Ruckus on Early Access to Pension Funds

The Namibian Financial Institutions Supervisory Authority (Namfisa) yesterday urged workers to remain calm ahead of the final standards and regulations on safeguarding superannuation benefits to be passed under the Financial Institutions and Markets Act 2021 ( FIMA).

The regulator said it has been inundated with inquiries about the new legislation, particularly from pension fund members who fear they will not have access to 75% of their pension funds in the event of early withdrawal.

The new regulation (Regulation RF.R.5.10), which will be published in the Official Gazette on October 1, 2022 when FIMA comes into force, stipulates that 75% of a pension fund must be kept until the date of early retirement. provided for in the rules.

This is done with the aim of ensuring that more income is available to support members of the retirement fund after they retire, or otherwise their dependents if they pass away.

This contrasts with a common practice of withdrawing savings early to meet short-term financial needs.

Ultimately, many people don’t have enough savings after retirement.

In these cases, the members of the fund usually end up depending on social benefits or the government old-age pension to survive when they retire.

Speaking to the media yesterday, Namfisa CEO Kenneth Matomola noted that formal consultations with industry stakeholders on all draft standards and regulations proposed under FIMA are currently at an advanced stage. .

The solicitation of industry comments on these standards and regulations closed on February 28, 2022.

Matomola added that in the meantime, Namfisa is reviewing and evaluating the comments received and, if necessary, will consult further with the industry before finalizing the standards and regulations that the Minister of Finance should consider promulgating.

“Namfisa confirms that Regulation RF.R.5.10 will introduce the mandatory continuation of pension benefits for people who withdraw from their pension fund before reaching retirement age, for example when changing jobs. employment or stop working. These members will be required to maintain 75% of their minimum individual reserve (fund credit) until the prescribed early retirement age of 55,” reads a statement from Namfisa.

Matomola explained that the draft regulations will apply without distinction to all pension funds registered with FIMA.

Thus, the mandatory maintenance of pension rights will apply to all pension benefits that will become due and to the contributions paid by members of pension funds from the date of entry into force of the FIMA.

“The public is advised that the primary purpose of a retirement fund is to collect and grow savings to provide income to the member when he retires, or otherwise to the member’s dependents in the event of death.

“Furthermore, if the member becomes disabled and therefore unable to work before reaching retirement age, the pension fund may provide that member with a disability benefit, usually in the form of monthly payments,” said said Namfisa.

Meanwhile, the Government Institutions Pension Fund (GIPF) yesterday acknowledged the public interest generated in recent days on social media platforms by the new draft regulations. “This draft regulation is one of many critical regulations and standards that are proposed to operationalize FIMA. GIPF is aware that Namfisa, as the institution that will be responsible for the administration of FIMA (and regulations and standards under FIMA), has begun consultations with various stakeholders on critical standards. GIPF awaits comments from Namfisa in this regard,” read a statement from GIPF spokesperson Edwin Tjiramba.

He also urged GIPF members to refrain from panicking, noting that FIMA is not yet in force and the proposed regulations and standards are not yet approved.

“As such, the proposal for mandatory preservation of pension benefits is not expected to come into effect until October 1, 2022 at the latest. Rest assured that the GIPF will continue to act in the best interests of its members,” Tjiramba added.

2022-04-08 Edgard Brandt

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