Following concerns expressed by the public about the state of pension funds, pension fund expert Marthinuz Fabianus, Managing Director of Retirement Fund Solutions (RFS) and a trustee of Benchmark Retirement Fund, has reassured the public about the health of pension funds under their administration.
He explained that funds use a mix of investments, including international and local asset classes such as investments in cash, money market instruments, bonds, shares and properties, etc. that are managed prudently to give the best possible returns and security to pension funds.
Fabianus continued that although there was a major sell-off of shares on the local, regional and international stock exchanges during March as a result of panic caused by the coronavirus pandemic, markets recovered after about a month.
Fabianus stressed that although stock market investors, who buy high-risk shares in the hopes of short-term gains, may have lost value, pension fund membership typically lasts for 30 to 40 years and investments are managed to ensure long-term growth, which continues in spite of short-term dips in the market.
To illustrate this point, he gave an example of the stock market crisis in 2007 and 2008. Other situations have emerged Fabianus pointed out, such as the ‘flash crash’ on the New York Stock Exchange during 2010 and turmoil in the Chinese stock markets. In spite of these brief challenges, long-term growth of pension funds has endured.
He added that the biggest loss of value is when people withdraw their pensions early. When they make early withdrawals from their pension funds, although they gain cash in the short-term, they lose the value of future growth and the future safety net for retirement.
Talking about members who are about to retire, Fabianus added that the best strategy is to try to delay drawing until growth has resumed. He goes on to say that Benchmark and RFS offer guidance and advice to members when they are about to retire.
Pension funds managed by RFS, and its fast-growing Benchmark Retirement Fund, Fabianus stated, invest in low to moderate risk investments across a range of asset classes. The aim is to produce steady growth over decades to ensure financial wellness of their members upon retirement.
Funds, he said, are managed by a board of trustees, expertly administered and monitored by independent actuaries and independent auditors and there is a strong emphasis on governance, all under the watchful eye of the Namibia Financial Institutions Supervisory Authority (Namfisa) as the regulator of pension funds.
He affirmed that both RFS and Benchmark keep their members informed of the health of their investments with regular reports and newsletters, noting that pension funds must be accountable and transparent to their members. “All will be well with pension funds,” Fabianus concluded.