Are You Saving for Old Age?

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By Petronella Sibeene WINDHOEK Whilst the retirement funds industry is reasonably active in the country, Deputy Minister of Finance Tjekero Tweya has expressed concern over a number of economically active Namibians who do not belong to any fund and make provision for their old age. According to Tweya, the State has done its part through the tax incentives to encourage retirement savings. However, not every working Namibian has taken advantage of these tax exemptions. He suggests that the industry educates Namibians on the importance of saving, as one of the main objectives of the industry is to promote the provision of adequate financial resources for the retirement, disability and family protection needs of its members. “All economically active persons ought to be making provision for their own financial wellbeing after retirement during their years of active economic engagement,” urged Tweya. He added that the state pension is not a substitute for private savings. The Retirement Funds Institute is a representative body for the purpose of partnering Government alongside other stakeholders in finding solutions that will address multiple challenges facing the majority of the people. While Administrative Manager of Retirement Fund Solutions Marthinuz Sabianus fully supports Tweya’s suggestion for the industry to educate the nation, he says general education should be complemented by the availability of products that would entice people to secure their future financially. Tweya also appealed to the institute and the industry at large to address the issues facing retirement savings in the country especially for low-earning people before Government steps in to set up tools that can be used such as the Retirement Fund of the Social Security Commission. Meanwhile, Tweya further expressed concern at a lack of capital funds to finance local projects despite the fact that the retirement industry controls over N$20 billion of Namibian assets. The Minister of Finance during the tabling of this year’s budget expressed unease over the heavy outflow of Namibian investments. Based on that, Tweya added, “I would like to appeal to the industry to come up with innovations that would assist the government initiative to minimize the outflow of our precious investments. We cannot continue to boost other economies while we are faced with our own challenges. High returns should be balanced with local development.” Tweya called on trustees in the industry to bear the ultimate responsibility for retirement savings and that they must behave and take decisions that are in the best interests of the fund they manage. Considering that education is an ongoing process, he says trustees should be trained, as this is probably the fundamental issue underlying many of the problems being exposed in the retirement industry today. “If your retirement fund trustees are not trained properly, it is questionable whether they will be able to ask the right questions and to spot things that might go wrong before it is too late.” he said. The use of independent consultants by trustees still remains important in view of eliminating conflicts of interest that could arise. He encouraged the regulator, Namfisa, to assist government efforts to accelerate the process of amending the current Pension Fund Act. He added, “We have inherited an old act (Act of 1956), which is presenting us with challenges in terms of progressing with the rest of the globe. Let us strive towards getting a document for Nami-bians, by Namibians!” During the budget debate this year, Tweya sent out a general caution to all those involved in illegal tax practices or evasions. The deputy minister once again accelerated this call and appealed to retirement funds to guard against instruments or products that are used to evade paying taxes in Namibia. He urged the industry to monitor retirement funds and ensure that no one applies practices that have the potential to erode savings. “I urge the regulator to investigate these and encourage the industry to come forward. Failure to exercise due care and diligence will not go unnoticed,” he warned.