Retirement funds urged to invest locally

Retirement funds urged to invest locallyCovid highlights challenges, opportunities The 14th Retirement Funds Institute of Namibia conference highlighted how that industry was affected by the pandemic, as well as its subsequent survival and the way forward. ESTER KAMATI







WINDHOEK

At least 1.75% of retirement fund assets should be invested locally, according to Prime Minister Saara Kuugongelwa-Amadhila. Investment from the funds, she said, are crucial for local investment.

During the 14th Retirement Funds Institute of Namibia conference in Windhoek, she said that the presence of Covid-19 has amplified Namibia’s vulnerability “due to reliance on imports when disruptions [occur] in supply chains for basic goods”. She added that this is also an opportunity for investment in the local markets. “This situation also brought to the fore investment opportunities locally which the local savings - including that under the pension funds industry - can be deployed into.”

She said local investments for the retirement fund industry have the potential to increase investment returns “while supporting local economic recovery and building resilience and ensuring compliance with the domestic assets requirement”.

Namibia’s economy was not spared by Covid-19, which brought industries such as tourism and transport to their knees, while unemployment heightened.

The prime minister added that “this led to disruptions in contributions, and earlier than planned withdrawals from retirement funds”.

Kuugongelwa-Amadhila shared that in some countries, pension fund regulators felt pressure to reduce employers’ contribution requirements, especially in industries which suffered job losses. These measures were supported by arguments that a reduction in labour costs may enable employers to retain more of their employees.

“The retirement fund industry must remain resilient to such shocks for it to remain strong. The industry remains critical to support the national economic recovery initiatives,” she added.

Collaboration

She further highlighted government’s introduction of the Paycheck Protection Programme (PPP), which she said offers opportunities for investment through public and private sector collaboration.

As at December 2020, Namibia had 81 active retirement funds, which the prime minister said is an indication that the industry is stable.

The theme of the Retirement Funds Institute of Namibia’s 14th conference emphasised how the industry was affected by Covid-19 and its subsequent survival and the way forward.

Kuugongelwa-Amadhila added that the Financial Institutions and Markets Act has been disseminated to enhance regulation and create mechanisms for complaints handling.

“The regulatory approach follows a risk-based approach to ensure that the focus is put on areas that pose the greatest risk to meeting regulatory objectives.”

ester@myzone.com.na