Finance and public enterprises minister Iipumbu Shiimi has appointed and inaugurated a 36-member technical advisory committee (TAC) on Monday, tasked to consult the broader public on a proposed regulation (RF.R.5.10) on the preservation of retirement benefits.
The draft regulation is intended to be issued under Chapter 5 of the Financial Institutions and Markets Act (FIMA) (Act No. 2 of 2021). Due to strong public reaction to the proposed draft regulation, Shiimi postponed the implementation of FIMA, under which the said draft regulation on the preservation of retirement benefits would be issued.
Under the new regulations, when FIMA becomes operational, 75% of a retirement fund must be preserved until the early retirement date as provided for.
This is done with the aim to ensure that more income is available to sustain retirement fund members after they retire or otherwise their dependants if the event of death.
This is opposed to the common practice of withdrawing savings early to meet short-term financial needs, which ultimately results in many people not having sufficient savings after retirement. In these cases, fund members mostly end up depending on social grants or the government’s old-age pension for survival when they retire.
FIMA, which was gazetted on 30 September 2021, replaces the outdated Pension Fund Act of 1956. Its objective is to consolidate and harmonise the laws regulating financial markets, financial institutions and financial intermediaries.
“We do not want to stretch the process; thus, the committee is given six months to conclude their task. We need to modernise the laws and not rely on outdated ones. There is a matter of urgency,” said Shiimi at TAC inaugural.
The minister added the committee is tasked to consult the public and further research as a collective to see what position is really going to benefit the Namibian environment.
“And also look at flexibilities in the retirement space and formulate recommendations. They are allowed to benchmark with other Southern Africa Development Community (SADC) member states, international standard-setting bodies and outside SADC in relation to policy and legislation for the purposes of preservation of retirement benefits. They are also mandated to review the current draft and spot gaps that need attention,” said the finance minister.
The TAC is chaired by Manfred Zamuee, while the entire TAC comprises representatives from Ministry of Finance and Public Enterprises, Bank of Namibia, Namibia Financial Institutions Supervisory Authority, Secretariat of the TAC, Retirement Funds Institute of Namibia (RFIN), Trade Union Congress of Namibia, National Union of Namibian Workers, Namibia National Labour Organisation, pension funds not part of the RFIN and the employers federation.
– mndjavera@nepc.com.na