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Benchtest Newsletter
Issued September 2023
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In this newsletter
Benchtest 08.2023 – the future of pension fund administration and more...
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Jump to...
Important notes & reminders
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NAMFISA levies
- Funds with September 2023 year-ends must submit their 2nd levy returns and payments by 25 October 2023;
- Funds with March 2024 year-ends must submit their 1st levy returns and payments by 25 October 2023;
- and funds with September 2022 year-ends must submit their final levy returns and payments by 29 September 2023.
Repo rate unchanged in September
BON announced after its September meeting that the repo rate remains unchanged at 7.75%. The interest rate on funds’ direct loans remains at 11.75%.
SSC invited to a stakeholder engagement on an NPF
The Social Security Commission invite stakeholders to an engagement to discuss and seek clarification on the SSC’s proposals for the National Pension Fund on 6 September at Avani Hotel. |
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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
- Annemarie Nel (tel 061-446 073)
- Christina Linge (061-446 6075)
Toolbox for trustees
RFS provides comprehensive support for trustees. Find a list of download documents to assist with governance and management of private funds, registered as of June 2022, here...
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Newsletter
In this newsletter, we address the following topics:
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In 'Tilman Friedrich's industry forum' we present...
- Monthly review of portfolio performance – 31 August 2023
- The bumpy road to a new global economic order
- The future of pension fund administration, trends and challenges
- Why does RFS not issue PAYE 5 certificates for additional voluntary contributions?
In Compliments, read...
- A compliment from the principal officer of a large fund
In ‘Benchmark: a note from Günter Pfeifer’, read about…
- Important circulars issued by the fund
In 'News from RFS', read about...
- RFS welcomes new staff members
- RFS teams play in the annual business Juksei league
- RFS donates apples for cancer
- Important circulars issued by the fund
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In 'Legal snippets'. read about...
- Withholding of a member’s benefit and employer’s non-payment of contributions
In 'Snippets for the pension funds industry,' read about...
- Investing for retirement – know your replacement level at every stage
- Beneficiary nomination- a warning for pension fund members
In ‘Snippets of general interest', read about...
- Risk attitude vs return altitude
- Winning vs succeeding
And make a point of reading what our clients say about us in the ‘Compliments’ section. It should give you a good appreciation of who and what we are!
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
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Monthly Review of Portfolio Performance
to 31 August 2023
In August 2023, the average prudential balanced portfolio returned 0.4% (July 2023: 1.1%). The top performer is Allan Gray Balanced Fund with 1.6%, while M&G Managed Fund with -0.3% takes the bottom spot. For the three months Momentum Namibia Growth Fund takes the top spot, outperforming the 'average' by roughly 1.4%. NinetyOne Managed Fund underperformed the 'average' by 2.0% on the other end of the scale. Note that these returns are before (gross of) asset management fees. (Refer to graph 3.5.1 for a more insightful picture of the rolling long-term performances of the portfolios.) The Monthly Review of Portfolio Performance to 31 August 2023 provides a full review of portfolio performances and other insightful analyses. Download it here...
The bumpy road ahead to a new global economic order
Where we are now, it does not look as if the Ukraine conflict will escalate into a fully blown war between the US and its allies on the one side and Russia, China and their allies on the other. It means that global financial markets will not be unhinged but will continue fairly orderly, given the impact of global economic restructuring. Another result of the global economic restructuring will be a global hunt for alternative supplies of commodities. This hunt should advance the economic fortunes of commodity-based economies, which are mostly emerging economies such as SA and Namibia.
We will likely experience a transition to a new bipolar world dominated by the US and China, each with its financial system and hegemonical territory. The two financial systems would likely be linked over time to promote trade and financial flows, but it will not be ‘smooth sailing’. Given the dissipation of the great uncertainty that the Ukraine conflict could have resulted in a global confrontation, the investor should review his investment strategy now. Clearly, the global economy will experience a new dawn, offering lots of investment opportunities while at the same time eliminating lots of existing businesses. It will undoubtedly be a rough ride with lots of volatility on the road to the new global order.
