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PUBLIC PENSION FUND MANAGEMENT AGENDA * Introduction * Good practices in industry * Results of GIPF * Short comings * Proposed regulatory changes * Closing Presenter: A.Jansen PUBLIC PENSION FUND MANAGEMENT GOOD PRACTICE INTRODUCTION

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PUBLIC PENSION

FUND MANAGEMENT

AGENDA

* Introduction

* Good practices in industry

* Results of GIPF

* Short comings

* Proposed regulatory changes

* Closing

Presenter: A.Jansen


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PUBLIC PENSION

FUND MANAGEMENT

GOOD PRACTICEINTRODUCTION

* 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.


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PUBLIC PENSION

FUND MANAGEMENT

1. Fully funded with assets invested in capital market(local and international)

- stock exchange

- bond markets

Reg.28: 35% Namibian assets ; Forex restrictions max 15 % offshore


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PUBLIC PENSION FUND MANAGEMENT

2. Annual audits by independent auditors

3. Annual and Tri-annual actuarial valuations


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PUBLIC PENSION FUND MANAGEMENT

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.


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PUBLIC PENSION

FUND MANAGEMENT

  • 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)


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PUBLIC PENSION FUND MANAGEMENT WHAT 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 Registrar

    Negatives

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


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PUBLIC PENSION

FUND MANAGEMENT

* 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)


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PUBLIC PENSION FUND MANAGEMENTRESULTS

  • No bankrupt funds

  • No fund unable to make benefit payments

  • Only two cases of “unauthorized” transfer by company management from 2 funds to companies (done without knowledge and approval of the Registrar)


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PUBLIC PENSION FUND MANAGEMENTGIPF Investment performance


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PUBLIC PENSION FUND MANAGEMENTGIPF Investment performance


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PUBLIC PENSION FUND MANAGEMENTGIPF Administration cost as % of assets


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PUBLIC PENSION

FUND MANAGEMENT

GIPF 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


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PUBLIC PENSION FUND MANAGEMENT

5. REGULATIONS IN THE PENSION FUND ACT THAT IS IN PIPELINE

a) Funds must appoint own compliance officers

b) Changes to max holdings

c) Individual member choice

* for Funds going from DB to DC

* access to advisors

* suitable default portfolio

* compulsory information/education to members


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PUBLIC PENSION FUND MANAGEMENT

5. REGULATIONS IN THE PENSION FUND ACT THAT IS IN PIPELINE (cont)

d) Funds compelled to seek expert advice

e) Compulsory to define,maintain and monitor investment policies


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PUBLIC PENSION FUND MANAGEMENTThe Regulatory organization NAMFISA(Namibia 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


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PUBLIC PENSION FUND MANAGEMENTProposed national pension fund-partially funded of the Scheme



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PUBLIC PENSION FUND MANAGEMENTShortcomings pointed out by the WB report of 2000 that we are currently addressing 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


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PUBLIC PENSION

FUND MANAGEMENT

Thank you !


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