Dear reader

We wish you all a very happy Christmas and a calm and peaceful 2012.

As always, we will close for the festive season on Friday, and will reopen on 3 January 2012.

In this newsletter, we review company developments in the year 2011, we report on changes to the Financial Intelligence Act in terms of which pension funds are no longer ‘accountable institutions’, changes to the Unit Trust Control Act and there are a few links to very interesting articles that recently appeared in various media.

Please feel free to comment: tell us what you value and how we can improve the content.

Regards

Tilman Friedrich

Tilman Friedrich's Industry Forum

Benchtest Monthly 11.2011

In November our average prudential balanced portfolio returned 0.28% (October 5.31%). Top performer is Investment Solutions multi manager (1.48%), while Sanlam (minus 1.32%) takes bottom spot.

Support of the Rand from foreign capital flows as expected, continues to fade. The net inflow of foreign capital into equity and fixed interest assets was R 17.4 bn for the 12 months to end November (inflow of R 20.6 bn to end October), compared to R 96.4 bn for the 12 months to end November 2010 (R 107.5 bn to end October 2010). If this trend persists as we expect it to do, local inflation will increase and as inflation increases, we will see interest rates increasing. This speaks in favour of direct offshore investments and an up weighting of Rand hedge shares and exporters.

For further analyses and our views download the report, here...

Benchmark Actuarial Report 2010

The Actuarial Report for 2010 has been released, and is available for download, here...

A message for Christmas



This year’s ‘game’ is nearly over as we approach Christmas, summer recess for most Namibians. We hope and trust that this will give us all the opportunity to recuperate, to relax, and to rebuild our physique and our spirit for another hard ‘game’ that will no doubt face us in 2012.

From our perspective, we have survived a tough game in 2011 and we have grown further. Our permanent staff complement grew from 43 to 47, with the addition of several staff members, but tempered by the departure of others.

As reported in previous newsletter, the following new players joined our team over the course of this year: Enda van Wyk, Audrey Haoses, Sabine Halberstadt, José Isaks, Nicolene Loubser and Timothy Wallenstein who joined us just this month.

For the first time in a while we saw two people leaving our service, Hettie Koorsen due to ill-health and Anita Keibib of her own volition. Our thoughts are with Hettie and her husband and we wish her sincerely that her health may recover fully! We also wish Anita all the best in her future endeavors!

On the private fund side, the number of funds administered by us increased by only 2 to 24, with our latest appointments to the Metje & Ziegler and the NDC Retirement Funds, both effective from 1 October, together some 600 employees. We have also once again managed to maintain our untainted record of having secured our reappointment by all clients where our mandate expired over the course of the past 12 months. This division is now responsible for close to 19,000 members, more than 2,000 pensioners and assets of around 7.3 bilion, or an aggregate payroll of around N$ 3 billion per year! By our calculations our market share, in terms of membership and excluding the GIPF, today is around 40% and should grow to around 45% when Namdeb joins our client base in July 2012.

Our Benchmark Retirement Fund progressed further over the course of the year increasing its overall membership from 5,047 to 5,592. The number of participating employers has increased from 42 to 47 and total assets from N$ 567 million to N$ 750 million. In terms of membership Benchmark is one of the 5 largest funds in Namibia, including the GIPF while it probably rates amongst the top 12 in terms of total assets.

As in the past we have grown without any marketing, but purely by word of mouth and we are not only pleased with what we have achieved but we are also extremely proud of the reputation we have built up over such short span of time of only 12 years, thanks to you our esteemed clients!

On behalf of the shareholders and our directors, we wish all our clients and their staff a peaceful, tranquil and unspoiled festive season and a prosperous 2011! We thank you most sincerely for your trust and support over the past so many years! It has been our pleasure to serve you and we look forward to stand by your side in advancing the interests of your fund and its members in 2012 and beyond!

RFS company news

Benefit statements in electronic form

Past practice has been to print and distribute ‘hard copies’ of benefit statements to members. More and more clients, however, are asking us to introduce electronic benefit statements.

We can provide electronic benefit statements either via the internet or by e-mailing them.

Prospective users of this option need to be aware that at this stage, information made available to users on the internet is not encrypted. Furthermore, funds wishing to utilize this alternative will need to set up a system to distribute pins and passwords to their members.

Alternatively benefit statements can be e-mailed directly to members. This requires the client to provide us with member’s e-mail address.