The new bipolar world and a global decoupling dictate that one should focus on international diversification. Global equities would be appropriate to counter the impact of rising inflation and interest rates. Such diversification should consider the expected re-orientation between the two global poles, with Western countries shifting manufacturing, production, and development of goods and services away from China. The Monthly Review of Portfolio Performance to 31 August 2023 also reflects the editor’s views on current developments and their impact on investment markets. Download it here...
The future of pension fund administration, trends and challenges
The future of pension fund administration is poised for significant transformation, driven by evolving trends and facing distinct challenges.
Trends:
- Digitalization: The pension industry is rapidly embracing digital technologies. Automation and blockchain are streamlining administrative processes, reducing errors, and enhancing transparency.
- Personalization: Pension plans are becoming more personalized, allowing individuals to tailor their investments and retirement goals. Robo-advisors and AI-driven solutions are facilitating this shift.
- Environmental, Social, and Governance (ESG) Investing: Increasing awareness of ESG factors is leading to a surge in responsible investing within pension funds. This trend reflects a growing desire to align investments with ethical and sustainable values.
Challenges:
- Aging Population: As the global population ages, defined benefit pension funds face the challenge of ensuring long-term financial sustainability. There's a pressing need to strike a balance between providing adequate retirement benefits and managing the financial burden on pension systems. As Namibia is mulling a National Pension Fund, a defined benefit system may not be an appropriate solution. The same applies to the GIPF, which is funded by the taxpayer, who would ultimately underwrite the ageing challenge. Since all private pension arrangements were moved to a defined contribution basis, since Namibia’s independence, they are unaffected by population ageing. However, in their case, population ageing would negatively affect expected pensions and funding structures must provide for it to secure a comfortable retirement.
- Regulatory Complexity: Evolving regulatory frameworks can be complex and demanding for pension fund administrators. Compliance with changing rules and regulations is a perpetual challenge. This is, of course, relevant when one considers the FIMA and its subsidiary legislation.
- Cybersecurity Risks: With the proliferation of digital tools, pension funds are susceptible to cyberattacks. Protecting sensitive financial data is paramount. The lack of economies of scale in Namibia will make it considerably more costly per person, meeting global cyber security standards.
- Investment Volatility: Economic uncertainties and market volatility pose a significant challenge. Pension funds must carefully navigate investment strategies to secure the financial well-being of retirees. The Global Financial Crisis (GFC), followed by the COVID shutdown, were stark reminders of how quickly and how dramatically tables can turn. Whereas pension fund members became used to double-digit real returns before the GFC, pension funds have generally been unable to produce 5% real returns since. In the heydays of double-digit returns, most pension funds dismantled their investment reserves for short-sighted personal advantage. While it is not a good time to build up investment reserves under prevailing market conditions, trustees would be well advised to mull the re-introduction of investment reserves in the interests of prudent retirement fund management.
- Insufficient economies of scale: Under the FIMA, pension funds will be expected to apply global best practices regarding their governance. Trustees and service providers must upgrade their skill and administrators must upgrade their IT systems, ultimately, at the cost of fund members, to measure up to expectations. Considering that barring the GIPF, funds range in membership between less than 1,000 and 6,000, the cost of managing the average Namibian fund will be significantly higher than the experience of most other countries. While multilateral organisations recognise this challenge of small economies and encourage appropriate regulatory measures, the FIMA and its subsidiary standards and regulations ignore this challenge and will burden fund members with disproportionate and unjustifiable costs.
- Government intervention: Given the absence of economies of scale in our industry, the proposed National Pension Fund will exacerbate the challenge by syphoning off membership from existing funds, particularly if it does not provide enrolment exemption to members of existing funds. In addition, if the GIPF, with its overwhelming size and resulting influence in the industry, proceeds with the mooted umbrella fund for SOE’s, it is likely to usher in the demise of most fund administrators and other service providers and of healthy competition in the industry, to the loss of fund members.
