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| Issued February 2024 | ||||
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| In this newsletter... | ||||
| Benchtest 01.2024 – we need a competing global financial system, risk management, housing loans and co-owners, and more... | ||||
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| IMPORTANT NOTES AND REMINDERS | ||||
NAMFISA levies
After its February meeting, BON announced that the repo rate remains unchanged at 7.75%. The interest rate on funds’ direct loans remains at 11.75%. 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 2023, 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
RFS provides comprehensive support for trustees. Find a list of downloadable documents to assist with governance and management of private funds, registered as of June 2023, here... |
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| IN THIS NEWSLETTER... | ||||
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In this newsletter, we address the following topics:
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In 'Tilman Friedrich's industry forum' we present...
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In 'Legal snippets', read about...
As always, your comment is welcome, so open a new mail and drop us a note! Regards Tilman Friedrich |
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| TILMAN FRIEDRICH'S INDUSTRY FORUM | ||||
| Monthly Review of Portfolio Performance to 31 January 2024 |
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| In January 2024, the average prudential balanced portfolio returned -0.2% (December 2023: 1.7%). The top performer is Namibia Coronation Balanced Plus Fund, with 0.4%, while Allan Gray Balanced Fund, with -0.8%, takes the bottom spot. Namibia Coronation Balanced Fund takes the top spot for the three months, outperforming the ‘average’ by roughly 3.5%. Hangala Capital Absolute Balanced Fund underperformed the ‘average’ by 2.2% 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 31 January 2024 reviews portfolio performances and provides insightful analyses. Download it here... |
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| The world needs competing financial systems | ||||
| Through the manipulation of interest rates and money printing by the Fed-led reserve banks around the globe since the GFC, the world may have avoided a ‘financial melt-down’, but it has come at a substantial cost to investors since then. Total global pension fund assets are currently estimated at US$ 48 trillion. A very crude calculation (assuming an annual growth of 2% in pension fund assets) suggests that the actual real return of 3.8% since the GFC is 2.2% below expectation, producing a ‘loss to pension fund investors worldwide of US$ 13 trillion over the sixteen years. The same crude calculation for Namibia implies a loss to Namibian pension fund investors of N$ 54 billion. This figure represents 26% of one’s pension fund assets! Where pension funds aim to replace one’s re-retirement income at 2% per year of membership, this loss means that pensioner’s pre-retirement income replacement rate has declined to only 1.5%! Reserve bank intervention during the GFC saved delinquent Western lenders too big to fail and short-term pain to the global economy but has showered severe pain on the world’s pension fund savers over the past sixteen years, even though our local banks never were faced with the issues Western banks faced at the time. And the end is not in sight yet! In short, the world’s pension fund savers saved delinquent Western financial institutions at the Fed’s instigation. Now, we are facing another similar situation where the rest of the world is made to pay for the US’s resolve to weaken its global adversaries, China, Russia and the BRICS countries of late. If their efforts of decoupling trade from the US Dollar are successful, the US will face severe challenges in funding its trade deficits, exporting inflation and borrowing cheaply from the rest of the world. The US will, therefore, be hell-bent on preventing this from happening and will use its supremacy over the global financial system to hurt its adversaries. Is it possible that the weakness of the Rand is the result of such a concerted effort by the West under US leadership? The world needs an alternative financial system… In the Monthly Review of Portfolio Performance to 31 January 2024, we elaborate on the strategies an investor should follow under the above circumstances. It also reflects the editor’s views on current developments and their impact on investment markets Download the Monthly Review of Portfolio Performance to 31 January 2024, here... |
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| The importance of risk management | ||||
| Those entrusted with safeguarding the financial future of countless individuals, navigating the ever-evolving landscape of investment markets may feel like walking a tightrope. Pension fund trustees carry tremendous responsibility, and effective risk management lies at the core of their duties. But why is risk management so crucial? Understanding the potential pitfalls and proactively mitigating them is the only way trustees can ensure the pension fund's long-term sustainability and solvency, ultimately protecting its members' financial security. The Multifaceted Landscape of Risks:Pension funds are exposed to a diverse range of risks, each potentially eroding member benefits and jeopardising the fund's stability. Here's a brief overview of some key categories:
Failing to manage these risks adequately can expose trustees to several liabilities, both legal and financial:
The good news is that effective risk management frameworks can be implemented to mitigate these threats and protect the fund. Here are some critical steps:
