| In this newsletter: Benchtest 07.2021, FIMA and independence and more... |
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We cannot report any further progress, and it appears the Act is still a work-in-progress. Pension fund governance - a toolbox for trustees
Registered service providers
If you want to find out whether your service providers are registered, or whether you need to establish directly from NAMFISA because the service provider does not appear on the list, use this link... In a note from our Managing Director, Marthinuz Fabianus examines the state of employers’ pension funds.
In our Benchmark column, read about
In ‘News from RFS’, read about -
In ‘Legal snippets’ read about ‘Death benefit quantum questioned’
As always, your comment is welcome, so open a new mail and drop us a note! Regards Tilman Friedrich  Monthly Review of Portfolio Performance to 31 July 2021 In July 2021, the average prudential balanced portfolio returned 1.9% (June 2021: 0.4%%). Top performer is NAM Coronation Balanced Plus Fund with 2.6%, while Allan Gray Balanced Fund with 1.3% takes the bottom spot. For the 3-months Momentum Namibia Growth Fund takes the top spot, outperforming the ‘average’ by roughly 1.2%. On the other end of the scale, NinetyOne Managed Fund underperformed the ‘average’ by 1.2%. Note that these returns are before (gross of) asset management fees. The Monthly Review of Portfolio Performance to 31 July 2021 provides a full review of portfolio performances and other exciting analyses. Download it here... Understanding Benchmark Retirement Fund Investments In the last and the next few issues of our monthly Performance Review, I will provide background and guidance on investments to assist Benchmark Retirement Fund members taking charge of their fund investments.
Follow this link to the monthly Performance Review and read paragraph 6. FIMA bits and bites – independence FIMA requires that certain persons appointed to specific positions are independent. Independence applies to board members of financial institutions. Section 261 deals with a retirement fund’s board. While this section specifically prohibits persons in a contractual arrangement with a retirement fund to serve on such fund’s board of trustees, the section has no independence prescriptions. However, one-third of the board of directors of financial institutions that are companies, must be independent. As per clause 3(2) (of General Standard 10.8 on independence), in relation to a financial institution (e.g., retirement fund, collective investment scheme, insurer, medical aid fund) or financial intermediary (e.g., fund administrator, insurance broker, stock broker, collective investment scheme manager or trustee), an individual is not considered independent if, in respect of an election or appointment to a position with that financial institution or financial intermediary, the individual:
 Compliment from a pensioner Dated 29 April 2021 “Dear S, Thank you very much for your prompt and to the point reply. These days it becomes more regular that requests like mine are either ignored or only attended to after various reminders. Therefore I really appreciate people like you who take their customers’ needs serious. Please keep up the great work and service you are and always have provided to my requests. Thank you very much once again.” Read more comments from our clients, here...  Our new, unique member communication platform! If you are a member of an employer fund participating in the Benchmark Retirement Fund, follow these steps to register
Or find it online, here... If you would like to know more about this facility, call your relationship manager or client manager. Don’t wait – register today!. Important circulars issued by the Fund RFS issued the following fund administration-related circulars to its clients over the last month.
 RFS bids farewell RFS bids farewell to Mariana Auene, who leaves our employ to join I3 Consultants and Actuaries at the end of August 2021. We thank Mariana for the years she shared with us and wish her well with her future endeavours!. Long service awards complement our business philosophy RFS’ business is primarily about people and only secondarily about technology. Every time a fund changes its administrator, a substantial amount of information and knowledge is lost. Similarly, every time the administrator loses a staff member, it loses information and knowledge, also referred to as corporate memory. As a small Namibia-based organisation, we cannot compete with large multinationals technology-wise because of the economies of scale that global IT systems offer. To differentiate ourselves, we focus on personal service and on the persons delivering that service to foster customer acceptance and service satisfaction. This philosophy has proven itself in the market, and we place great emphasis on staff and corporate memory retention through long service. The following staff member celebrated her fifth work anniversary at RFS! We express our sincere gratitude for her loyalty and support over the past 5 years to
Important circulars issued by RFS RFS issued the following fund administration-related circulars to its clients over the last month.
One of our staff members, Aliza Prinsloo, initiated and coordinated the Jar of Hope social responsibility project. Each Jar of Hope contained 750 ml instant stew mix, providing a full meal for four adults. How to make the Jars of Hope Ingredients
This complaint concerns the deceased member’s benefit quantum.