In conclusion, the future of pension fund administration promises greater efficiency, customisation, and ethical investment practices. However, fund trustees and administrators must grapple with demographic shifts, regulatory intricacies, cybersecurity concerns, market unpredictability, high costs and the absence of competition, as they shape the retirement landscape of tomorrow.
Why does RFS not issue PAYE 5 certificates for additional voluntary contributions?
The subject of additional voluntary contributions to a retirement fund is raised regularly at trustee meetings. RFS has repeatedly pointed out in discussions with the trustees and its newsletters that voluntary contributions are not tax deductible and the risks of allowing employees to make additional voluntary contributions under the pretence that they are tax deductible. Often, trustees get upset. “But our rules allow members to make additional voluntary contributions (AVCs)!” Yes, the Pension Funds Act does not prohibit AVCs; if the rules provide for AVCs, the fund is bound to allow members to make AVCs. However, that does not make the contributions tax deductible.
All contributions to the fund must be made as per its rules. The rules constitute a contract between the fund, the participating employers, and the members. The Income Tax Act prescribes how employers must deal with compulsory contributions to the fund under the Income Tax Act. Accordingly, employers are responsible for administering employee contributions. Contractual contributions must be deducted from the employees’ salaries and reflected separately on their PAYE returns.
The Income Tax Act does not provide pension funds or their administrators to issue PAYE 5 certificates for contributions received. Fund administration systems, therefore, do not cater for issuing PAYE 5 certificates. In fact, if an administrator were to issue any formal document confirming a member’s AVCs, it could mislead the member and NamRA into believing that he is entitled to claim the contributions for Income Tax purposes. Should NamRA have allowed the member’s claim and at any point in time realise its mistake, it can claim interest and penalties for submitting a false return.
In this newsletter we provided a detailed exposition on additional voluntary contributions and why they are not tax deductible. We also referred to the ruling obtained by one of our clients, seemingly agreeing that additional contributions as provided for in its rules may be deducted for tax purposes. Such rulings only apply to the person to whom it was issued. In this case, the ruling is flawed, as it explicitly only refers to “additional contributions”, whereas the request explicitly was for “additional voluntary contributions”. We do not know if it was an oversight of NamRA or if it was intended to pacify the applicant but avoid a clear answer to the request.
Tilman Friedrich is a chartered accountant and a Namibian Certified Financial Planner® practitioner, specialising in pensions. He is a co-founder, shareholder, Chairman of the RFS Board, retired chairperson, and now a trustee of the Benchmark Retirement Fund.
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 Compliment
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Compliment from a principal officer of a large fund
Dated 2 August 2023
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“Dear R,
Your letter is well received.
Thank you for considering your fees as for every penny saved it means more goes to our members’ retirement box.
So often we take your service for granted, just expecting there will be a J or a R on the other side of the line when we press the button. I want to make use of this opportunity to appreciate the excellent service received from you, thank you for guidance, knowledge sharing, timely responses and the list goes on and on…(the space will not be enough if I have to mention all).
The RFS team are indeed a vital asset to our Fund, may we continue the good working relationship.
Thank you.
Regards” |
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Read more comments from our clients here...
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Benchmark: a note from Günter Pfeifer
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Important circulars issued by the Fund
The Benchmark Retirement Fund issued the following circular in May and June:
- Employer communication – Taxation of late payment interest
Clients are welcome to contact us if they require a copy of any circular.
Günter Pfeifer was the Principal Officer and a trustee of the Benchmark Retirement Fund for many years. He holds a Bachelor of Commerce (Cum Laude). Günter completed his articles with Deloitte & Touche in Windhoek. He completed the De Beers ‘Program For Management Development’ at Gordon Institute for Business Science and the Advanced Development Program at the London Business School. He was formerly the Financial Manager of De Beers Marine.
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News from RFS
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RFS welcomes new staff members
We are delighted to announce that the following persons will be joining our permanent staff on 1 October 2023:
- Denise Rukero
- Tuhafeni Shingwetha
- Laina Jesaya
- Richardene Samuels
Denise Rukero joined our Benchmark accounting team from Old Mutual as an administrator in the Benchmark team. She matriculated at Otjiwarongo Secondary School in 2007. She obtained a National Certificate in Accounting and Finance from NUST in 2010 and a National Diploma in Accounting and Finance in 2017. She still has one module outstanding towards her degree in accounting. Denise started to work at Old Mutual in 2010 as a pension claims administrator and her last position was that of senior pension fund administrator.
