The Namibian Financial Institutions Supervisory Authority (Namfisa) yesterday urged the working public to remain calm ahead of the final standards and regulations on the Preservation of Retirement Benefits to be made under the Financial Institutions and Markets Act, 2021 (FIMA).
The regulatory body stated that it has been inundated with queries relating to the new legislation, specifically from pension fund members who are afraid they will not have access to 75% of their retirement funds upon early withdrawal.
The new regulations (Regulation RF.R.5.10), which will be published in the Government Gazette on 1 October 2022 when FIMA becomes operational, state that 75% of a retirement fund must be preserved until the early retirement date as provided for in the rules.
This is done with the aim to ensure that more income is available to sustain retirement fund members after they retire, or otherwise their dependants if they pass away.
This is opposed to a common practice of withdrawing the savings early to meet short-term financial needs.
This ultimately results in many people not having sufficient savings after retirement.
In these cases, fund members mostly end up depending on social grants or the government’s old-age pension for survival when they retire.
Addressing the media yesterday, Namfisa CEO Kenneth Matomola noted that formal consultations with industry players on all the draft proposed standards and regulations under FIMA are currently at an advanced stage.
The solicitation of comments from the industry on these standards and regulations ended on 28 February 2022.
Matomola added that in the meantime, Namfisa is considering and evaluating comments received and, where necessary, will consult further with the industry before finalising the standards and regulations for the finance minister to consider for promulgation.
“Namfisa confirms that Regulation RF.R.5.10 will introduce the compulsory preservation of retirement benefits for people who withdraw from their retirement funds before they are old enough to retire, for example when they change jobs or stop working. Such members will be required to preserve 75% of their minimum individual reserve (fund credit) until the prescribed early retirement age of 55 years,” reads a Namfisa statement.
Matomola explained that the draft regulation will apply indiscriminately to every retirement fund registered under FIMA.
As such, the compulsory preservation of retirement benefits will apply to all retirement benefits that become due to, and to contributions made by, members of retirement funds following the date on which the FIMA comes into force.
“The public is informed that the main purpose of a retirement fund is to gather and grow savings to provide an income to the member when s/he retires, or otherwise to the member’s dependants if the member passes away.
“In addition, if the member becomes disabled and thus unable to work before reaching the retirement age, the retirement fund may provide such member with a disability benefit, usually in the form of monthly payments”, Namfisa stated.
Meanwhile, the Government Institutions Pension Fund (GIPF) yesterday acknowledged the public interest generated in recent days on social media platforms by the new draft regulations. “This draft regulation is one of many critical regulations and standards that are being proposed to operationalise the FIMA. The GIPF is aware that Namfisa, as the institution that will be responsible for administering the FIMA (and the regulations and standards under the FIMA), has commenced consultations with various stakeholders on the critical standards. The GIPF awaits feedback from Namfisa in this regard,” read a statement from GIPF spokesperson Edwin Tjiramba.
He also urged GIPF members to refrain from panic, noting that the FIMA is not yet in force, and proposed regulations and standards are not yet approved.
“Thus, the proposed compulsory preservation of retirement benefits is not expected to come into force on or before 1 October 2022. Rest assured that the GIPF will continue to act in the best interest of its members,” Tjiramba added.