The Minister of Finance Ipumbu Shiimi has postpone the compulsory preservation of retirement benefits to allow for adequate time for broader consultations on the envisaged regulation.
He said the modalities on how the consultations will be undertaken will be announced in due course.
The final standards and regulations were to be published in the Government Gazette on 1 October 2022 when the Financial Institutions and Market Act (FIMA) was to become operational.
In terms of the new regulation when someone resigns, changes jobs or stops working they will be required to preserve 75 percent of their individual pension, until the prescribed early retirement age of 55 years.
But, the ministry alongside Namibia Financial Institutions Supervisory Authority (NAMFISA) received massive national backlash for not consulting the relevant stakeholders,
such as the pension funds, workers’ unions and individual pension fund members.
The delay in the implementation of the regulation comes as the Government Institutions Pension Fund (GIPF) is conducting a survey seeking their members’ views regarding the draft national regulation. The, among others, wants to know what portion of their retirement benefit they want to save when they leave their employment. The survey is only applicable to GIPF members between the ages of 18 and 55 years for accuracy, as they are the ones who will be affected by the change.
The National Union of Namibian Workers was one of the unions that had called for the rejection of the FIMA regulation. Its secretary general Job Muniaro had stated that their call for this rejection is based on the fact that their members are expected to take care of their education and health as well as that of their children using their pension savings.
He had lamented that the existing pension funds under permitted conditions mitigate the impact relating to their survival, economic and other needs as a result of the high rate of unemployment among others, while the FIMA Act seeks to curtail such lenient provisions.
The NUNW regards it as crucial and as a necessary and mandatory to reject the FIMA Act stating that it is not in the best interest of the public particularly members of NUNW.
Additionally, he pointed out that the six-month period given to the public for input is not enough as the act will be operationalized come 1 October 2022.
Namfisa CEO Kenneth Matomola last month said that the draft regulation will benefit working people by ensuring that a portion of their retirement savings is preserved throughout their working lives.
He explained that this results in more income for members of pension funds after they retire, or for their dependents if such member dies.
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.
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.