| In this newsletter: Benchtest 09.2021, not being top performer, joining another fund under FIMA and more... |
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The government published the FIMA (Act 2 of 2021) and the NAMFISA Act (Act 3 of 2021) in the government gazette no 7645 on 30 September 2021. Downlaod NAMFISA’s public notice here... Both Acts, or provisions of these Acts, will come into operation on a date the Minister will determine by notice in the Gazette. 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 our Benchmark column, read about…
In ‘News from RFS’ read about…
In ‘Legal snippets’ read
In media snippets, read –
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 30 September 2021 In September 2021, the average prudential balanced portfolio returned -0.4% (August 2021: 1.2%). The top performer is Allan Gray Nambibia Balanced Fund with 1.3%, while Hangala Prescient Absolute Balanced Fund with -1.9% takes the bottom spot. For the 3-months Old Mutual Pinnacle Profile Growth Fund takes the top spot, outperforming the ‘average’ by roughly 1.8%. Hangala Prescient Absolute Balanced Fund underperformed the ‘average’ by 2.4% 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 30 September 2021 provides a full review of portfolio performances and other insightful analyses. Download it here... Not being the top performer is not good enough! The Benchmark Default portfolio is currently experiencing a difficult time, investors taking the fund to task for not featuring at the performance table’s top end. Investing is like a sports game, whether it is soccer, rugby, hockey, or whatever, and the investor serves as the coach. His investment is his team; the opponents are the investment market. The coach may take one of two routes, a speculative route or a planned route. Taking the speculative course, the coach would attempt to capitalise on the opponent’s weakness as the game progresses, focusing on winning the game. The planned route requires the coach to know his opponents and his team and what result he wants to achieve. This knowledge will determine the strategy he must follow. He may not always want to win each game if that means preserving his team’s completeness, fitness, and health for the next game. Investment is not a one-game matter but rather like winning the league. One can follow similar approaches when investing. The speculative course means that the investor tries to identify opportunities in the market and invest in these, focusing on making a killing on the investment. How one identifies opportunities is important. Laypeople would consider what has done well over the recent past and jump onto that band-wagon. Experts would use benchmarks for assessing whether an investment presents an opportunity. Often the benchmark considers the investment relative to other similar investments, the market, or the investment’s historical metrics. In a planned approach, the investor would define his ultimate goal and a strategy for achieving this goal… Read part 6 of the Monthly Review of Portfolio Performance to 30 September 2021 to find out what our investment views are. Download it here... FIMA bits and bites – key points to consider when joining another fund after FIMA (Part 2) Read part 1 of this article here... FIMA will raise the goalposts for funds, trustees, and service providers materially. Compliance failure under FIMA may lead to imprisonment of up to 10 years and penalties of up to N$ 5 million. In certain instances, even trivial administrative shortcomings can result in imprisonment. Boards of trustees currently often comprise the employers’ senior management members, and imprisonment would automatically disqualify the senior management member from filling any senior position at the employer. As a result, many employers and trustees are contemplating a move to an umbrella fund. Under FIMA, the fund rules bind the employer, the members and the fund. The fund is a separate legal entity under the trustees’ control. The trustees must take all outsourcing decisions and how to deal with the fund’s assets, subject to FIMA, the fund’s rules and its policies. The employer must consult the fund and its members. Once FIMA has become effective, a fund wishing to transfer to another fund must comply with General Standard 10.10 on outsourcing, and to Retirement Funds Standard 5.22 on the transfer of any business. GEN.S.10.10 – Outsourcing
Funds should ascertain that the rules are amended to provide for making and receiving transfers and for amalgamating with other funds in compliance with this standard. We would advise that funds better carry out their decision to move to an umbrella fund before FIMA becomes effective. Since the Gazette published FIMA, the declaration of its effective date is imminent.
 Compliment from from an HR officer of a former client fund Dated 31 August 2021 “I would like to say that I absolutely enjoyed working with …, one of the best I ever worked with. He is tops in my opinion. Always going out of his way to assist.” Read more comments from our clients, here...  Important circulars issued by the Fund The Benchmark Retirement Fund issued the following fund administration-related circulars to its clients over the last month.
