The regulator’s expectations of funds in terms of governance have been increasing steadily and it is exerting pressure on funds through its so-called enforcement ladder. This enforcement ladder has 5 stages of intervention:
- No significant problems;
- Early warning;
- Risk to viability or solvency;
- Future viability in serious doubt;
- Entity not viable or insolvency imminent.
Funds will be classified into a stage of intervention based on NAMFISA’s supervisory and regulatory activities, such as on-site inspections. Each stage of intervention envisages increasing levels of intervention and reporting and compliance requirements by Namfisa. Download the circular here…
In our experience from past on-site inspections the more common issues raised by Namfisa are:
- Fund does not have an investment policy that makes provision for a strategic asset allocation;
- Fund does not carry out trustee performance appraisals;
- Fund does not have a code of conduct;
- Fund does not have a risk management policy;
- Fund does not have a conflict of interest policy;
- Fund does not have a communication policy;
- Fund rules do not set out how unclaimed benefits will be disposed of;
- Fund rules to not provide for a term of office of the trustees;
- Service provider agreements are not in place.
Do avoid being sucked further into NAMFISA’S enforcement processes. Trustees should ascertain that their fund meets at least all the above requirements.
Download a generic investment policy statement here…
Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.