Contributed by Carmen Diehl, C.A.(Namibia), Senior Manager: Risk Management and Compliance

The FIMA (Act 2 of 2021) was promulgated in Government Gazette no. 7645 on 1 October 2021. The Minister of Finance has not yet set a date for it to become effective. Although it has been inactive since its promulgation, following last year’s elections, we can expect action on it again in 2025, once the new Minister of Finance has settled into her role. NAMFISA, however, has not been idle, spending a lot of time revising and issuing FIMA standards and regulations. In the next few issues of this newsletter, we will present the latest status on the standards and regulations and provide a brief overview.

 
This summarises the main provisions of draft standards and regulations under the FIM Act and implications for retirement funds.

Standards Chapter 5: Retirement Funds

RF.S.5.17 Categories of persons having an interest in the compliance of a fund with payment of contributions and the reports that must be submitted to such persons

The statement does not disclose to whom it applies.

Summary:

• The standard requires the principal officer or an authorised person of the retirement fund to report quarterly to active members, board members, contributing employers, NAMFISA, and any other interested parties.
• The report must be prepared in a specified format and distributed electronically, with paper copies available upon request.
• The quarterly report must be issued within one month of the quarter's end.

What to do:

• Trustees will need to arrange with their administrator to produce this report every quarter. This is likely to have cost implications, as administration platforms will need to be adapted to produce the report.
• The necessary arrangements will need to be made to ensure the distribution of this report to members.

RF.S.5.18 Matters to be included in an investment policy statement

The statement does not disclose to whom it applies.

Summary:

• The standard requires the board of a fund to develop and maintain an Investment Policy Statement (IPS).
• The IPS of a fund that does not permit member choice investments must include extensive information such as the fund's rate of return objectives, risk tolerance, asset classes in which the fund may invest, and diversification levels. The IPS should also detail the target and maximum allocations for each asset class, prohibited investments, and limits on single investments and currency risk.
• For defined contribution funds, the IPS must describe the investment options available to members and ensure they receive clear and regular information and statements.
• Additionally, the IPS must address the use of derivatives, securities lending, unlisted shares, and private placements, and include processes for reviewing investments and appointing investment advisors.

What to do:

• Trustees should revise the investment policy to align it with the requirements of this standard once the standard becomes effective.
• Trustees must consider whether their funds and available resources are sufficient to meet the requirements of this standard.
• The service level agreements with relevant service providers must be revised to reflect the responsibilities of these service providers in relation to this standard, including the information required from them, as well as the turnaround times necessary to support the standard's requirements.

RF.S.5.19 Matters to be communicated to members and contributing employers, and minimum standards for such communication

The statement does not disclose to whom it applies.

Summary:

• The standard outlines the communication requirements for retirement funds with their members and contributing employers.
• Funds must ensure that communications to active members, retired members, deferred members, and contributing employers are clear, complete, and accurate.
• Funds must provide annual reports and annual benefit statements to members that contain the minimum information required by the standard, and for benefit statements, in the format specified by the standard.
• Funds must also notify members of meetings, potential mergers, and rule amendments.
• Contributing employers must be informed about matters concerning the fund, such as board meetings, member meetings, notice of any legal actions against the fund or the board, summaries of member complaints, and any material concerns raised by service providers.
• Additionally, funds must provide contributing employers with copies of all required reports under the FIM Act, including audited financial statements and valuator's reports.

What to do:

• Trustees should establish a template for the report to members and the report to participating employers that meets the requirements of this standard.
• Trustees must consider whether their funds and available resources are sufficient to meet the requirements of this standard.

The service level agreements with relevant service providers must be revised to reflect the responsibilities of these service providers in relation to this standard, including the information required from them, as well as the turnaround times necessary to support the standard's requirements.

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. RFS (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of RFS.

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