Consultations on the disputed draft regulations of the Financial Institutions Markets Act (FIMA) are still ongoing, particularly the mandatory preservation clause, which is still being vehemently opposed. FIMA, which was gazetted on 30 September 2021, will eventually replace the outdated Pension Fund Act of 1956. The new legislation was initially expected to be implemented on 1 October 2022.
Under FIMA and in terms of the draft regulations which have caused an uproar in public, it is proposed that members who leave a pension fund before retirement or early retirement age are compelled to preserve at least 75% of their accumulated benefits.
This is done with the aim to ensure more income is available to sustain pensioners after they retire, or otherwise their dependants in the event of death.
This stipulation is opposed to the common practice of withdrawing retirement savings early to meet short-term financial needs, which ultimately results in many people not having sufficient savings after retirement. In these cases, pensioners mostly end up depending on social grants or the government’s old-age pension for survival when they retire.
Last year, finance minister Iipumbu Shiimi appointed and inaugurated a 36-member technical advisory committee (TAC), tasked to consult the broader public on the proposed regulation (RF.R.5.10) of the preservation of retirement benefits.
The TAC is chaired by Manfred Zamuee, while the entire TAC comprises representatives from the finance and public enterprises ministry, the Bank of Namibia, Namfisa, Secretariat of the TAC, Retirement Funds Institute of Namibia (RFIN), Trade Union Congress of Namibia, the National Union of Namibian Workers, the Namibia National Labour Organisation, pension funds not part of the RFIN, and the employers’ federation.
The first task of the committee was to conduct research across Southern African Development Community and other parts of the world that is relevant. The committee appointed an independent researcher to do that work on their behalf.
“The second mandate of the committee was to go out and do public engagements for them to share their views on mandatory preservation. The current mandatory provision of 75% was not favourably received. There were views that preservation should not be mandatory. The other view was why don’t we reduce the percentage, and that there must be exceptions for the applications of the rule,” Zamuee said as he shared some of the findings with New Era.
He further stated that the committee is also summarising respective views.
“The technical researcher is expected to submit its report by mid-March this year, which we will review and compare with the public inputs. The committee will then make recommendations to the minister by end of April,” said the chairman.
The date on which FIMA will come into operation will be communicated to the public in due course and at the appropriate time by the finance minister. -mndjavera@nepc.com.na