Why FIMA risks missing the mark for Namibia
I have long held reservations about the Financial Institutions and Markets Act (FIMA). My concern has never been with the Namibia Financial Institutions Supervisory Authority's (Namfisa) objectives—which are legitimate—but with the suitability of applying highly sophisticated first-world regulatory standards to a small, developing country. When regulatory models are transplanted without sufficient contextualisation, the unintended consequences are almost always borne by the ordinary pension fund member the legislation is intended to protect.
One of the industry’s persistent concerns has been the absence of meaningful and substantive consultation. While Namfisa considers its engagement process adequate, many stakeholders experienced it as instructional rather than collaborative—more reminiscent of a classroom dynamic than a genuine policy dialogue. The retirement fund sector has, for decades, been anchored by employer-sponsored schemes that served as the only reliable social safety net for many employees. Yet employers, who carry real risks under FIMA, were not brought along in shaping its direction.
Ironically, FIMA’s strict-liability environment and the expectation of professionally qualified trustees may deter the very employers whose voluntary participation historically made the system viable and affordable.
Preservation: Necessary reform, but not in its current form
Turning to preservation, it is well known that the original regulation (RF.R.5.10) was halted by a single individual with political influence. By comparison, the pensions industry’s multi-year efforts to refine the broader Act achieved only modest traction. In principle, some form of compulsory preservation is sensible and aligned with global practice, provided it is proportionate and designed with appropriate exceptions.
South Africa’s newly introduced two-pot system is an example of a more balanced approach, offering a measure of liquidity while protecting long-term savings. I would expect Namibia to adopt a similar structure in due course.
Namibia in a global context
Globally, most social security systems are compulsory, contributory, and tax-funded. Namibia and South Africa stand out as exceptions, relying predominantly on voluntary retirement arrangements as the backbone of old-age income security. This distinction matters: where contributions are voluntary, employees’ ownership and access rights to accumulated savings become inherently more sensitive than in a compulsory state system.
Internationally, there is no universal legal requirement to impose compulsory preservation on voluntary arrangements. However, there is a clear trend towards discouraging early withdrawals, often through tax measures, minimum access ages, or partial locking-in mechanisms.
The International Labour Organisation, the Organisation for Economic Co-operation and Development and World Bank encourage preservation as good practice but do not prescribe rigid rules. Countries with strict, non-negotiable preservation requirements remain the exception rather than the norm, and several such jurisdictions temporarily relaxed these rules during COVID-19 to provide social and economic relief.
*Tilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner. The opinion reflects his own experience of almost four decades in Namibia’s retirement fund environment.**
One of the industry’s persistent concerns has been the absence of meaningful and substantive consultation. While Namfisa considers its engagement process adequate, many stakeholders experienced it as instructional rather than collaborative—more reminiscent of a classroom dynamic than a genuine policy dialogue. The retirement fund sector has, for decades, been anchored by employer-sponsored schemes that served as the only reliable social safety net for many employees. Yet employers, who carry real risks under FIMA, were not brought along in shaping its direction.
Ironically, FIMA’s strict-liability environment and the expectation of professionally qualified trustees may deter the very employers whose voluntary participation historically made the system viable and affordable.
Preservation: Necessary reform, but not in its current form
Turning to preservation, it is well known that the original regulation (RF.R.5.10) was halted by a single individual with political influence. By comparison, the pensions industry’s multi-year efforts to refine the broader Act achieved only modest traction. In principle, some form of compulsory preservation is sensible and aligned with global practice, provided it is proportionate and designed with appropriate exceptions.
South Africa’s newly introduced two-pot system is an example of a more balanced approach, offering a measure of liquidity while protecting long-term savings. I would expect Namibia to adopt a similar structure in due course.
Namibia in a global context
Globally, most social security systems are compulsory, contributory, and tax-funded. Namibia and South Africa stand out as exceptions, relying predominantly on voluntary retirement arrangements as the backbone of old-age income security. This distinction matters: where contributions are voluntary, employees’ ownership and access rights to accumulated savings become inherently more sensitive than in a compulsory state system.
Internationally, there is no universal legal requirement to impose compulsory preservation on voluntary arrangements. However, there is a clear trend towards discouraging early withdrawals, often through tax measures, minimum access ages, or partial locking-in mechanisms.
The International Labour Organisation, the Organisation for Economic Co-operation and Development and World Bank encourage preservation as good practice but do not prescribe rigid rules. Countries with strict, non-negotiable preservation requirements remain the exception rather than the norm, and several such jurisdictions temporarily relaxed these rules during COVID-19 to provide social and economic relief.
*Tilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner. The opinion reflects his own experience of almost four decades in Namibia’s retirement fund environment.**
