WINDHOEK – Finance Minister Calle Schlettwein has called on Namibia’s lawmakers to consider passing the Financial Institutions and Markets (FIM) Bill without delay. Responding to a question from Rally for Democracy and Progress (RDP) president, Mike Kavekotora, Schlettwein said the proposed legislation will align the country’s legislation with international best practices and “cure” observed weaknesses in the legal instrument that governs pension funds in the country. Schlettwein was responding to questions relating to the distribution of surplus funds emanating from Rössing Uranium’s pension fund.
“A policy decision was made to revamp the legislative instrument that governs the pension fund industry to align it to international best practices. Under the envisaged legislative regime to be called the Financial Institutions and Markets Act, currently a bill, surplus distribution will be dealt with via a regulation. This regulation will provide for the terms and conditions under which a board may distribute some or all of an actuarial surplus. The determination of who is entitled to surplus and the equitable distribution thereof largely depends on the source of the surplus,” Schlettwein responded.
The finance minister explained that in a defined benefit fund there are different arguments as to who is entitled to surplus funds, namely active members, retired members, former members, participating employers, etc., all of whose arguments hold water in various circumstances, especially when looking at how the surplus was derived at. “The equitable distribution of surplus has always been controversial, and this is not unique to Namibia,” said Schlettwein.
According to Kavekotora the current Pension Fund Act seems to have loopholes that are detrimental to pension fund beneficiaries, particularly concerning the distribution of surplus funds. “The Pension Fund Act, 24 of 1965 does not contain any guidelines as to how surpluses in the pension fund are to be distributed,” Kavekotora charged, before asking Schlettwein if it is not time to review the existing legislation.
However, Schlettwein vehemently refuted Kavekotora’s assertion that beneficiaries received a mere N$120 million out of close to half a billion dollars of surplus funds in the Rössing
pension fund. “The comments by the Honourable member of the House are factually incorrect,” said Schlettwein.
The finance minister broke down what he said was the actual distribution of the Rössing pension fund surplus, which consisted of active members receiving N$132.3 million (29.1 percent), the active members holiday reserve getting N$9 million (2 percent), the employer getting close to N$150 million (33 percent), former members receiving N$68.1 million (15 percent) and pensioners receiving N$94.8 million (20.9 percent). The total distributed funds totalled N$454 266 000.
Meanwhile, Sanlam Namibia, as a leading player in the local financial services market, has welcomed the new proposed legislation. During a recent event Sanlam Group CEO Tertius Stears noted that as head of a non-banking financial institution, he also commended the tabling of the FIM, which is intended to regulate them. “It is not something new; the whole progress has happened. A lot of it tried to focus on improving the value of our services to clients through simple language and products that are understandable to consumers. We are fully aligned and supportive of it,” said Stears.
2019-07-19 10:26:00 | 10 months ago