Tuhafeni Shigwedha joined our RFLAUN administration team from MMI where she worked as a pension fund administrator since June 2015. She matriculated at Tsumeb High School in 2010. She obtained a Bachelor’s degree in Business Administration and an Honours degree in Business Management from NUST. She also obtained a certificate in Risk Management as well as a certificate in Investment Management from the University of Cape Town.
Laina Jesaya joined us from Alex Forbes as a Fund Accountant in our private fund accounting team. She started her career in the pension funds industry in 2017 with Alex Forbes as a bookkeeper and her last position was that of team leader bookkeeping. Laina grew up in the Oshakati area and she matriculated at the Iipumbu Secondary School in 2010. She obtained a diploma in accounting and finance from NUST in 2020 . She has one subject outstanding for her degree.
Richardene Samuels joined our RFLAUN administration team. Richardene matriculated at PK De Villiers Secondary School in Keetmanshoop in 2017. She has obtained a Bachelor of Accounting degree in 2021. Since then, she has done voluntary teaching work at Eros Girls School. She is currently busy with her Honours Degree in Business Management at Unam.
e warmly welcome Denise, Tuhafeni, Laina and Richardene and look forward to their contribution to helping our Benchmark clients sleep in peace, knowing that RFS is attending to their fund’s business. We are confident that their expertise and experience will be a valuable addition to our team, and we wish them all the best in their new roles!
RFS teams play in the annual business Juksei league
A big thank you to the two RFS teams that represented us at the recent business league Jukskei event. We have received very good feedback that the team represented RFS well and put our name out there.
There is no better way to promote our name and brand than that. Thank you to each one who went out there! We encourage staff to partake in similar events in support a good social cause while promoting RFS at the same time!
Here a few impressions from this event:
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Janolene Rittman taking aim.
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Stefaus Morris going for the bulls eye |
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Lined up for the RFS team pic...
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…it was all worthwhile
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RFS donates apples for cancer
RFS doubled up on every apple ordered by its staff under the Bank Windhoek apples for cancer project. Richardene Samuels and Anel Pieters personally delivered the RFS
sponsored apples to Eros Girls School.
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| On the left, Principal E Haipinge, Anel Pieters 2nd from right and Richardene Samuels right. |
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Richardene Samuels, puts her heart into it! |
Important circulars issued by RFS
RFS issued the following circulars in September:
- Circular 2023.08-06 – ‘Administration system’
Clients are welcome to contact us if they require a copy of any circular.
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 News from NAMFISA
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14 September 2023 Industry Meeting notes
Compiled by S Frank-Schultz, C.A.(Nam), Client Manager
RFIN update (Sydwill Scholtz):
RFIN raised the following matters:
- Requirements for service providers:
- RFIN requested NAMFISA to issue a circular outlining the duties of and requirements to be expected of service providers.
- Risk-based supervision approach:
- RFIN wanted to know what the practical implications are and how this will differ from the current testing methodology.
- SMEs:
- RFIN requested an explanation why SMEs (e.g. CCs) are excluded from unlisted investments.
- NAMFISA answered that this is due to a lack of regulation with regard to those entities.
- Complaints:
- Complaints relating to late payment of pension benefits were discussed, and the question was raised how NAMFISA could help educate members to reduce such complaints. It was pointed out during the meeting that the applicable legislation currently does not specify any time period and many of the complaints are thus unjustified.
- NAMFISA replied that a complaint is only recorded as such after it has been established that the complainant has raised the concern with the relevant institution and a response has been provided to the complainant (which is unsatisfactory to the complainant).
- It was also pointed out that general member education in that regard is difficult since pension fund administrators handle the exit process differently and have different requirements and timelines.
