to make the process more efficient they kept on referring to the gazette that does not require them to issue invoices.

The next meeting will be on 15 September 2014

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.