The deceased’s service commenced in March 2013, and he passed away in August 2014. The Administrator received and allocated contributions for the deceased member from September 2013 to August 2014. The rules obliged the employee to participate in the Fund. The Employer was obliged to register the deceased as a member of the Fund and to pay contributions on his behalf from March 2013 to August 2014. The Employer is consequently in arrears with contributions from March 2013 to August 2013. The Employer owes a duty of good faith but breached that duty by not paying over the contributions timeously. The tribunal successfully reconstructed Fund’s benefit calculation applying the Administrator’s information and the rules’ prescriptions. It found that the dispute only affected the member’s fund credit and that the Fund must pay the outstanding contributions according to Pension Funds Act, section 37 C. Order of the Tribunal The Fund must register the deceased member from March 2013 to August 2014.
 Should I pay down my overdraft or increase the repayment? If your salary provides you the capacity to apply some of this excess monthly income, it is a good idea to reduce your debt. The question is ‘which debt do I tackle first?’ It is best to try and settle the more expensive debt first, e.g., the overdraft probably has a higher interest rate than the bond. If your bond has an access facility, the facility can be used to settle the overdraft. Try to keep the ‘overdraft portion’ of the bond repayments as high as you can. Don’t keep your total bond repayments at the same level they were before you consolidated the debt. If you have little retirement savings, focus both on ensuring your bond will be fully repaid by the time you retire and on accumulating some retirement savings. Interest rates are quite low at the moment so it’s a good time to try and get ahead of your bond repayments. Calculate how much you can pay extra by paying more than the required amount. The best way to do this is to set up an extra debit order. It is much better doing it this way than waiting for the end of the month to “see how much is left” to transfer to your bond account. Save into a retirement product like a pension/provident or retirement annuity (RA) you effectively save pre-tax money. A certified financial planner professional will be able to help you establish how much you should be saving now to ensure you can maintain your lifestyle in retirement. Read the full article by Rick Briers-Danks in Moneyweb of 28 July 2021, here… Factors to take into account when moving after retirement “Decisions on where to live when you retire are going to affect the quality of your retirement and should be made with great care, as there are a host of reasons and choices available that could determine a stress-free retirement….” Consider the following factors:
Raising your children to have a healthy relationship with money “As parents, we all want our children to have a healthy relationship with money so that they can enter adulthood with a positive view and a clear understanding of money and how it can be effectively used to achieve their goals. While we know that money won’t necessarily make them happy, through our words and actions we can provide them with a better chance of developing a positive connection with money and a deeper understanding of the role it can serve in their adult lives. Talk openly about money: It is important to talk openly, albeit age-appropriately, with your children about money and finances to demonstrate that financial matters need not be shrouded in secrecy or mystery… Allow them to make their own decisions: If you’re paying your children an allowance or pocket money, avoid trying to micro-manage the way in which they choose to spend their money. Demonstrate honesty: Be sure to always demonstrate honesty when it comes to money so that your children know that it is never okay to cheat, conceal or tell untruths about money. Let them see you using your money for good: It is important for your children to see you using your money and/or resources for good. Demonstrate a work-life balance: Demonstrating a healthy work-life balance will help your children develop a healthy sense that a career can be rewarding and pleasurable and that it is possible to make money doing something that you enjoy. Show them that a budget is not punishment: Speak about the household budget in a positive manner so that your children develop a healthy respect for budgeting. Don’t compare your finances to others: Avoid judging other people on the amount of money that they earn or by their accumulated wealth as this may lead your children to believe there is a link between money and self-esteem. Don’t bicker or fight about money: Arguing with your partner or spouse about money can lead your children to associate money with tension and discord. Don’t make them feel guilty for buying something: Encourage your children to make smart money decisions by encouraging them to do their market research, compare prices, check the quality, and assess whether their desired purchase is a ‘want’ or a ‘need’. Allow them to experience work in exchange for money: Getting children to appreciate the value of money is an age-old challenge. That said, one of the surest ways of helping anyone appreciate its value is to allow them to work or do chores in exchange for money. Don’t kill their entrepreneurial dreams: Do everything you can to encourage their entrepreneurial ambitions by allowing them to share their ideas without fear of ridicule. Don’t let them believe that finding a rich partner is an acceptable path to financial freedom: Raising your children to believe that the only way to wealth is to find a rich partner is a recipe for disaster. Watch your language: Be aware of the way in which you talk about money. Negative words and phrases can cause your child to develop a scarcity mentality which can severely limit their view of money and finance. Honour your financial goals and commitments: Impress on your children the importance of honouring your financial commitments, paying bills on time, repaying loans, and paying your own way. Don’t be scared to talk about your past money mistakes: We’ve all made financial mistakes, and it’s important that we share these mistakes with our children…” Read the full article by Craig Torr of Crue Investments (Pty) Ltd in Moneyweb of 26 July 2021, here...  