MPs, Pensions and Post-Parliamentary Transition

The Pension arrangements for Namibian members of parliament (MPs) and other office bearers are governed by the Members of Parliament and Other Office-Bearers Pension Fund Act 20 (1999), a framework distinct from general pension schemes in the country.

This legislation sets it apart from other pension funds as it was specifically established by an act of parliament, with its rules subsequently gazetted in the year 2000.

Despite this uniqueness, the fund remains registered under the Pension Funds Act of 1956, which governs pension and provident funds in Namibia.

The distinct nature of this pension fund lies in its establishment and regulatory framework.
Unlike other pension funds, which are typically set up by employers or industry bodies, this fund is statutorily created, ensuring that its governance and benefits structure align with the legislative framework governing political office bearers.

Another unique feature is the employment tenure of MPs, which is generally limited to five-year terms, making their pension needs different from those of the general working population. 

As 21 March looms – with the transition of outgoing, incoming, and continuous members of parliament – the discussion takes on greater significance.

This transition period presents an important opportunity for MPs to reflect on their financial well-being, particularly in terms of their pension planning.

THE NEED FOR AWARENESS

Financial professionals and those well versed in the pension space seem to avoid engaging MPs on pension planning for several reasons.
It could be because of political sensitivity and public perception, as discussions around MPs’ pensions can be controversial.

Their pension schemes are often government-funded and separate from occupational pensions, reducing the need for external advisers.
The short-term nature of political tenure and state-backed benefits might also make them a less attractive market for private financial firms.
Legal barriers, governance issues and limited commercial interest are other possible reasons.

Also, there may be a general fear of victimisation, as speaking about such matters could be seen as interfering in political affairs.
Through consultations with both incoming and outgoing MPs, it became evident that many MPs lack awareness of the fundamental aspects of their pension fund and financial planning.

This is concerning as pension literacy is essential for financial preparedness, especially for MPs whose tenure in public office is often uncertain.
MPs, like all individuals, must consider their financial security post-retirement. However, their situation is often more complex because of the uncertainty of their tenure.

Some MPs serve only a single term before transitioning into other careers, voluntarily or because of political shifts.
Unlike in the past, when many politicians had long parliamentary careers spanning decades, there is a higher turnover of MPs in the current political landscape, making pension planning even more crucial.

FINANCIAL LITERACY

Financial and pension literacy is essential for younger MPs who may assume retirement is still far off, as well as those over 55 who have spent years enjoying the benefits that come with being an MP.

Many MPs go through their careers without having to worry much about personal finances, but the reality of financial insecurity can eventually set in if proper retirement planning is neglected.

It is, therefore, imperative for MPs to familiarise themselves with the commencement and cessation of their pension membership, particularly the provisions outlined in Article 48 of the Constitution, which governs the vacation of parliamentary seats.

Equally important is understanding their retirement and withdrawal benefits to ensure that they make informed financial decisions during and after their term in office.

Understanding the structure and performance of their pension fund, including its risk profile and the returns on investments, is crucial.
MPs should be aware of the fees and charges associated with their fund as these can affect their long-term savings.

Regularly reviewing the fund’s performance and staying informed about changes in pension regulations or investment opportunities will help MPs make proactive decisions, ultimately leading to better financial security and peace of mind as they transition into retirement.

CHALLENGES

Leaving parliament can be a period of financial, employment, and emotional adjustment.
While serving MPs receive structured remuneration and benefits, there is limited transitional financial support for those who exit before reaching pensionable age.

The transition out of parliament can be particularly challenging for those who have not proactively planned for their post-political careers.
Former MPs frequently encounter challenges when re-entering the job market.

Many struggle to return to their former professions, particularly those who previously worked in public service.
Fields requiring ongoing accreditation pose additional hurdles, as maintaining industry standards while serving in parliament can be difficult.

Employers may also be reluctant to hire former MPs because of concerns about political affiliations, further narrowing their career opportunities.
Proactive career and financial planning must be integrated into MPs’ tenure from the outset. 

Providing financial literacy programmes and career transition counselling both during and after their tenure could help them manage post-political life more effectively.

Encouraging new MPs to view their time in parliament as temporary and to plan ahead for future careers can also ease the transition.
Also, offering training programmes that help MPs articulate their transferable skills and obtain relevant certifications would enhance their employability.

Reducing political careerism by promoting professional networking and exploring career opportunities beyond politics can help mitigate dependency on parliamentary roles.

MOVING FORWARD

An MP’s role is undoubtedly significant in shaping national policies, but the reality of parliamentary tenure being temporary underscores the need for comprehensive pension and transition planning.

MPs must take proactive steps to understand their pension rights and obligations while simultaneously preparing for life beyond parliament.
With the right support mechanisms, MPs (former) will be enabled to handle transitions more effectively and continue to contribute meaningfully to society even after leaving office.

• – Vincent Shimutwikeni is the head: legal and compliance at the University of Namibia and a trustee on a pension fund. He writes in his personal capacity. 

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