 Important circulars issued by RFS RFS issued the following fund administration-related circulars to its clients over the last month.
Marthinuz Fabianus celebrates 20th anniversary at RFS RFS philosophy is that our 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 and sophistication that global IT systems offer. To differentiate us, we need to focus on personal service and on the persons delivering that service to foster customer acceptance and service satisfaction and be more flexible and more responsive to local needs and the local environment. With this philosophy, we have been successful in the market, and to support this philosophy, we place great emphasis on staff retention and long service. We congratulate Marthinuz wholeheartedly and express our sincere gratitude for diligently leading the company over the past three years and for his dedication and commitment to the company and our clients and other stakeholders over the past 20 years! Other employment anniversaries Zulene Bio celebrates her 5th anniversary on 1 November 2021. We express our sincere gratitude to Zulene for the years she devoted to RFS and her clients and wish her many more enjoyable and satisfying years with the company! RFS welcomes new staff We are pleased to announce that Crezelda Kooper joins our permanent staff complement on 5 November as a Benchmark client manager with added responsibilities of providing board services to the Benchmark Retirement Fund board of trustees. Crezelda matriculated at Delta Secondary School in 2006. She joined Alexander Forbes in October 2007 as a fund administrator and moved to the fund accounting department at the beginning of 2010, where she was later promoted to the position of team leader: fund accounts. She moved to the retail department of AF as a team leader in April 2014. Crezelda joined Old Mutual in October 2016 as a team leader in their corporate segment. At Old Mutual, she was responsible for administration-related deliverables on both their pension and provident funds. RFS sponsors Projekt Lilie gala event Education is the key to prosperity in any society. To RFS, all forms of education take centre stage in our sponsorship programme. In this endeavour, RFS supports school sports events in various codes and various other related causes and events. September is the month of the Projekt Lilie gala evening in recognition and support of teachers who have excelled in promoting education in Namibia. This project is a legacy of former Privatschule Karibib. The occasion had its 16th anniversary this year, and the board of curators has been chaired since its inception by Tilman Friedrich, who is one of the initiators.
Here are the Lily winners of 2021:
In our June newsletter, we reported on our sponsorship of the Privatschule Grootfontein for the restoration of their historic hostel that once served as a military hospital. Here are a few photos of the project.
 NAMFISA calls virtual meeting to discuss FIMA roll-out FIMA sent out a circular on 10 October, inviting all Chief Executive Officers and Principal Officers of Regulated Entities to a virtual session on how NAMFISA intends to roll out the formal consultations in respect of the sub-ordinate legislation of the FIM Act. The meeting will take place on 8 November from 11h00 to 12h30. Confirmation of attendance is expected by 1 November  When may an employer request its fund to withhold a benefit from a member upon termination of membership The requirements for a deduction by the employer from a benefit due to the member from his retirement fund are:
Paragraph (m) of the definition of „gross income‟ stipulates as „gross income‟ “any amount received or accrued under or upon surrender or disposal of, or by way of any loan or advance granted by the insurer…, any policy of insurance upon the life of any person who at any time while the policy was in force was an employee… or director of the company if any premium paid …was deductible…under section 17…”. Any loan or advance previously included in „gross income‟ is to be excluded. If a policy is terminated and a paid-up policy is issued, these are deemed to be one and the same policy. Section 17(1)(w) deals with „general deductions‟ and more specifically with “expenditure incurred by the taxpayer in respect of any premiums payable under a long-term policy of which the taxpayer is the policyholder, where…” any of the following conditions apply:
In practice, Namibians, including Namibian pension funds, mostly have dealings with South Africans, and in general, the services provided by South African service providers would be subject to Namibia’s double taxation agreement with South Africa. This agreement prohibits the taxation by Namibia of any of the following income –
 Desperate South African workers are ‘resigning’ to get access to retirement funds – but SARS is taking note “Momentum Corporate’s multi-employer umbrella fund, FundsAtWork, has received several requests from participating employers to allow members to resign ‘artificially’ to get access to their retirement savings. Employers then reinstate the employee once they’ve obtained access to their savings. Momentum said this trend is not unique to FundsAtWork and is evident across the industry…The trend reflects the financial vulnerability of many employed South Africans. To make matters worse, many employees are unlikely to receive salary increases, let alone inflationary-related increases, as many businesses struggle to bounce back from the pandemic…Should SARS suspect the exit from employment was formally structured as a legitimate resignation while the real intention was deliberately disguised to allow the employee early access to their retirement savings withdrawal benefit, they will investigate further, and if they find this is in the case, they could revoke the income approval of the retirement fund. This would mean, among other things, contributions to the retirement fund will no longer be tax-deductible and investments and their growth would be taxed, which would impact significantly on the financial viability of the retirement fund…” Read the full article by Staff Writer in Businesstech of 27 September 2021, here… Note: Namibia is no different from SA From the tax perspective. Employers must take note of the potential consequences when allowing employees to resign to get their pension fund benefit. Ten rules for a secure retirement for women “…many women are being overlooked when it comes to retirement planning. When confronted with the hard realities of available retirement money, death, divorce, or disability, it always makes sense to talk openly to your spouse timeously and discuss the exact point of reference and standing for both of you. It would make sense to look at 10 general rules that affect retirement planning for women. These rules apply to both common law and same-gender relationships.