- National Pension fund:
- RFIN wanted to know if NAMFISA was part of the discussion and questioned why RFIN was completely excluded from all ongoing discussions
- NAMFISA stated that they were also excluded from the ongoing talks. It was only once invited as an observer role at a recent information session conducted by the Social Security Commission to introduce its preferred NPF model.
- It was suggested to obtain information through unions and other involved parties and to urge the Ministry of Labour, Ministry of Finance and the Social Security Commission to involve RFIN and NAMFISA in the discussions.
Feedback on statutory submissions and overview of the industry:
- 78 registered funds
- 49 un-insured (private) funds
- 22 insured funds
- 7 inactive funds
- 70 active funds
- 1 deregistered fun
Industry assets as of 30 June 2023
Total assets amounted to N$224 billion (47% invested in shares; 34% invested in bonds; 49% invested in Namibia)
A delegate from a private pension fund asked how unlisted investment managers are regulated since their pension fund suffered significant losses through unlisted investments.
- NAMIFSA replied that a regulatory framework is in place and that overall, the unlisted investments sector performed well in Q2 of 2023. However, there is a need to break down this sector further. Debt funds, for example, have performed well while other funds (infrastructure, private equity) struggled. Debt funds, for example, have performed well while other funds (infrastructure, private equity) struggled.
Complaints:
36 complaints in Q2 2023
- 22 resolved
- 12 in favour of complainants
- 10 in favour of funds
- 14 pending
Most complaints relate to delays in pension fund payouts.
Risk Based Supervision:
- Top-down approach
- Being pro-active. Identifying risks and addressing them
- Being risk and principle based and forward looking
- Assessing financial and operational factors in place to mitigate identified risks
- NAMFISA to allocate resources towards identified issues and high risk regulated entities
The methodology and strategy have been finalised. NAMFISA is now testing this approach in practice.
Principles:
- Supervisory methodology
- Board of directors, trustees & senior management accountability
- Risk tolerance
- Reduced likelihood and impact of failure
- Consolidated supervision
- Sound predictive judgement
- Use of governance and oversight function
- Reliance on and use of work done by external stakeholders (such as actuaries and auditors)
- Timely risk-focused reporting
- Continuous and dynamic reassessments
- Allocation of resources
Steps:
- Identifying significant activities of Non-Banking Financial Institutions (NBFI)
- Assessment of the inherent risk of each significant activity
- Assessment of risk management quality
- Adjusting the overall residual risk per NBFI
- Developing an intervention strategy
A delegate of a private pension fund requested that NAMFISA provides the industry with the qualitative and quantitative factors used in its assessment framework. These should be clearly defined so that each pension fund can predict how it will be rated on the risk scale, and there should be limited subjectivity.
NAMFISA was requested to define the fit and proper requirements for a trustee clearly.
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 Legal snippets
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Withholding of a member’s benefit and employer’s non-payment of contributions
This SA Adjudicator determination deals with the case N Chagonda (“complainant”) v Transport Sector Retirement Fund (“fund”) And Nelson Logistics CC (“employer”)
The case deals with two aspects. Firstly, the employer’s non-payment of contributions and, secondly, the withholding of a member’s benefit at the request of the same employer.
1. Withholding of the member's benefit:
The complainant, N Chagonda, was dismissed by his employer, Nelson Logistics CC, after an accident involving a company car. When he attempted to claim his withdrawal benefit from the Transport Sector Retirement Fund, he was informed that his employer had requested the fund to withhold his withdrawal benefit.
The employer claimed damages from the complainant's withdrawal benefit, citing section 37D of the Pension Funds Act. However, the fund found that the employer's claim did not fall within the scope of section 37D because it was based on negligence rather than intentional misconduct or dishonesty. Therefore, the fund determined that the complainant's benefit should not be withheld, and the fund was ordered to proceed with the payment of the complainant's withdrawal benefit.
The complaint related to the withholding of the member's benefit involved the employer's attempt to claim damages from the complainant's withdrawal benefit, which was ultimately denied by the fund due to the nature of the claim not meeting the criteria specified in section 37D of the Act.
