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. It has hibernated ever since, but following last year’s elections, we will see action on it again in 2025, once the new Minister of Finance has been appointed and has found his feet. 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.
Summary of main provisions of draft standards and regulations under the FIM Act and implication for retirement funds
Standards Chapter 5: Retirement Funds
RF.S.5.5 Determination of the soundness of the financial position of a fund
This statement applies to all funds registered under the Act.
Summary:
- Provides for detailed requirements concerning the determination of financial soundness and the format of the valuator's certification of a rehabilitation plan.
- Various responsibilities are placed upon the board of trustees in this regard.
What to do:
- The fund’s valuator is to be requested to report on any implication of these requirements for the fund.
RF.S.5.6 Requirements for the voluntary termination or dissolution of a fund
This statement applies to all funds registered under the Act, to its board and principal officer and to a liquidator appointed under clause 5
Summary:
- Detailed exposition of requirements and onerous conditions before a fund, or its participation in an umbrella fund, can be terminated.
What to do:
- Funds planning to terminate or dissolve may wish to expedite their decision to avoid these conditions and requirements.
RF.S.5.7 Minimum benefits that a retirement fund must provide to its members
This statement applies to all funds registered under the Act.
Summary:
- The standard determines that every fund shall provide its members with the minimum benefit specified in the standard.
- The minimum benefit for a member who ceases to be a fund member before retirement shall not exceed the minimum individual reserve.
- The standard also defines how the minimum individual reserve is to be calculated. Essentially, this will outlaw vesting scales.
- Funds need to establish a policy for pension increases.
What to do:
- The fund’s valuator is to be requested to report on any implication of these requirements for the fund.
RF.S.5.9 Beneficiary nomination form
This statement applies to all funds registered under the Act.
Summary:
Section 276 of the FIM Act requires the payment of a benefit after notification of the member's death in line with the deceased member’s beneficiary nomination form.
- For this purpose, each member of the fund must complete a Beneficiary Nomination Form or No Change to Beneficiary Nomination Form annually and return it to the fund by 30 January each year.
- The standard sets out the format and content of the Beneficiary Nomination Form or No Change to Beneficiary Nomination Form.
What to do:
- Trustees should consider amending their beneficiary nomination forms in line with the standard and the nomination process to meet the requirements of the standard.
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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