 How much do government employees earn – SA vs. Namibia According to Businesstech of 3 October, the average earnings of SA government employees amounted to R 400,000 in 2019, heading towards R 450,000 in 2021. The article notes that by comparison, the average formal sector remuneration was R 277,500. Taking Namibia’s GIPF 31 March 2020 annual financial statements, its fund members’ average annual pensionable salary was N$ 186,600. By comparison, the average formal sector pensionable remuneration in Namibia was N$ 222,300. The Namibian information derives from RFS’ pension fund database. It is possible that these figures do not quite compare “apples with apples”, but they will be pretty close to that. The SA figures may represent total remuneration, while Namibia figures represent pensionable remuneration. For the “upper echelon,” pensionable remuneration is often lower than total remuneration because of employment benefits. However, it is not clear whether SA figures represent total remuneration. If they do, one can probably add one-third to the Namibian figures for a better comparison. The average remuneration of Namibian government employees would then amount to about N$ 250,000, and the average remuneration of the Namibian formal sector would then amount to about N$ 300,000. One may conclude that SA government employees’ remuneration is totally out of line while the formal sector remuneration is much more in line with Namibian figures. Read the full article by staff writer in Businesstech of 3 October 2021, here... Discussing ethics with children is a vital part of parenthood “Many families and almost all schools spend a great deal of time academically developing their kids. This is a good thing. Yet I think it is at least as important for us to all think consciously about how we ethically develop the next generation to be decent members of society… Ethics and values should be spoken about regularly in homes. Often they already are. Every time your child comes home with an example of something “unfair” that happened at school, this is an opportunity to speak about ethics… Consistently discussing ethics with your kids is one of the most important things you can do. And look at it this way — tens of thousands of parents are out there at the moment drilling their children in extra comprehension, grammar and maths questions that come from joyless “swot-up” books. I doubt that these are producing engaged, quality discussions between parents and kids… Pandemic Ethics are a practical stream into the ocean of personal liberty, choice and the limits of government. They also ask hard questions about the ways we value human life. There is a practical side to this as well… Information, advice and rules come from all sorts of places in a pandemic. Sometimes they will give differing opinions about what to do – whether to go out, how serious it is, whether to wear a mask, etc. Who should you trust to give you reasonable information? Who should you obey if they tell you to do something like stay at home? This question goes to the heart of truth and reliability – with life or death consequences, as we all know. Some key concepts that might affect your discussion include: reliability; track record; our own ability to judge; public health versus private health; corruptibility… Some of these conversations might feel more like tip-toeing through a minefield. In the security of your own home I believe you can let your children say some unvarnished, half-thought-through things from any side of the political or ethical spectrum. They should learn, grow and mature as the years go on, particularly with your guidance…” Read the article by Newington College headmaster Michael Parker, in The Sydney Morning Herald of 27 September 2021 here…  Great quotes have an incredible ability to put things in perspective. "Whenever you find yourself on the side of the majority, it is time to pause and reflect.” ~ Mark Twain |
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