Pension to cater for informal sector proposed

April 28, 2023

 

Namibia has an urgent need to establish a pension fund for self-employed individuals and others operating in the informal sector, a financial services group has said.

According to the Alexander Forbes Investments Head of Multinational Consulting, Craig Bentley, the world and generations are continually changing, and retirement plans must adapt to these changes, highlighting versatility in pension preservation.

"We can't expect people who are struggling to survive to save more, a large number of people who are self-employed, work in the informal sector even some in the formal sector don't belong to retirement funds," he said on Friday at a Discussion Forum hosted by the company on envisioning the retirement fund of the future.

Bentley estimated that 60% of people who are formally employed belong to a pension fund in South Africa which is consistent with Namibia, highlighting that "this then leaves out a large number of people not signed to a pension fund or do not want to participate."

"The vast majority of the continent has a social security framework, a voluntary contribution for both employed and self-employed individuals, which establishes a basic engine that relieves pressure on government and the need to increase access to finance. South Africa and Namibia face challenges, particularly in terms of longevity, and the capacity to identify a meaningful revenue source to tie to this will be a long-term problem," he said.

He stated that there is a need to create retirement and preservation benefits that appeal to varied target clientele, emphasising that someone in their twenties would not want what someone nearing retirement would.

"The rate of change is high, and it will impact how we interact in the future, as well as how we run our businesses and funds," he added.

"We need to start thinking far ahead, envisioning what is coming and preparing for what is coming, and how do we embed that action."

Alexandra Forbes, Consulting and Actuaries Director Joleen Mans meanwhile emphasised the importance of increased governance openness and communication from pension funds in order to restore the public trust lost during the Covid-19 pandemic.

"Trustees must accept responsibility for all decisions including the memorandum of agreement reached between sponsors and trustees. They must ensure that their code of conduct is in place and that how they handle the distribution of these benefits is in accordance with the service providers and that they remain independent with mutual confidence," she said.

This comes as Namibia has resumed efforts to set up a National Pension Fund (NPF), meant to cater to people who are not covered by existing pension funds, due to lack of consensus on the design of the mooted fund.

 

The design of the national pension fund seeks to ensure that senior citizens are entitled to and do receive a regular pension adequate for the maintenance of a decent standard of living and the enjoyment of social and cultural opportunities.

In 2018, the Social Security Commission. tabled a proposed National Pension Policy based on a defined contribution fund.

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Last modified on Tuesday, 02 May 2023 14:46

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