By: Nghiinomenwa Erastus
The on and off-site compliance inspections and assessment by Namfisa has found multiple issues within the pension industry that defies the country regulations and rules and risks people’s savings.
Namibia has 147 active pension funds with 81 active funds and 48 inactive funds local funds, while the foreign funds are subdivided into 66 active and 55 inactive funds.
By the first quarter of this year, the pension funds were worth N$190,7 billion.
The authority conducted 58 off-site inspections during the 2020 calendar year. Such inspections are performed based on information provided to the authority.
The Namibia Financial Institutions Supervisory Authority (Namfisa) annual report for the financial year ended in December 2020 released on Friday, eight months into the new financial year makes very disturbing findings.
According to the Namfisa compliance division, by the end of 2020, the pension funds liabilities exceed assets, implying the entities concerned were experiencing a funding risk.
“Current liabilities exceeded current assets, implying the entities concerned were
experiencing liquidity risks,” the division found.
Some of the pension funds are getting qualified audit opinions as auditors’ flag down their reporting.
The division has also indicated that some of them are doing inaccurate reporting evident in the chart of accounts.
The inaccurate reporting is coming in terms of misstating investment values and
The non-compliance goes as further as certain funds do not implement recommendations of actuarial valuation reports.
The report also revealed that the retirement funds are breaching good corporate governance as regards services being rendered to the funds.
There were also issues of conflicts of interest, risk management in respect of service providers, quorum requirements, and no restriction on trustee terms of office.
The non-compliance has also been detected in company boards of directors’ composition, contribution levels, terms of office of key personnel, creation of reserve accounts, and distribution of reserves.
It was also found out that some companies were not submitting annual financial statements and actuarial valuation reports.
The funds were not complying with the provisions of Regulation 13 on the domestic assets requirement, which dictate 45% of their assets to be invested locally.
At the same time, the pension funds (mostly some) were and still are struggling to channel the prescribed level of investment to the unlisted investments, while some are breaking the provisions of the investment on how much of their assets should be in credit balances.
The pension funds are also breaking the Act (Pension Funds Act) that is supposed to guide them, the division found without going into details.
The division has also reported that the pension funds are also rocked by the late payment or non-payment of pension contributions.
Some of the funds are also in their own world as they appoint their principal officers and trustees without notifying the Authority as required.
Based on the supervised entities’ quarterly returns submitted via the on-chart of accounts, entities’ annual financial statements, and their actuarial valuation reports.
Corrective measures were taken by Namfisa according to the report, with penalties amounting to N$402,000 issued to the culprits during the reporting period.
Individualised directives were issued to seven funds following the division’s inspection
findings, while recommendations to follow good corporate governance were issued to 17 funds.
Moreover, from the total complaints received by Namfisa last year, 152 are regarding pension funds.
Some clients have bemoaned the non-provision of relevant information, non-payment of pension benefits.
Some pension funds are not paying retirement annuity benefits and death benefits, Namfisa did not elaborate if they are not doing it timely or no payment at all. Email: email@example.com