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| Housing loans and shared ownership | ||||
| Section 19(5)(a) of the Pension Funds Act outlines several scenarios in which a fund may grant a member a loan for various housing purposes. Specifically, subparagraph (i) allows for the redemption of a loan granted by a person other than the fund, buying land an erecting a dwelling, buying a dwelling or doing renovations to a dwelling, against the security of immovable property belonging to the member or their spouse and occupied or to be occupied by the member or a dependent. The critical condition for granting such a loan, as outlined in subparagraph (b), is that it must be fully secured. This security can be in the form of a first mortgage on the immovable property owned by the member or their spouse, a pledge of the member's benefits from the fund, or both. Additionally, the loan must adhere to certain limitations outlined in subparagraphs (ii), (iii), and (iv), which include not being liable for any other loan to the fund, not having a lower interest rate than prescribed by regulation, and having a redeemable capital sum over a specified period. Furthermore, subparagraph (c) outlines the maximum limits for the loan amount based on the type of security provided. If a mortgage on the property secures the loan, it cannot exceed 90% of the property's market value. When a fund member co-owns a house with another person who is not a fund member, the fund may still grant a loan for housing purposes to the member, as long as certain conditions in the Pension Funds Act are met, as briefly referred to above. However, it's crucial to note that in the event of default, the fund may only be able to attach half the property's value, given that the member co-owns it with someone who is not a fund member. This limitation of attaching only half the property's value in case of default introduces additional risk for the fund. Therefore, the fund must factor in this risk when determining the loan terms, including the loan amount, interest rate, and repayment period. Furthermore, the maximum loan amount the fund can grant is typically limited to a percentage of the property's market value, as outlined in the Act. However, given the risk associated with only being able to attach half the property's value in case of default, the fund needs to adjust this percentage accordingly to mitigate its risk exposure. In conclusion, while the Namibian Pension Funds Act allows for the granting of loans to fund members for housing purposes, including scenarios where the member co-owns a property with a non-member, the fund must carefully consider the additional risk introduced by the limitation on attaching only half the value of the property in case of default, and adjust its lending policies accordingly to manage this risk effectively. |
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| COMPLIMENT | ||||
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Compliment from a former fund member
19 January 2024 |
“Good Day V Thank you so much for your excellent service, it is rare that one finds this class service in Namibia. You and your company indeed stick to your promises. May you grow in your career because of the valuable input you give. Regards SG” |
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Read more comments from our clients, here...
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| BENCHMARK: A NOTE FROM GÜNTER PFEIFER | ||||
| Important circulars issued by the Fund | ||||
| The Benchmark Retirement Fund issued no new circular since the previous newsletter Clients are welcome to contact us if they require a copy of any circular. |
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| NEWS FROM RFS | ||||
| Staff improving their competencies | ||||
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RFS prioritises the ongoing education and professional development of its staff. As Nelson Mandela once said, "Education is the greatest equaliser," and by investing in the education and training of its employees, RFS is helping to create a more skilled and knowledgeable workforce.
By supporting its staff in their pursuit of further education, RFS is also investing in the long-term success of its business. As staff members become more skilled and knowledgeable, they are better equipped to provide high-quality service to clients and to help the company stay competitive in a rapidly changing market. Pursuing further education can be challenging and arduous, and it is a testament to hard work and dedication to achieve such a milestone in one’s life. We congratulate:
We wish these two ladies all the best on the road to greater heights! Considering their circumstances, this is a remarkable achievement and a shining example for others to follow!
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| RFS welcomes back an ‘old face’ | ||||
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After a brief stint on ‘greener pastures, ' RFS welcomes back Sharita Visser. Sharita picks up the baton on our permanent staff complement again on 1 March. We welcome Sharita back wholeheartedly and look forward to her contributions to the Benchmark team and her clients!
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| Long service awards complement our business philosophy | ||||
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RFS places a high value on its employees and recognises the importance of their contributions to the company’s success. Long service awards are a great way to acknowledge and celebrate the commitment and loyalty of employees who have been with the company for a significant time.