The Adjudicator determined that the employer's claim to withhold the complainant's withdrawal benefit was not valid. The employer had claimed damages from the complainant's benefit based on negligence related to a car accident involving a company vehicle. However, the Adjudicator found that for a benefit to be withheld under section 37D of the Pension Funds Act, it must involve intentional misconduct or dishonesty with an element of dishonesty, and negligence alone did not meet these criteria.
The Adjudicator's determination was in line with legal precedents that stated that misconduct referred to in section 37D(1)(b)(ii) must involve dishonest conduct or at least conduct with an element of dishonesty. Negligence, without intentional and malicious actions, did not qualify as a valid reason to withhold a member's benefit.
As a result, the Adjudicator ordered the fund to proceed with the payment of the complainant's withdrawal benefit, as the employer's claim did not meet the requirements of section 37D of the Act.
In summary, the determination found that the employer's claim for withholding the benefit was invalid because it was based on negligence rather than intentional misconduct or dishonesty, as required by the law. Therefore, the complainant's benefit should not be withheld, and the fund was ordered to make the payment.
2. Employer’s non-payment of contributions:
The complainant, N Chagonda, was a member of the Transport Sector Retirement Fund. The employer had failed to pay provident fund contributions on the complainant's behalf for the period between April 2016 and December 2018. Despite entering into an Acknowledgment of Debt (AOD) agreement with the fund to pay the outstanding contributions, the employer remained non-compliant in fulfilling this agreement.
The Adjudicator found that the employer's actions were in violation of the fund's rules and Section 13A of the Pension Funds Act, which required timely payment of contributions. The employer owed outstanding contributions for the mentioned period, and it had acted against the provisions of the fund's rules and the law.
As a result, the Adjudicator issued a series of orders:
- The employer was ordered to submit outstanding contribution schedules for the complainant's contributions for the period April 2016 to December 2018 within four weeks.
- If the employer failed to comply with the first order, the fund was ordered to reconstruct the complainant's contribution schedules based on available information within two weeks of the employer's failure to submit the schedules.
- The fund was ordered to calculate the arrear contributions due from the employer, along with late payment interest as per Section 13A(7) of the Act [not applicable to Namibia], within one week of receiving the contribution schedules.
- The fund was instructed to transmit the calculations to the employer within three days of completion.
- The employer was directed to pay the arrear contributions, including late payment interest, within one week of receiving the calculations from the fund.
- The fund was ordered to pay the complainant his outstanding withdrawal benefit, which consisted of the arrear contributions remitted by the employer, within two weeks of receiving payment from the employer.
Finally, the fund was required to provide the complainant with a breakdown of his withdrawal benefit within one week of making the payments.
In summary, the Adjudicator determined that the employer had failed to pay the complainant's provident fund contributions, which was in violation of the fund's rules and the law. The Adjudicator issued a series of orders to ensure that the outstanding contributions, along with interest, were paid to the fund, and the complainant received his withdrawal benefit.
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Snippets for the pension fund industry
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Investing for retirement – know your replacement level at every stage
This article emphasises the importance of understanding your replacement level at various stages of investing for retirement to ensure effective retirement planning. The replacement level, also known as the funding level or replacement ratio, represents the percentage of your last monthly salary that you can expect to receive as sustainable post-retirement income. The article highlights that many retirees may not achieve a high replacement ratio, with an average projected replacement level closer to 40.5%.
The article breaks down retirement planning into different stages:
Early Career Stage: At this stage, individuals are just beginning to save for retirement. Calculating the replacement level helps establish a baseline for savings goals, considering factors like desired lifestyle, expenses, and inflation. This information guides decisions on savings rates and investment strategies.
Mid-Career Stage: During this period, individuals may have accumulated a substantial retirement nest egg. Reassessing the replacement level is essential to align income goals with changing life circumstances, such as family dynamics, housing costs, and healthcare expenses.
Late Career Stage: As retirement approaches, it becomes crucial to understand the income needed to maintain the desired lifestyle. Evaluating savings against the replacement level allows for necessary adjustments, such as increased savings, catch-up contributions, or exploring additional income sources.
