Trade unions, asset managers and prospective pensioners will have to wait for the consultation process regarding the contentious compulsory preservation of pensions to be finalised.
This comes as workers’ representatives continue to seek clarity through a high-level audience with government officials and fund leadership on the much-hyped regulations of the new Financial Institutions and Markets Act (FIMA). The finance ministry yesterday stated it will not pronounce itself on the matter until the consultation process with stakeholders is totally complete. FIMA, Act No. 2 of 2021, was promulgated on 30 September 2021, but is not yet operational and is comprised of “critical” regulations and standards to operationalise the new legislation.
The regulator, Namibia Financial Institutions Supervisory Authority (Namfisa) has activated a FIMA implementation plan. However, the legislation is only scheduled to be gazetted by 1 October 2022, as the consultative process still needs conclusion.
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, mostly fuelled by ignorance of the new law and its true purpose, 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. This week, umbrella trade unions such as the National Union of Namibian Workers (NUNW) and Trade Union Congress of Namibia (Tucna) penned correspondence to finance minister Iipumbu Shiimi and heads of government’s regulatory authorities, seeking audience with regards to the new changes of pension benefits without proper consultation.
Contacted for comment yesterday, finance ministry spokesperson Wilson Ashikoto said the regulations are still with Namfisa, which is in the process of undertaking public consultations.
“The public is encouraged to provide their comments to Namfisa, so their inputs are incorporated into the revised version which Namfisa will submit to the ministry. At this point, the ministry is unable to comment and or provide audience on a document which has not yet been formally submitted to us,” Ashikoto pointed out. He added the ministry has encouraged Namfisa to consult widely and to gather as much input as possible.
Much of the public distress stems from various demands from umbrella trade unions on behalf of workers who have expressed fear of losing their pensions if held until retirement age of 55 years, as stipulated in FIMA draft regulations. NUNW secretary general Job Muniaro said the union has been inundated with complaints from workers and the general public with regards to the new changes in pension benefits without proper consultation.
“The workers feel that the Ministry of Finance denied them the right to give their inputs on proposed changes on their benefits which may be in effect in October 2022. This he said is contrary to the tripartite arrangement. Muniaro added the workers feel the finance ministry has taken a unilateral decision that may affect their livelihoods in the future. Hence, he requested a meeting with Shiimi as soon as possible.
Meanwhile, Tucna secretary general Mahongora Kavihuha wrote similar letters addressed to GIPF chief executive officer David Nuyoma as well as to the head of Namfisa Kenneth Matomola, requesting an audience on vital information about the draft regulations.
Kavihuha also asked GIPF and Namfisa what the stance on the issue is from workers’ representatives.
Tucna also wants to be furnished with the position or the record of GIPF’s response regarding these regulations, more specifically those submitted during the consultative process with Namfisa.
Kavihuha also charged that it is rather unfair to exclude workers from various unions, such as the Public Service Union of Namibia (PSUN), Teachers Union of Namibia (TUN), and Nurses Union of Namibia (NANU), from the deliberations that have the obvious potential to affect their members.
Furthermore, the FIMA implementation plan includes formal consultations with stakeholders on draft FIMA regulations and standards, which was expected to take nine months. The finance minister is anticipated to operationalise FIMA only once Namfisa and stakeholders have agreed on the critical regulations and standards, approximately three months after the consultation process is scheduled to end. Also, the 12-month period for FIMA compliance includes the re-registration of all master and special rules of the fund.
As part of enforcement actions, Namfisa is responsible for supervising compliance with FIMA by retirement funds, intermediaries, and participating employers. Namfisa is empowered to take enforcement actions against any person or organisation subject to FIMA regulations.
Failure to comply with certain FIMA provisions or Namfisa directives is a criminal offence. President Hage Geingob promulgated FIMA on 29 June 2021. After becoming law, the next phase of the Act was to operationalise it and this includes finalising the subordinate legislation such as the Regulations and Standards under the Act. The industry was required to provide commentary to the critical standards by 28 February 2022.