The much-hyped regulations of the new Financial Institutions and Markets Act (FIMA) have sparked brouhaha across social media platforms, much to the chagrin of trade unions and the working class, who are against new protocols that seek compulsory preservation of pensions.
The bone of contention around FIMA is the 75% compulsory preservation of pensions, which applies to early withdrawal benefits within pension funds.
This default option is available at most registered financial institutions.
The public uproar is aimed at the compulsory 75% preservation of pensions for retirement until at least the early retirement age of 55.
Many would-be pensioners currently have access to their pensions before retirement age, which leaves many financially vulnerable after they leave formal employment.
The minimum individual reserve is calculated according to a minimum benefits formula.
Ironically, the FIMA Act was already passed in parliament in 2020, with a certain section empowering the finance minister to make regulations relating to the preservation of retirement benefits.
For finance minister Iipumbu Shiimi, who is ultimately going to have the final say, it is a given fact that many households in Namibia do not save sufficiently for retirement.
It is true that in many instances, members tend not to preserve their savings, which they commonly have access to upon resigning from their jobs.
“Understandably, the high cost of living, household indebtedness, high levels of unemployment and slowing growth in assets have placed retirement planning low on the priority list for most people. This is further compounded by the high number of informal sector employees that do not fall within the ambit of any savings pool,” Shiimi highlighted in a ministerial statement this week.
According to him and many other proponents of the proposed regulations, low retirement savings increase the future burden on the state due to more people becoming dependent on social grants and public services.
However, there have been mixed feelings about the regulations, with some funds strongly objecting to the draft proposals, while slamming Namfisa for not consulting adequately.
The current uproar over this specific issue is, rightly so, understandable, considering the state of the economy, which has been rocked by skyrocketing prices of food, fuel and other commodities.
The status quo has placed many Namibians, especially the working class, in overwhelming financial stress.
The prevailing Covid-19 pandemic has already shown us how interdependent the world is.
This “uninvited guest” has trapped many nations in victimhood, and no one really knows what the future holds.
Nevertheless, the issue of pension preservation should be carefully considered, given the fact that many of our people still lack knowledge of investment, while retirement saving is generally poor.
This is also attributed to financial education, which, in this case, is key to helping reduce financial stress and ensure better planning, including after retirement.
The mess we currently find ourselves in would have been avoided had the authorities consulted widely on this issue.
Unions representing the interests of workers should equally share the blame for literally sleeping on duty when this important subject was under consideration in parliament in 2020.
Like politicians, unionists are notorious for their hypocrisy, and this is clearly what we are witnessing at the moment.
It is also disingenuous on the part of some opposition politicians to claim ignorance on the new Financial Institutions and Markets Act, which was passed under their noses.
All in all, there is a need for all stakeholders to ensure that regulations or laws involving the finances of the working class are sensible, realistic and practical before implementation.