In addition to recognising employees’ contributions, long service awards can be a powerful retention tool, demonstrating that the company values and appreciates its employees’ dedication and hard work. These awards can help to create a positive and motivating work environment where employees feel supported and encouraged to continue to grow and develop within the company. Günter Pfeifer, Director Operations: Benchmark, celebrated his fifteenth work anniversary at RFS on 1 February 2024! We sincerely thank Günter for his leadership, dedication, loyalty and support over the past fifteen years. We look forward to his continued contribution to building the Benchmark Retirement Fund and RFS, our clients and colleagues! |
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| It is ‘Back to School’ for RFS staff | ||||
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| Here are the pupils of Khomasdal Funky Town SSS, smartly dressed in their school uniforms. | ||||
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The theme of our first staff event of 2024 was ‘Back to School’. Although most pupils looked suspiciously over age, all thoroughly enjoyed the afternoon and are looking forward to the new ideas of our new social committee for the upcoming events.
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| No Volleyball for All tournament without RFS | ||||
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Since RFS was founded 25 years ago, it enrolled teams for the annual DTS Volleyball for All tournament. 2024 was no exception, with RFS being represented by two teams. Here are our warriors after their gruelling endeavours to win for once. Do their faces express fatigue, disappointment, or both? If nothing else, it portrays their wonderful team spirit!
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| Important circulars issued by RFS | ||||
RFS issued the following new circular since the previous newsletter:
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| NEWS FROM NAMFISA | ||||
| NAMFISA invites to pension funds industry meeting | ||||
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NAMFISA invites all Trustees, Principal Officers and other officers to attend the first industry meeting scheduled for 4 March, and to forward any annotated items for inclusion on the agenda by 22 February 2024 to Ms. Martha Mavulu at email address: This email address is being protected from spambots. You need JavaScript enabled to view it.. The meeting is strictly reserved for Trustees and Fund Officers.
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| NAMFISA proposes substantial changes to the PFA investment regulations | ||||
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| NEWS FROM RFIN | ||||
| RFIN’s trustee training calendar | ||||
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| LEGAL SNIPPETS | ||||
| Bank of Namibia increases foreign investment allowance | ||||
| In exchange control circular no 2023/02, the Bank of Namibia informs authorised dealers that it has been decided, with effect from 14 December 2023, to increase the applicable limit from the current 35% to 40% of total assets under management. | ||||
| PFA determination on Covid-19 relief and non payment of contributions: MA CORNELIUS v THE HOSPITALITY AND GENERAL PROVIDENT FUND and others | ||||
Background
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| Can trustees remove nominated beneficiaries? | ||||
| In a landmark case reported in the Allgemeine Zeitung of 2 February 2024, the court was requested to set aside a decision by a board of trustees of a family trust, to remove certain persons from the trust’s list of beneficiaries. The article sheds light on a significant court ruling in Namibia regarding the dynamics between trustees and beneficiaries within a trust. The court's decision, delivered on 15 December 2023, marks a pivotal moment in clarifying the roles and rights within such arrangements. At the center of the legal dispute were the trustees, including Hans Wilhelm Schütte, Dorothea Schütte, and Herbert Maier, who had taken steps to remove certain beneficiaries from the trust. On the opposing side were the beneficiaries, represented by Ascan and Gesa Schütte, who contested this action. The crux of the matter revolved around the trustees' decision to exclude Brigitte Schütte-Barry, the eldest daughter, from the list of beneficiaries without her explicit consent. Interestingly, although this decision was a point of contention, it wasn't directly addressed in the court's final ruling. The court's judgment underscored a fundamental principle: trustees cannot unilaterally remove beneficiaries from the trust without their explicit consent. This ruling reinforces the importance of respecting the rights and interests of beneficiaries within trust arrangements. Furthermore, the court clarified that while trustees can be requested to resign from their position, their entitlement as beneficiaries doesn't automatically cease upon resignation. Unless voluntarily relinquished, a trustee's entitlement remains intact. This aspect of the ruling delineates the distinction between the roles of trustee and beneficiary, emphasising that one's status as a beneficiary is not contingent upon one's role as a trustee. The court's decision upheld the lower court’s ruling, dismissing the trustees’ appeal. Consequently, Ascan and Gesa Schütte are to be reinstated as beneficiaries retroactively. Moreover, all decisions made by the trust over the past five years are deemed null and void. The trust is also mandated to cover the legal expenses incurred by both parties. In summary, the court's judgment serves as a significant precedent in defining