SOME pension funds are being overseen by trustees who are not independent and are conflicted in services provided to the funds, says the Namibia Financial Institutions Supervisory Authority.
The financial regulator revealed this in their 2019 annual report, noting that there is a presence of conflict of interest in some pension funds, while the composition of certain boards of trustees was not in line with fund rules.
According to Namfisa, there were 134 pension funds under their watch as of 31 December 2018, with a combined value of N$158 billion.
Namfisa is mandated to regulate and supervise financial institutions as well as to ensure a safe, stable and fair financial system, which is done by on and off-site visits to financial institutions.
Of the inspections done at pension funds, Namfisa said they found that certain pension funds did not have key governance policies, agreements and practices, while some had inadequate risk management functions.
“The relationships between board members and pension fund service providers compromised the board’s independence, and created a conflict of interest for board members,” read the findings included in the annual report.
Other ills observed at high-governance level include boards of trustees meetings held in a manner not conforming to fund rules, as well as non-compliance with the conditions concerning the exemption to invest in the business of a participating employer.
Namfisa said during the 2019 financial year, they conducted 74 off-site inspections and 13 follow-up inspections, uncovering that the pension fund industry had certain investments not in line with the respective pension fund’s policy, inaccurate reporting of fund investments, as well as outstanding Namfisa levy payments.
According to the annual report, Namfisa only imposed penalties for non-compliance, and did not undertake any other post-inspection supervision interventions. In 2018, the regulator conducted on-site inspections on 27 funds, with some findings repeating themselves even in the year under review.
According to the 2018 International Monetary Fund’s financial sector stability assesment, there is a need to strengthen the accountability and transparency framework of Namfisa in the next one to three years, as well as the carrying out of effective on- and off-site supervision as the current ones are considered burdensome and mis-focused.
Local dailies have reported that finance minister Calle Schlettwein has called on interventions to be made to ensure that the trustees of retirement and pension funds are equipped with the necessary skills to suitably guide and advise on the sustainability of these funds.
Email: lazarus@namibian.com.na
Twitter: @Lasarus_A