Pre-Retirement Stage: This phase involves a detailed examination of all potential sources of capital, including non-retirement investments and property. Adjustments are made based on these sources to fine-tune the savings plan and create a solid financial foundation.
Post-Retirement Stage: Even in retirement, individuals must periodically reassess their replacement level. Monitoring spending patterns, lifestyle changes, healthcare costs, and adjusting retirement income to account for inflation and interest rates are essential steps.
Read the article by Sumayya Davenhill of M&G Investments in Moneyweb of 20 August 2023, here…
Beneficiary nomination- a warning for pension fund members
This article discusses a case involving distributing a pension fund member's death benefits. In this case, the member, Mkhawuleni Paulus Ndwandwe, had designated beneficiaries in a nomination form, including his wives and children. However, when he passed away, the fund distributed the death benefit differently than specified in the form, causing a legal dispute.
The legal experts examined whether the fund's trustees acted within their rights and obligations. They found that the fund's rules, specifically Rule 10.4(iii), allowed the trustees discretion to distribute death benefits equitably among a wide class of potential dependents. The court ruled in favour of the trustees, stating that they acted reasonably and lawfully according to Rule 10.4(iii).
The article highlights that while members can designate beneficiaries in a nomination form, the fund's trustees have significant discretion to determine the distribution of death benefits, provided it aligns with the fund's rules and is done rationally. This ruling aligns with section 37C of the Pension Funds Act, which grants trustees the authority to find potential dependents and distribute benefits equitably.
The legal experts recommend that members still complete a death beneficiary form, as it remains an essential document for consideration by the trustees.
Note: The Namibian Pension Funds Act is the same as its SA equivalent in this regard.
Read the article by Luke Frazer, in Businesstech of 11 March 2023, here…
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Snippets of general interest
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This article discusses the relationship between risk and return in investing and emphasises the importance of aligning your risk tolerance, investment goals, and time horizon. It outlines five basic risk profiles:
- Low Risk: Low returns with minimal losses, suitable for a short-term time horizon.
- Low-to-Medium Risk: Some risk with stable growth to keep up with inflation, but not expected to provide high returns.
- Medium Risk: Involves volatility, typically for investment time frames of five years or more, offering a fair return but with increased chances of downturns.
- Medium-to-High Risk: Accepts various levels of rewards and risks for up to 10 years, with meaningful exposure to property and equity, which can be beneficial or detrimental depending on market conditions.
- High Risk: Focuses on long-term capital growth with significant value fluctuations over extended periods (10+ years), potentially leading to substantial gains but carrying the greatest financial uncertainty and potential loss.
The article also highlights the distinction between personal risk propensity and investment risk profile, suggesting that one's willingness to take risks in leisure activities doesn't necessarily translate to a similar attitude towards investment risk.
Read the full article by Sumayya Davenhill, Head of Marketing at M&G in Cover of 15 March, 2023, here...
Winning vs succeeding
This article highlights the inspiring story of Jacqueline Nyetipei Kiplimo, a Kenyan marathon runner who sacrificed victory and a $10,000 prize to help a male runner with a birth defect during a race in China. This act of kindness exemplifies the difference between winning and succeeding.
Winning often comes at the expense of others, while succeeding involves achieving personal goals. In sports and life, success and winning are closely related but distinct concepts. Success is subjective and may not always be easy to define or measure, whereas winning is comparative and measurable.
The article encourages a shift from a "drive to win" mentality to a "passion to succeed" perspective, emphasising personal growth and achievement rather than competition. This principle is also applicable in the business world, where success should focus on serving customers rather than merely outdoing competitors.
Download the full article by Xinjin Zhao in LinkedIn, here…
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 And finally...
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Wisdom from great philosophers
Here's a famous quote from the German philosopher Arthur Schopenhauer, better known for his broader ideas on human behaviour and the pursuit of happiness:
"The savings of a lifetime are often an estate to the children, but the savings of a week can be a morsel for the devil."
— Arthur Schopenhauer
This quote underscores the importance of long-term financial planning and the consequences of impulsive spending.
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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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