the rights and responsibilities of trustees and beneficiaries within trust structures in Namibia, emphasising the importance of transparency, consent, and adherence to legal protocols in such arrangements. Would this decision be relevant to retirement funds that are, of course, also trusts? Does it mean trustees cannot remove or ignore a beneficiary from a deceased’s nomination form? In the case of a retirement fund, the prohibition of removing a beneficiary won’t apply to nominated beneficiaries to a retirement fund death benefit. The entitlement to a benefit in a testamentary trust arises from the trust deed. As is evident from the Schütte case, the trustees attempted to remove persons whose benefit entitlement arose from the trust deed. In the case of a retirement fund, a prospective entitlement to a benefit only arises upon the fund member's death. Until then, the member can still change his nomination at any time, provided he informs the fund thereof in writing. A nominated beneficiary’s legal entitlement to a benefit would only arise once the trustees allocate the death benefit unless there are no dependents. Dependants, in contrast with nominated beneficiaries, are entitled to a benefit, even if they were not nominated by the deceased member. It is often a job to identify the dependants. Once all dependants have been identified, the trustees must establish how much to allocate to each dependant and the nominated beneficiaries. Nominated beneficiaries only need to be considered if there is surplus capital after the allocation to the dependants. The existence of a nominated beneficiary is a factual question. Did the member inform the fund in writing of the beneficiary he wanted to benefit? The trustees cannot remove a nominated beneficiary, but they are not obliged to allocate anything or according to the written member nomination, unless the member left not dependants. Subsequent events can impact the quantum of dependency but not the legal entitlement. The trustees determine the quantum at their discretion, and some beneficiaries may get nothing because of insufficient capital and a lower priority ranking. The trustees’ allocation will be the dependents’ and nominated beneficiaries’ legal entitlement. If the deceased had no dependants but nominated beneficiaries, the beneficiaries become entitled per the nomination form after the fund extinguished any shortfall in the deceased member’s estate. Section 37A prohibits the trustees from exchanging beneficiaries once they have allocated and paid the benefit, even if a beneficiary subsequently passes away. Nominated beneficiaries would only be considered once all dependents were considered, and the allocation is entirely at the trustees’ discretion. If there are no dependants, the trustees have no discretion and must follow the nomination form. |
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| SNIPPETS FOR THE PENSION FUND INDUSTRY | ||||
| Investments that may not be suitable for retirement fund portfolios | ||||
| This article suggests it is very important to align investment choices with individual financial goals, particularly in the context of retirement planning. It warns against common investment pitfalls that can lead retirees into financial difficulty during their retirement years. Firstly, it cautions against overspending on luxurious houses, which may result in excessive mortgage debt, especially for retirees with modest incomes. Secondly, it advises against investing in cryptocurrencies, highlighting their volatile nature and potential for significant losses. Thirdly, it suggests diversifying away from holding too many company shares, emphasising the need for a balanced portfolio and avoiding emotional investment decisions. Additionally, it warns against relying too heavily on property investments, which may lack liquidity and income generation during retirement. The article also discourages single-strategy portfolios, advocating instead for a diversified approach to mitigate risk. It advises against investing in souvenirs or collectibles, which typically offer low liquidity and uncertain returns. Lastly, it cautions against financially supporting family members at the expense of one's own retirement savings, emphasising the importance of preserving capital. In conclusion, the article underscores the need for careful consideration of investment choices and alignment with individual financial circumstances and goals. It stresses the importance of seeking guidance from experienced financial planners to navigate the complexities of retirement investing effectively. Read the article by Michael Haldane in Moneyweb here… |
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| Six rules of thumb to save enough for retirement | ||||
| This article emphasises the importance of securing a comfortable retirement for South African families through early planning and a solid strategy, especially in uncertain times. It highlights that while balancing monthly expenses with saving for the future can be challenging. It is crucial, though, given that 50% of South Africans prioritise a comfortable retirement. Rising costs have led many South Africans to hold multiple jobs. Experts suggest several rules of thumb for retirement savings:
Read the article by Seth Throne in Businesstech of 10 February here... |
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| Retirement annuities as an alternative to a trust | ||||
