Prime Minister Saara Kuugongelwa-Amadhila said the main aim of the retirement funds is savings mobilisation for future protection of the earnings of members and are crucial for local investment.
Kuugongelwa-Amadhila said this when she addressed the 14th Conference for Retirement Funds in Windhoek on Wednesday.
According to the Prime Minister, the business of retirement funds is to guarantee income and preserve the buying power of the current earnings.
“This noble function thus serves as a life protector of income to the savers and places the retirement funds in a situation to develop optimal investment methodologies and approaches that guarantee such future earnings,” she said.
She also said that it is pleasing that the Namibian retirement funds industry is stable and dynamic.
“The 2020 annual report of Namfisa shows 81 active registered funds in Namibians in December 2020.
“Given the important role of retirement funds, it is incumbent upon the government to ensure an effective regulatory environment for the industry to protect the consumers and savers and preserve the members’ investments invested into these entities,” she also said.
Kuungogelwa-Amadhila further said that the Financial Institutions and Markets Act has now been promulgated to, amongst others, enhance the role of the regulation and create mechanisms for complaints handling by members.
In this regard, she added, the regulatory approach follows a risk-based approach to ensure that the focus is on areas that pose the most significant risk to meeting regulatory objectives, in line with international best practices.
“Other reforms under the new regulatory framework include registration requirements for pension fund administrators and prescription of specific requirements for Boards establishments, among others,” she explained.
Kuugongelwa-Amadhila said while the regulations require that at least 1.75 per cent of the assets be invested locally, the intention is not to induce the maximum investments to that benchmark but to induce the industry to identify opportunities for local investments.
Covid-19, she said, had amplified our vulnerability due to reliance on imports when disruptions in supply chains for essential goods due to Covid-19 restrictions and exports restrictions resulted in supplies disruptions.
“This situation also brought to the fore investment opportunities locally, which the local savings, including that under the pension funds industry, can be deployed into.
“The sector should harness this potential for local investment to optimise investment returns while supporting local economic recovery and resilience building and ensuring compliance with the domestic assets requirement. Covid-19 has negatively affected the economy.
“Sectors such as tourism and transport have seen a massive decline in employment. This led to disruptions in contributions and earlier than planned withdrawals from the retirement funds,” the Prime Minister said.
Kuugongelwa-Amadhila said the pension fund regulators in a number of countries have come under pressure to relax employers’ contribution requirements, particularly in industries with significant fund member job losses and unpaid leave.
She said arguments supporting these measures have included that the resulting reduction in labour costs may enable employers to retain more employees.
According to the Prime Minister, the retirement funds industry must remain resilient to such shocks to remain strong.
The industry, she added, remains critical to support the national economic recovery initiatives.
“The government has adopted initiatives such as public, private partnership (PPP) that offer opportunities for investment of our local savings through collaboration between the government and the private sector.
“Through the PPP, the industry has a chance to share its expertise to help with the realisation of strategic national initiatives to improve service delivery, besides growth promotion and optimisation of returns on investment.
“Harambee Prosperity Plan outlines the range of interventions the government prioritises on which cooperation can be forged with the industry. I call upon the industry to see how it can position itself to be a part of the implementation of HPPII,” she said.
