agenda introduction good practices in industry * results of gipf * short comings * proposed...

AGENDAAGENDA

* Introduction

* Good practices in industry

* Results of GIPF

* Short comings

* Proposed regulatory changes

* Closing

Presenter: A.Jansen

PUBLIC PENSION PUBLIC PENSION FUND MANAGEMENTFUND MANAGEMENT

GOOD PRACTICEGOOD PRACTICEINTRODUCTIONINTRODUCTION

* All pension funds are governed by the Pension Funds Act of Namibia of 1956.

* Around 400 registered pension funds – Mostly voluntary funds catering for civil servants and larger

private & public companies* We do not have a national pension fund covering all working

citizens (shortfall).* Registered funds covers 120 000 members of the 500 000

economically active Namibians.(GIPF the fund I work for has approximately 70 000 members)

* Social pension (less than minimum wage) have 125 000 recipients.


1.Fully funded with assets invested in capital market (local and international)- stock exchange- bond marketsReg.28: 35% Namibian assets ; Forex restrictions max 15 % offshore

PUBLIC PENSIONPUBLIC PENSION FUND MANAGEMENTFUND MANAGEMENT


2. Annual audits by independent auditors

3. Annual and Tri-annual actuarial valuations


4.Prudent investment guidelines

4.1 No investments in employer/sponsors

Registrar limited discretion to grant exemption

4.2 Maximum & prohibited investments

e.g. equity/stocks max -75 %

Unlimited investment – 5 %

No investments in coins & valuable artifacts.

Appoint independent money managers – To manage funds within the bounds of

regulatory framework and laid down mandates– Discretionary mandates to money managers– Regular (continuous) monitoring of adherence

to benchmarks (including peer comparisons)


PUBLIC PENSION PUBLIC PENSION FUND MANAGEMENT FUND MANAGEMENT

WHAT MAKES OUR INDUSTRY WORKWHAT MAKES OUR INDUSTRY WORK

Choice under the act of different funds

- Pension Fund

- Provident Fund- Retirement Annuity Fund- Guaranteed funds (insurance companies underwrite)

Prior Approval of auditors and actuaries by the RegistrarNegatives

Other consultants e.g. Employee benefits, Asset consultants, etc. not needed to be prior approved by Registrar

* Preferential tax treatment of the :- the contributors

- the funds themselves

- the benefits

• All funds have independent boards of trustees most have equal Employer /Employee representation (except GIPF – tripartite)



RESULTSRESULTS

No bankrupt fundsNo fund unable to make benefit paymentsOnly two cases of “unauthorized” transfer

by company management from 2 funds to companies (done without knowledge and approval of the Registrar)


GIPF Investment performanceGIPF Investment performance

Individual years to 30 June (%)Year ended

30 June

Fund

Return

Fund Bench-

Mark Return

Namibian

Inflation

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

20.9

12.7

11.8

6.4

15.4

25.8

7.8

26.4

13.0

18.6

19.8

16.1

13.8

10.0

6.0

17.4

25.3

8.5

28.9

13.5

18.0

18.4

9.8

9.9

8.2

5.2

8.8

6.9

10.0

7.4

10.0

15.1

15.2


GIPF Investment performanceGIPF Investment performance

Periods to 30 June 2001(%)Year ended

30 June 2001

Fund

Return

Fund Bench-

Mark Return

Namibian

Inflation

Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10

20.9

16.7

15.1

12.8

13.3

15.3

14.2

15.7

15.4

15.7

16.1

14.9

13.3

11.4

12.6

14.6

13.7

15.5

15.3

15.6

9.8

9.8

9.3

8.2

8.4

8.1

8.4

8.3

8.4

9.1


GIPF Administration cost as % of GIPF Administration cost as % of assetsassets

Year ended 31 March Admin cost as % of assets (incl. invest fee)

Assets at market value N$’000

1993

1994

1995

1996

1997

1998

1999

2000

2001

0.19

0.20

0.23

0.24

0.31

0.43

0.49

0.61

0.49

1 967 084

2 754 868

3 340 500

4 330 407

5 164 981

6 554 282

6 828 277

8 682 442

10 700 000

GIPF Average asset allocationGIPF Average asset allocation

* Geographic: 15% International, 55 % RSA and 35% Namibia

* Across asset classes : 50-55 % Stocks , 30-35% Bonds 5-10% Real Estate and 5-10% Cash

• Trading : 92.5% Quoted and 7.5% unquoted

• Target rate of return 3% above inflation



5. REGULATIONS IN THE PENSION FUND ACT THAT IS IN PIPELINEa) Funds must appoint own compliance officers b) Changes to max holdingsc) Individual member choice

* for Funds going from DB to DC* access to advisors* suitable default portfolio* compulsory information/education to members


5. REGULATIONS IN THE PENSION FUND ACT THAT IS IN PIPELINE (cont)d) Funds compelled to seek expert advicee) Compulsory to define,maintain and monitor investment policies


The Regulatory organization NAMFISAThe Regulatory organization NAMFISA((Namibia Financial Institutions Supervisory AuthorityNamibia Financial Institutions Supervisory Authority))

• Established as a juristic person(to sue & be sued, collect own revenue)

• To exercise supervision, in terms of the act and other laws over the business of financial institutions.

• Revenues generated through levies on financial institutions under supervision.

• Private pension fund assets supervised including GIPF is in excess of 55 % of GDP

PUBLIC PENSION PUBLIC PENSION FUND MANAGEMENTFUND MANAGEMENTProposed national pension fundProposed national pension fund

-partially funded of the Scheme-partially funded of the Scheme

Synopsis of our proposed Social Security ActType of Benefit

Contribution Insurable

Earnings

Eligibility Amount

of Benefit

Retirement

Disability

Survivors/

Orphans

4.2 % divided

Equally b/w

Employee and

Employer – also

covers contributions for disability and survivor insurances.

Minimum -N$300

Maximum –

N$4500

Old Age:

15 years of contributions and

60 years of age with a retirement

test between 60-65.

Disability:

Individuals under

60 deemed to be permanently disabled and whose earnings don’t exceed N$240.

Retirement/Disability

Min=80% of minimum insurable earnings

Max=80 % of wage base.

Wage base=avg. of

last 3years of earnings.

Eligible individuals receive a ‘gift’ equal

to 6 months of benefits upon retirements as a lump sum.


Table continuesTable continues

After 60 the

retirement benefit substitutes the invalidity one.

Benefit formula:

N$220*t/30+(0.01)*

Wage base*

T (t=years).

Survivors/Orphans

The spouse receives 40 % of the benefits as calculated under “retirements”. If children are less than 4, 20% each. If 4 or more, the remainder 60 % is split among them


Shortcomings pointed out by the WB Shortcomings pointed out by the WB report of 2000 that we are currently report of 2000 that we are currently

addressing are the followingaddressing are the following

What contribution rate can the economy afford

The impact of HIV/AIDS and how that will impact above

The impact of granting exemptions

Thank you !


agenda *introduction *good practices in industry * results of gipf * short comings * proposed...

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agenda introduction good practices in industry * results of gipf * short comings * proposed...