The Financial Institutions and Markets Act (Fima) is being implemented under Namibia Financial Institutions Supervisory Authority (Namfisa) supervision following a formal directive from the minister of finance.
This marks a decisive step toward stronger governance, financial stability, and consumer protection in Namibia, according to Namfisa.
According to Namfisa, Fima strengthens Namibia’s non-banking financial sector by promoting consumer protection, transparency, and sound governance. Importantly, the Act will be implemented effectively without the regulation on the preservation of retirement benefits, ensuring regulatory progress continues while safeguarding the public interest.
Observer Money talks to Carmen Diehl, the senior manager for risk management & compliance at RFS Fund Administrators, about the future of Fima and its implementation.
Observer Money (OM): What are some of the pension industry concerns regarding Fima?
Carmen Diehl (CD): The Retirement Funds Institute of Namibia (RFIN), together with industry stakeholders, has identified several critical concerns that need to be addressed before the Financial Institutions and Markets Act (Fima) is put into effect. The industry supports regulatory reform and improved protection for retirement fund members.
However, certain misalignments (for example, with the Income Tax Act), unclear provisions, and operational challenges within Fima may unintentionally harm members, increase costs, reduce retirement benefits, and create uncertainty across the retirement sector. These need to be addressed before Fima is implemented.
OM: Namfisa clarified that the commutation rules, being one-third cash entitlement of the retirement benefits at retirement applicable to pension funds, retirement annuity funds and preservation funds and the 100% lump-sum cash entitlement at retirement for provident funds as currently provided for under the Income Tax Act, Act No. 24 of 1981, will remain unchanged upon the initial commencement.
May you clarify and explain the above statement in simple terms?
CD: Namfisa is saying that when Fima begins, nothing will change regarding how much of your retirement benefit you are allowed to take in cash when you retire.
This means that pension funds, retirement annuity funds, and preservation funds will still be allowed to take one‑third (1/3) of your retirement benefit as a cash lump sum, and the remaining two‑thirds must buy a pension (annuity), just like the rules under the current Income Tax Act.
Provident funds: you will still be allowed to take 100% of your retirement benefit in cash when you retire, exactly as you can now under the current tax law.
OM: When will Fima come into effect and does this mean that the changes will still come into effect after the initial commencement?
CD: We do not know when Fima will come into effect. We expect it to be this year, but hopefully after the pension industry concerns have been resolved.
Namfisa indicated that the provision on commutation rules will not come into effect upon initial commencement, but only after alignment to the Income Tax Act. Any amendments to the FIM Act need to be approved by Parliament.
OM: Anything else to add?CD: As Fima represents one of the most significant legislative reforms in Namibia’s financial sector, ongoing constructive engagement between regulator, policymakers and the retirement funds industry is critically important.
