Prime Minister Saara Kuugongelwa Amadhila yesterday said retirement fund investments are crucial for local investment. Speaking at the 14th Annual Conference of the Retirement Funds Institute, which was themed “the perfect storm is here”, the Prime Minister noted that while the regulations require at least 1.75% of retirement assets be invested locally, the intention is not to induce the maximum amount of investments to that benchmark, but to induce the industry to identify opportunities for local investments.
She added that Covid-19 brought to the fore local investment opportunities where domestic savings residing in pension funds industry can be deployed. “The industry should harness this potential for local investment to optimise investment returns, while supporting local economic recovery and resilience building and ensuring compliance with the domestic assets requirement.”
Kuugongelwa-Amadhila noted the pandemic has negatively affected the domestic economy and confirmed that sectors such as tourism and transport have seen massive declines in employment. This, she added, led to disruptions in contributions as well as earlier than planned withdrawals from retirement funds.
The prime minister further advised the retirement funds industry to remain resilient to external shocks for it to remain strong.
“The industry remains critical to support the national economic recovery initiatives. Government has adopted initiatives such as public-private partnership (PPP) that offer opportunities for investment of our local savings through collaboration between government and the private sector. The industry has an opportunity, through PPP, to also share its expertise to help with the realisation of strategic national initiatives to improve service delivery, besides growth promotion and optimisation of returns on investment,” she stated.
Kuugongelwa-Amadhila continued that it is incumbent upon government to ensure an effective regulatory environment for the industry for the protection of the consumers and savers and for the preservation of members funds invested into these entities.
She informed the conference that the Financial Institutions and Markets Act has now been promulgated to, amongst others, enhance the role of the regulation and create mechanisms for complaints handling by members.
“The regulatory approach follows a risk based method to ensure that the focus is put on areas that pose the greatest risk to meeting regulatory objectives, in line with international best practices. Other reforms under the new regulatory framework include registration requirements for pension fund administrators, and prescription of certain requirements for establishments of boards, amongst others,” she explained.
On the same occasion, CEO of Namibia Financial Institutions Supervisory Authority (Namfisa), Kenneth Matomola, said the authority recognises the fact that focusing its supervisory efforts on entities or areas which are deemed to pose the highest risk is crucial in the industry. Thus, he said, adopting a risk-based approach to supervision will allow the authority to ensure that action is taken to mitigate unacceptable risks and also to allocate resources based on the areas of greatest risk.
He further stated that risk based supervision tends to be ineffective due to organisational resistance to change, the inability to attract required levels of resources and skills, improper use of or inadequate tools to support processes, and inadequate quality assurance.