By: Justicia Shipena and Nangura Nguvauva
On Tuesday, finance minister Iipumbu Shiimi Iipumbu said that low retirement savings increase the state’s future burden due to more people becoming dependent on social grants and public services.
Shiimi made these remarks in the National Assembly while emphasising that the Financial Institutions and Markets Act (FIMA) regulations are still in the draft stage.
“The public is encouraged to provide inputs for consideration,” he said.
According to Shiimi, the problem of low retirement savings is further exacerbated by rising life expectancies.
“The move towards ensuring that a more significant proportion of retirement funds be preserved throughout the working life of individuals results in increased security after retirement, but this must be weighed against a genuine financial requirement for emergencies before retirement,” he explained.
He further said the current Pension Funds Act penalised early withdrawal from pension funds in the form of forfeiture of employer contributions upon changing jobs.
“Therefore, early withdrawal from pension funds was not a typical case back then.”
According to him, early withdrawal from pension funds are more frequent as people change jobs.
“Pension funds today are predominantly defined contribution funds where full vesting of pension benefits no longer penalises early withdrawal,” he said.
Additionally, he said the defined contribution funds employer does not guarantee pension for members.
“It is essential for the member to accumulate sufficient savings during their working life,” he expressed.
Iipumbu explained that there is a great need and responsibility to preserve retirement benefits for the state and every individual.
“This is to improve the saving culture for the nation. The proposed regulations on preserving pension savings are a step in this direction.”
According to the draft regulations under the FIMA act, individuals would only have access to 25 per cent of their pension if they resign from their employment before 55, while they would only access 75 per cent after the age of 55. FIMA is administered by the Namibia Financial Institutions Supervisory Authority (Namfisa).
Secretary-General of the Trade Union Congress of Namibia (TUCNA), Mahongora Kavihuha, says government should not dictate how people spend or invest their money.
“We cannot dictate on the foreign investments. We cannot dictate the market or how to conduct it. So equally, workers cannot dictate how to spend their money, how they want to invest it,” said Kavihuha.
According to him, people cannot make decisions that affect other people on their personal feelings on how best they can facilitate the “looting processes.”
“The money you are talking about is workers’ money, and there is no one under this free market that can debate someone’s investments,” he said.
He added that FIMA was a one-sided proposal.
“This is where they have underestimated the workers’ capability to spend their grants and advance. It is the money of the employees we are talking about. We are not interested in the portion of the employers. Employer will come and present their case,” he expressed.
Kavihuha said TUCNA seeks a record of the stance adopted by the workers or worker representatives on the board of trustees on this debate.
“We want to hear those representing the workers what their proposition was to the board of trustees. We want that record,” he lauded.
Regarding the Government Institutions Pension Fund (GIPF), Kavihuha said it should furnish TUCNA with a stance or record regarding FIMA, which was submitted during consultations with Namifsa.
“Those records never came from the workers,” he added.
Moreover, he stressed that he is disappointed with the statement by GIPF on membership. Last week, GIPF said that Namfisa commenced with consultations with various stakeholders, following the public’s outrage.
“From Namfisa’s side, it shows that GIPF agreed already. We want to get to the bottom of the issue, and we are demanding both records,” he said.
Kavihuha questioned what biblical or scientific evidence was carried out to determine the regulations of FIMA.
“What study was carried out to say that if employees get their pension earlier, they become worse off? What formula have they used to arrive at 55, not at 65 or 75 at the beginning?”
He further questioned what study was done to determine that a certain percentage of those people who get their money at a tender age are wasting it.
“I have observed that those who received that Ransome have at least a good infrastructure in place. The issue is that we cannot decide on hearsay.”
Hence he called for the regulations to be revised.
“It must be revised. This time around, we are not going to be smooth. We are going to act. If we have to go legal or political routes, so be it.”
IN THE DARK ABOUT FIMA
National Union of Namibian Workers (NUNW) vice president Phillip Munenguni said significant controversies have occurred concerning this matter.
Munenguni, in a radio interview with Eagle FM’s The Home Run show, took it upon himself to state how the members felt about the regulation and how flabbergasted he was about FIMA since they had no idea about it.
He also stated that they were not consulted and were ignored on inquiries made on the matter.
In addition, he added that he hadn’t had extended invitations from pension funds concerning FIMA.
Thus he added that members expressed disappointment with Namfisa wanting to regulate their money without proper consultation.
Munenguni told Eagle FM that the members are confused with the developments of FIMA.
In the same interview, the former Windhoek mayor, Job Amupanda, said he was not surprised to learn that NUNW had no idea about FIMA.
He added that Namibia is a capitalist nation that thrives on people’s ignorance. He argued that the issue could be handled before it gets out of hand.
He urged that the union prepares in advance if they wanted to stand a chance to turn the matter in their favour.
Amupanda further elaborated that it’s necessary to make sure that people understand what is happening because it’s a complex matter.
“The people’s pension is their property, and nobody should tell them how they are to dispose of it, and nobody should prevent one from claiming what is rightfully theirs.”
Speaking on Monday, he further said that FIMA is a situation where less talking is required but more action and unity to achieve a goal.
When asked whether he had an idea of the FIMA regulations, the former mayor replied that he had always been aware of what was in the pipeline.
He pointed out it is a total blow and unreasonable to implement these regulations since not every member will live up to 55 to claim their pension.