Section 37 A prohibits the member to give permission for the deduction of his debt to his employer while section 37 D defines very specific scenarios under which an amount can be deducted from a member’s benefit. A member cannot authorise a deduction and payment directly to the employer other than with regard to a housing loan or housing loan guarantee.
Section 37 D does allow a deduction where the employer has obtained a court order based on damage caused to the employer by the member as the result of his or her theft, fraud, dishonesty or misconduct, or where the member has in writing acknowledged to this. The amount determined by the court or acknowledged by the member as the damage caused can be deducted and paid to the employer directly.
While cheques still represent legal tender, funds often employed the practice of instructing that an uncrossed cheque is issued for any amount to be paid to the employer for reasons other than those aforesaid. The member is then requested to endorse the cheque to the employer. This practice has been followed on the basis of the argument that the member first received payment from the fund and then made over the payment to the employer. We are not aware of an instance where a court has ruled against this practice but stand to be corrected on this.
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.
For RFS, 2016 was a year of mixed fortunes. On the down side, we unfortunately lost our appointment as administrator to 2 of our prestigious clients. Both funds went out to tender during 2015, after RFS had been serving them for 15 years. Both funds were in ‘administrative distress’ when we were appointed in 2001 and both have never looked back since they had the courage to engage that new kid on the block called RFS, soon after the company was established. In both cases, however, corporate memory of painful experiences preceding our appointment in 2001 has faded over the years through changes to the composition of the boards of trustees. Where price at the time was rated second to service quality and reliability, these considerations were ostensibly no longer considered imperative. The dilemma of trustees is how to weigh up cost against quality of service. Bad experience cannot be corrected at any price!
On the positive side, RFS was re-appointed by 9 clients since 30 June 2015, following their regular review of service provider mandates. This record speaks for itself, is testimony to our reputation in the market and the trust and confidence our clients have in our capabilities. We are extremely proud of this achievement and of course also extremely grateful to these clients! At the same time we are humble and appreciate that clients expect to receive value for their money. For this we have to continue going the extra mile to meeting our clients’ expectations.
RFS has no intention to be the largest player in our market but has every intention to be uncompromising in its pursuit of delivering a service of the highest standards!
As far as the Benchmark Retirement Fund, our unique house brand, is concerned we have expanded the range of products available in the fund in response to the challenge posed to pension funds by Inland Revenue’s new interpretation of Practice Note 5 of 2003 and in anticipation of what impact the National Pension Fund and the FIM Bill is likely to have on stand-alone pension funds. In addition we have introduced an innovative living annuity product that will assist pensioners to manage their income in retirement sustainably and to manage market volatility in an innovative manner.
For the past year-and-a-half we have invested substantial resources in having the MIP administration system developed to support our efforts of delivering an advanced and superior service experience to our clients. In 2017 RFS is set to turn over a new leaf in its history with the migration from the Compen administration platform to the MIP administration platform, a state of the art web-based system that will assist us in meeting the ever more technology driven needs of our clients and the market.
Besides our challenge to convert all clients to MIP the regulatory environment will no doubt pose a number of challenges to retirement funds and to us as administrator of funds. Here we are referring to the National Pension Fund that SSC aims to launch in 2017 and the FIM Bill that NAMFISA aims to have enacted in 2017. These laws will no doubt introduce incisive changes to the retirement funds industry and are likely to lead to the demise of a number of retirement funds.
In the light of the large slice government and its SOE’s already represent of the Namibian economy and the financial distress that government is experiencing, it is concerning to the private sector that government seems intent on taking over an ever growing slice of the economy through the establishment of more and more para-statals that are all siphoning off revenue that could have ended up in in government’s coffers. These SOE’s to a large extent operate in a protected environment that suppresses the free market mechanism of allocating resources and promoting competition for the benefit of the consumer. Hardly a month goes by without the announcement of the establishment of yet another SOE. Can Namibia afford this?
Those that know us will no doubt agree that we are in fact humble and down to earth and will discount such comment as a deliberate attempt at discrediting RFS. These could be competitors who want to raise their image to our level by lowering ours or it could simply be persons who have an axe to grind with us.
Our fee model
Our ‘arrogance’ is typically portrayed in the context of our fee model. RFS probably uses one of the most scientific methods to determine the cost of its services to its clients of service providers in the pensions industry. For any client it should be comforting to know that the services you pay for are determined in a scientific manner. This means that they are fair towards you, first and foremost. Fairness in determining fees is an obligation of any service provider who is a member of any professional association. In our case, top managers are members of a number of different professional associations whose code of ethics obliges them to apply fairness in the determination of their fees. This means the client is paying for what he is getting. Conversely it also means the client is not paying for a service he is not getting. Secondly, a client should be comforted knowing his service provider applies a scientific method to determine the costs of his services as this means the service provider has a sustainable business model.
The fact that RFS has been around as a self-sustaining Namibian organisation for over 17 years now is testimony to the sustainability of our business model. New entrants to the industry may prefer a misguided strategy of buying market share by offering unsustainably low fees. For the client who buys into this, it means one of two things. The service provider will either revert back soon with the scenario of having to close doors or the client agreeing to a fee adjustment or of the service provider in fact closing doors – a nasty situation for any pension fund if it was your administrator.
Would you call this arrogance?
Our business principles
Our ‘inflexibility’ is typically portrayed in the context of our way of dealing with client enquiries on special ‘non-standard’ services. As our slogan goes ‘rock solid fund administration that lets you sleep in peace’, we are very principled in approaching such requests. Firstly, requests must be defined properly so that both parties understand what is required, what the parties’ expectations and obligations are, what risks need to be addressed and how these risks will be addressed. Until all these pre-requisites have been met, trustees may at times experience our response frustrating and overly dogmatic. However at the end of the day, our concern for protecting the interests of fund members and trustees should in the final analysis provide the comfort and peace of mind to our clients that all ‘i’s’ have been dotted and all ‘t’s’ have been crossed and that their risk exposure is consequently minimised. RFS’ reputation speaks for itself!
Would you call this inflexible?
Comments referring to RFS being arrogant and inflexible have to be interpreted in the context of their origin. We do not think they are appropriate. Being a humble, down to earth organisation believing to apply the highest standards of fairness, we invite any client or prospective client to explore with us our model for setting fees for the services we provide.
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