Investing in a post COVID world “Inflation is the enemy of long-term investing and savers. If we look at the big picture, governments are in debt and they need inflation to lesson the burden of that debt, unfortunately. The Fed is talking about 2% as an inflation target. This was the target when inflation was 4-5% and at 2% the dollar depreciates and halves twice in a person’s life time. So it’s surprising that we have not had inflation up to now given the amount of free money in the world. We study it intensely and our take is that governments have avoided deflation. Deflation was actually quite good but the governments avoided it because it is damaging for the heavily indebted…. The fed has made it clear they won’t increase rate, so from our side it’s clear that the Fed and governments generally will err on the side of letting inflation come through. However, the other deflationary forces are still there. There is still a lot of cheap money around which will not necessarily go away. There is a lot of disruption around and there is a lot of base effect going on now – with growth, earnings and inflation numbers. We expect inflation above 2% for a while and it will be interesting to see what happens in a few years – will we come back and neutralise at 2%? In SA, the market is forecasting about 5.2 %. We think that is too high due to the base effects. We think we will get a return to about 4% inflation in SA. So this is not a runaway inflation or scare story but it is something we need to deal with so we must avoid assets that don’t do well in inflation. Equities that have pricing power are the place to be at the moment… The difference we see in Chinese tech companies is that they are serving the Chinese consumer – so it’s a play on the Chinese consumer. China is moving from infrastructure-driven GDP to consumer- driven GDP and benefiting from that. China… One of the things we have benefitted from and the reasons for the strength of the Rand was 14 months of trade surpluses. That’s been mainly driven by the fact that imports collapsed but export continued. So mining volumes and mining efficiency has held up surprisingly well which has been great for South Africa… [With regard to property] we are seeing a huge reduction in the number of people going in to the office, which means that the companies don’t need the space anymore. This is as a result of reduction in head count, efficient technology and the work-from-home benefits to people’s quality of life. Cities have been overtraded and congestion is a problem. I think downtown real estate, particularly commercial has seen its best days…” Subscribe to Cover magazine to read the full conversation with Dave Foord, in the July 2021 edition, page 48 here… The compliment sandwich and four other common mistakes of leaders “Most companies recognize the impact culture has on employee engagement, productivity, and performance. But while many leaders think they are cultivating an effective culture, some of their actions are actually culture mistakes. Take the compliment sandwich, for instance. This is when feedback is provided by sandwiching “negative” feedback between two compliments. There are many other examples of how leaders can inadvertently create culture missteps, some of which are outlined here. If you can recognize the pitfalls early on, you can adjust your leadership style and strategy to create your desired culture. Failing to link culture to strategy What behaviors do you want from your team to achieve that future vision? This process of linking the two helps you ensure that they are not working at cross purposes… Moving too fast to achieve true alignment Spending a few extra hours in conversation with the leadership team about what the strategy really is will not only yield better decisions about the company’s future but will also create a stronger level of team cohesion. Relying on the artifacts Authentic culture is everything to do with the interactions of human beings as they are doing the day-to-day work. Sometimes leaders lean too hard on artifacts and believe having isolated team-building events will create the kind of morale boost that they need. Triangulating (even with good intentions) No matter what the conversation might be when you’re talking about somebody, it can erode trust. The most effective thing for leaders to do is always encourage, invite, and even insist that employees talk directly to one another when they have interpersonal challenges. Failing to invest Culture shifts do not happen overnight, and real change begins from the inside out. By far and away, the biggest mistake the leaders make when it comes to culture is simply not investing in it. Most of the time, the biggest investment is actually the time it takes to have these important conversations. Ultimately, culture can become harmful or ineffective if not planned out carefully and with purpose. Evaluate all culture initiatives based on their ability to drive business results, improve lives and increase employee engagement to determine if they are worth implementing.” Read the full article by Laura Gallaher in Fast Company of 16 July here…  Great quotes have an incredible ability to put things in perspective. "Wealth is like sea-water; the more we drink, the thirstier we become; and the same is true of fame.” ~ Arthur Schopenhauer |
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