The Namibia Financial Institutions Supervisory Authority (Namfisa) says pensioners and their beneficiaries did not claim more N$176.4 million in benefits last year.
The unclaimed amount, which is sitting with the Namibian Retirement Fund Industry, shows that retired members of society are not aware of the funds or the pension administrators lack sufficient information to contact the beneficiaries.
“Most of the cause is that the pension funds are unable to trace beneficiaries due to poor records they might have, and changes of contact details and addresses. Also financial literacy levels is another factor, where beneficiaries are not even aware that they are entitled to the money as the member might have not communicated with the family and they are thus left unaware of the benefits,” Namfisa Chief Executive Officer Kenneth Matomola told The Brief.
He said if the benefits go unclaimed within a certain amount of time, they are passed to the Master of the High Court, and the court then serves as per the law so that the owners can come claim. In 2020, N$273.8 million was not claimed.
“The benefits do not remain with the pension funds to ensure that it is transferred to the masters before a certain period of time, furthermore what we have done with the FIMA Act is that we have made it an obligation for the pension to ensure that they get all the details from their members and changes on an annual basis to eliminate the issue of unclaimed pension funds, which we believe will be greatly reduced,” Matomola said.
Meanwhile, total benefits paid in 2021 amounted to N$10.4 billion, an increase of 14.4% from the previous year according to Namfisa, driven by retrenchments and retirements observed during the 2021 year due to the COVID-19 pandemic.
Since the start of the COVID-19 pandemic, the regulator has increased its monitoring of the industry and has not identified trends in the industry’s benefit payments that pose significant threats to the industry’s financial viability.
Consequently, the benefits paid out by the industry have been growing for the past five years.
“The continued growth of benefits paid will be monitored to assess the pressure placed on the industry that emanated during the COVID-19 pandemic, and to assess whether improvements in vaccine and other mitigating actions taken against the COVID-19 pandemic translates to improvements in the benefits paid by the industry,” Namfisa said in its annual report for the financial year ended March 2022.
The industry’s total investments grew during the 2021 year, despite the economic impact of the COVID-19 pandemic. While the funding level was above 100% as at 31 December 2021.
“Total investments increased by 18.0 percent to N$211.6 billion as at 31 December 2021. The direct investments held by the industry increased by 17.6 percent to N$188.0 billion, and the value of insurance policies increased by 21.6 percent to N$23.6 billion as at 31 December 2021. December 2021, the COVID-19 pandemic resulted in benefits and expenses exceeding contributions received by the industry,” Namfisa reports.
Matomola said the retirement fund industry remained resilient, withstanding the effects of COVID-19 and rising inflation as well as the resulting interest rate hikes in various jurisdictions.
As a result, total contributions received increased by 4% to N$9.7 billion for the year ended 31 December 2021, which correlates with the NCPI (or inflation) of 4.5% reported for the 2021 financial year.
“The contributions to the pension funds industry consistently increased from 2017 to 2021; however, contribution growth has slowed from the 2018 financial year. The slower growth in contributions from 2018 coincides with the decline in economic growth observed in the country, which worsened during the COVID-19 pandemic that started in 2020 and continued through 2021,” said Namfisa.
The Bank of Namibia previously revealed this year that financial institutions in the country had N$485 million in unallocated funds belonging to various clients, including cash sitting in dormant accounts.
