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

2. GOOD PRACTICE INTRODUCTION *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. PUBLIC PENSION FUND MANAGEMENT

3. 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 PUBLIC PENSION FUND MANAGEMENT FUND MANAGEMENT

4. PUBLIC PENSION FUND MANAGEMENT 2. Annual audits by independent auditors 3. Annual and Tri-annual actuarial valuations

5. PUBLIC PENSION FUND MANAGEMENT 4.Prudent investment guidelines 4.1No investments in employer/sponsors Registrar limited discretion to grant exemption 4.2Maximum & prohibited investments e.g. equity/stocks max -75 % Unlimited investment – 5 % No investments in coins & valuable artifacts.

6. 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) PUBLIC PENSION FUND MANAGEMENT

7. PUBLIC PENSION FUND MANAGEMENT WHAT MAKES OUR INDUSTRY WORK 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

8. * 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) PUBLIC PENSION FUND MANAGEMENT

9. PUBLIC PENSION FUND MANAGEMENT RESULTS 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)

10. PUBLIC PENSION FUND MANAGEMENT GIPF Investment performance Individual years to 30 June (%) Year ended 30 June Fund Return Fund Bench- Mark Return Namibian Inflation 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 20.9 12.7 11.8 6.4 15.4 25.8 7.8 26.4 13.0 18.6 19.8 16.1 13.8 10.0 6.0 17.4 25.3 8.5 28.9 13.5 18.0 18.4 9.8 9.9 8.2 5.2 8.8 6.9 10.0 7.4 10.0 15.1 15.2

11. PUBLIC PENSION FUND MANAGEMENT GIPF Investment performance Periods to 30 June 2001(%) Year ended 30 June 2001 Fund Return Fund Bench- Mark Return Namibian Inflation Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 20.9 16.7 15.1 12.8 13.3 15.3 14.2 15.7 15.4 15.7 16.1 14.9 13.3 11.4 12.6 14.6 13.7 15.5 15.3 15.6 9.8 9.3 8.2 8.4 8.1 8.4 8.3 8.4 9.1

12. PUBLIC PENSION FUND MANAGEMENT GIPF Administration cost as % of assets Year ended 31 MarchAdmin cost as % of assets (incl. invest fee) Assets at market value N$’000 1993 1994 1995 1996 1997 1998 1999 2000 2001 0.19 0.20 0.23 0.24 0.31 0.43 0.49 0.61 0.49 1 967 084 2 754 868 3 340 500 4 330 407 5 164 981 6 554 282 6 828 277 8 682 442 10 700 000

13. 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 PUBLIC PENSION FUND MANAGEMENT

14. 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

15. 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

16. PUBLIC PENSION FUND MANAGEMENT The 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

17. PUBLIC PENSION FUND MANAGEMENT Proposed national pension fund -partially funded of the Scheme Synopsis of our proposed Social Security Act Type of Benefit ContributionInsurable Earnings EligibilityAmount of Benefit Retirement Disability Survivors/ Orphans 4.2 % divided Equally b/w Employee and Employer – also covers contributions for disability and survivor insurances. Minimum - N$300 Maximum – N$4500 Old Age: 15 years of contributions and 60 years of age with a retirement test between 60-65. Disability: Individuals under 60 deemed to be permanently disabled and whose earnings don’t exceed N$240. Retirement/Disability Min=80% of minimum insurable earnings Max=80 % of wage base. Wage base=avg. of last 3years of earnings. Eligible individuals receive a ‘gift’ equal to 6 months of benefits upon retirements as a lump sum.

18. PUBLIC PENSION FUND MANAGEMENT Table continues After 60 the retirement benefit substitutes the invalidity one. Benefit formula: N$220*t/30+(0.01) * Wage base* T (t=years). Survivors/Orphans The spouse receives 40 % of the benefits as calculated under “retirements”. If children are less than 4, 20% each. If 4 or more, the remainder 60 % is split among them

19. PUBLIC PENSION FUND MANAGEMENT Shortcomings 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

20. Thank you ! PUBLIC PENSION FUND MANAGEMENT