| In this article, retirement annuities are presented as an alternative to trusts in estate planning and financial management. It highlights the complexities and costs associated with managing a trust and suggests that retirement annuities can serve as effective substitutes. Retirement annuities offer tax advantages and are powerful tools for estate planning, aiming to foster asset growth outside of one's estate. The recent increase in tax deduction limits and the allure of tax-free investment growth make retirement annuities an appealing option. Despite differences, retirement annuities and trusts share benefits such as protection against creditors, asset growth outside the estate, and fiduciary duties. However, there are liquidity restrictions associated with retirement annuities, requiring careful financial planning. The decision between a retirement annuity and a trust depends on individual financial goals, estate planning needs, and tax considerations. Consulting with a financial or estate planning professional is crucial to tailor the decision to one's specific circumstances and ensure a comprehensive and aligned financial strategy. The article emphasises the importance of seeking advice from certified professionals in navigating the complex financial landscape. Read the full article by Wouter Fouries of Ascor Independent Wealth Managers in Moneyweb of 12 February 2024 here… |
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| SNIPPETS OF GENERAL INTEREST | ||||
| Major win for SA’s skills crisis | ||||
| The South African Department of Home Affairs has approved the first companies for the Trusted Employer Scheme (TES), addressing the country's skills crisis. Introduced in 2023, the TES streamlines immigration processes for large employers, aiming to attract foreign talent and investment. Strict qualifications ensure only reputable companies benefit, offering streamlined processes, reduced documentation requirements, and faster processing times. The TES is seen as a bold step to strengthen South Africa's appeal for talent and investment, providing a solution to immigration challenges faced in the past 24 months. Approved companies will experience more efficient immigration procedures, marking an exciting development in the nation's economic growth. Read the full article by Luke Fraser in Businesstech of 23 January 2024 here… Editor’s note: The Bank of Namibia will likely bring its repo rate on par with the SARB if the SARB lowers its repo rate, as this article suggests. |
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| South Africa’s Rand manipulation case falls apart | ||||
| The Competition Appeals Court has thrown out the Competition Commission’s case against most of the banks accused of manipulating trades involving the rand/dollar pair. The case has been ongoing for eight years, but was dismissed due to a lack of evidence, jurisdiction, and overreach by the Commission. Only four banks are still under consideration, and no guilty verdicts have been given yet. However, there is enough evidence for a case to be brought against them. The court emphasised that the Commission needed to show a common anti-competitive objective among all banks. Despite the high profile of the case, experts argue that the manipulation was an isolated incident, and that it only harmed individual clients, rather than the entire South African economy. The National Treasury confirmed that market manipulation ceased in 2013, and regulations were put in place to prevent it from happening again. Read the full article by Staff Writer in Businesstech of 9 January 2024 here… |
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| Advice for becoming a self-disciplined person | ||||
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Discipline as a crucial skill for personal and professional successand is neither innate or excessively challenging. Discipline, defined as self-control over actions and behaviors, is achieved through accountability, responsibility, and choice.
Benefits of discipline include improved productivity, goal achievement, resilience, and mental well-being. Core principles for building discipline involve setting clear and achievable goals, managing triggers, building habits, and making mindset adjustments. Challenges in developing discipline include coping with distractions, procrastination, lack of motivation, and breaking positive habits. Strategies for building everyday discipline include creating clear and achievable goals, identifying and managing triggers, establishing consistent habits, optimising environments, and adjusting mindsets. A case study featuring James illustrates how applying these strategies led to significant improvements in his work routines, health habits, productivity, confidence, and mental wellness. The key takeaways include the learnability of discipline, its impact on various aspects of life, the importance of addressing goals, triggers, habits, environment, and mindsets, and the transformative power of consistency and self-compassion. In conclusion, the article encourages individuals to make discipline a lifelong practice, providing frameworks, schedules, and psychological insights to empower self-control and achieve clarity of purpose in both professional and personal life. Read the full article by Julianna Summers here… |
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| AND FINALLY... | ||||
| Wise words from wise men | ||||
| The insights of ancient philosophers still resonate today and offer timeless wisdom on the relationship between money, virtue, and well-being. ”If thou wilt make a man happy, add not unto his riches but take away from his desire.” ~ Epicurus (341 BC – 270 BC) |
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| Unsubscribe If you do not want to receive these newsletters {unsubscribe}click here...{/unsubscribe} Disclaimer 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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