Employers interested in one of these two alternatives are welcome to contact us to obtain an indication of the costs of these facilities.

Law and legal snippets

The Financial Intelligence Act Amendment

Government Notice 235 as published in Gazette no 4850 of 15 December 2011, at long last clarifies the situation of pension funds. Section 19 of Schedule 1 which lists accountable institutions, was amended effective 18 November, by excluding from this list “(a) a registered pension fund or provident fund as defined in section 1 of the Pension Funds Act…and (b) a registered fund as defined in section 1 of the Medical Aid Funds Act…”

For the more technically minded – section 1 of the Pension Funds Act only defines a ‘pension fund’, it does not make mention of a provident fund. Furthermore, retirement annuity funds are also pension funds in terms of the Pension Funds Act. Where does the amendment leave these funds? We believe they will be equally excluded, but was this the intention since they do receive moneys from members of the general public.

The Unit Trust Control Act Amendment

Government Notice 231 as published in Gazette no 4847 of 9 December 2011, introduces a number of changes to the Act. Text in square brackets is removed from the Act, text underlined is inserted.

Amongst other changes, it introduces a definition of ‘assets’ being “…the investments comprising or constituting a unit portfolio of a unit trust scheme, and includes any income and accruals derived there from;”

It deletes the previous definitions of ‘approved securities’ and of ‘liquid assets’.

It introduces a definition of ‘open-ended investment company’, being “…a company with an authorized share capital which is structured in such a manner that it provides for the issuing of different classes of shares to investors, each class of shares representing a separate portfolio with a distinct investment policy;” Is this making reference now to entities such as Stimulus?

The definition of ‘trust deed’ is substituted, now being “…the agreement between a management company and a trustee, and includes a document of incorporation whereby a unit trust scheme is established and in terms of which it is administered;”

The definition of ‘unit trust scheme’ is substituted, now meaning “…any scheme or arrangement [in the nature of a trust], in whatever form, including an open ended investment company, in pursuance of which members of the public are invited [or permitted, as beneficiaries under the trust,] to acquire an interest or undivided share (whether called a unit or by any other name) in one or more unit portfolios and to participate proportionately in the income or profits derived therefrom, whether the value of such interest, unit or undivided share which may be acquired remains constant or varies from time to time;”

Does this now draw the Allan Gray Namibia Investment Trust and Stimulus into the ambit of the Act?

In line with an amendment to regulation 28 of the Pension Funds Act, it introduces a definition of ‘unlisted assets’ being “…securities other than stock exchange securities and such other securities determined by the registrar by notice in the Gazette;”

The amount of minimum prescribed share capital is removed from the Act. This will presumably be determined in Government Notices from time to time in future.

It introduces a new section dealing with changes in the name of management companies, in their shareholding and directors and provides for the appointment and removal of directors and management staff of such companies.

A number of other specifics in the Act are removed and will presumably be dealt with by the Minister in a less formal manner through proclamation in the Gazette.

Interesting media snippets

Directors and Officers run for Cover

‘D&O’ has always been a consideration on the corporate scene, but the introduction of the revised Companies Act [in South Africa] and the advent of the King III code of corporate governance raises the stakes in terms of such liabilities. Here is an article on this topic that appeared in Cover on 1 July.

Interestingly, it appears that the Namibian Companies Act 28 of 2004, actually prohibits the indemnification of directors and officers.

5 myths about emerging markets

Economies of big emerging-markets countries such as China, India and Russia have been growing much faster than the plodding U.S. economy. Yet if you own a fund that focuses on emerging-markets stocks, the chances are good that its performance this year has been lagging far behind the returns of the U.S.-stock funds in your portfolio. How could that be?

Read an interesting article on the 5 myths about emerging markets, that appeared in Yahoo Finance on 5 December, here...

Atos boss Thierry Breton bans internal mail

Aren’t we all feeling overwhelmed by the masses of e-mails we have to go through every day? Will a radical ban of internal e-mails contribute towards solving this problem? Read an article from BBC News of 6 December, here...

It’s now or never

For and interesting commentary on the status of the global economy and some advice on what investors should be doing by Investec’s Jeremy Gardiner, download and read this...

Tilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner® practitioner, specialising in the pensions field. He is a member of the marketing committee of ICAN and a member of the legal and technical committee of RFIN. Tilman is co-founder, shareholder and managing director of RFS.