Windhoek-Intervention is required to ensure that the trustees of retirements funds are equipped with the necessary skills to suitably guide and advise on the sustainability of these funds that have experienced exceptional growth of assets over the last few years.
This was the message by Finance Minister Calle Schlettwein on Friday morning when he launched a book by Dr Manfred Zamuee, called ‘The Manual of Namibian Retirement Funds and Social Security’.
“Furthermore, I am made to understand that the levels of skills and knowledge of trustees of retirement funds is inadequate. This is definitely one area that I think intervention is required to empower trustees with knowledge and understanding of their duties and responsibilities.
“More than just attendance of intermittent trustee training programmes, there must be a system of evaluation or standardisation to ensure adequate knowledge is achieved.
“In this regard, NAMFISA (Namibia Financial Institutions Supervisory Authority) can play a leading role, but initiatives like this book will go a long way to assist in achieving basic financial, legal and investment literacy for trustees to carry out their fiduciary and statutory duties,” Schlettwein concluded.
Retirement funds perform a social welfare role underwritten by social security and act as a stimulant for economic growth and developmental objectives through mainly deepening and broadening local financial markets. In addition, retirement funds can meaningfully impact serious national challenges by helping to alleviate poverty and unemployment.
“Allow me to conjecture my delight at the fact that the title of book recognises the fact that occupational retirement funds and social security interact in a symbiotic relationship yoked together to achieve optimised retirement value. This underscores the statutory objective of retirement funds and a safety net for social protection,” said Schlettwein in an address read on his behalf by his executive assistant, Esau Mbako.
Schlettwein noted that the long-term nature of retirement savings and phenomenal growth of assets over the years presents a perfect opportunity for retirement funds to play a significant role in local economic development through progressive investment policies.
This, he said, finds expression in, for example, the quantitative investment limits under Regulation 28 of the Pension Funds Act 24 of 1956, which seeks to mobilise local assets for local economic development.
“I am happy therefore, to observe that many retirement funds have embraced the new investment universe for local unlisted investments and have opted for infrastructure investments as part of their broader investment strategy.
“This is very encouraging indeed and bodes well for public-private partnerships espoused by the Namibian government. Dr Zamuee, I am also very happy that you have dealt with this important aspect in your book,” said Schlettwein.
He went on to say at an individual member level, retirement funds play a significant role in stimulating savings, since the majority of members do not have any other form of savings other than the accumulated values in their pension funds.
“This makes it cardinal for rules of retirement funds to create a conducive environment for increased savings in order to offer members positive net replacement rates between pre-and post-retirement incomes. In this regard, the growing trend towards pre-retirement cash withdrawals must be discouraged since it further dilutes the retirement values of members.
“The more money stays in the retirement system, the better it is for retiring members. This is also important considering the legal protection offered to retirement fund benefits under the Pension Funds Act,” Schlettwein explained.
Dr Zamuee’s book points out various available income tax incentives for the preservation of retirement benefits and members of retirement funds have been encouraged to make use of these incentives and protect the accumulated values of their pensions during pre-retirement occupational mobility.
“Cost efficiencies should also be a critical consideration in the management of retirement funds and hence member and employer contributions should not be unduly compromised by administration and other management costs. The focus must always be achievement of a retirement safety net for members first and foremost,” Schlettwein noted.