The Namibia Financial Institutions Supervisory Authority (NAMFISA) Deputy Chief Executive Officer, Erna Motinga cautioned the Namibian public against mass resignations in an attempt to
Access their pension savings, because of the introduction of compulsory preservation of retirement benefits for people who withdraw from their retirement funds before retirement age.
In terms of this new regulation when someone resign, change jobs or stop working they will be required to preserve 75 percent of their minimum individual pension reserve, until the prescribed
early retirement age of 55 years.
This has ignited heated public debate on social media and news platforms, with angry members of public vehemently opposing the provision, saying they should be free to access their pension money when they leave a pension fund.
Motinga says ‘’we are all well aware of the poverty rates in the country and they should not go for short term gratification’’ maintaining that resigning because of this new regulation is not the right thing to do.
Moreso, the regulation is still in draft stage and it is not certain if it will go through in its current form.
Namfisa CEO Kenneth Matomola says the organisation is busy considering and evaluating the comments received, and will consult further with the industry if necessary before finalising the standards to be issued, as well as regulations for the Minister of Finance to consider for promulgation.
The final standards and regulations will be published in the Government Gazette on 1 October 2022 when Financial Institutions and Market Act (FIMA) becomes operational.
Matomola said the formal consultation with industry players on all the draft proposed standards and regulations under the FIMA are currently at an advanced stage.
As such, the solicitation of comments from the industry on these standards and regulations ended on 28 February 2022.
NAMFISA has received several queries relating to the draft Regulation on Preservation of Retirement Benefits (Regulation RF.R.5.10) to be made under the FIMA legislation.
The draft regulation will apply indiscriminately to every retirement fund registered under FIMA, and the compulsory preservation of retirement benefits will apply to all retirement benefits that become due to, and to contributions made by, members of retirement funds following the date on which the FIMA becomes effective.
Matamola said that the draft regulation will benefit working people by ensuring that a portion of their retirement savings is preserved throughout their working lives.
This results in more income for members of retirement funds after they retire, or for their dependents if such members die.
In contrast, withdrawing retirement savings in cash before retirement and using them to meet short-term financial needs result in many people not having enough savings to take care of themselves and their needs when they retire, leaving them entirely reliant on government social grants.