On any Saturday and Sunday mornings, a visit to the Single Quarters in Katutura is a hive of activity with lines and queues of cars parked and trying to secure parking respectively at the popular spot of international acclaim.
This is where Namibians from all walks of life and international visitors frequent to experience and get a taste of the succulent flame grilled beef strips, commonly known as kapana. As you approach the different stands of kapana sellers, amidst the smoke, you are greeted by a frenzy of invitations by the sellers at each stand to taste their beef strips, initially free of any charge. Your taste experience informs which kapana stand you will support at the end.
My favourite service quote by an unknown author reads; “In today’s world meaningful differences between businesses are rarely rooted in price or product, but instead in customer experience!” How many of us really take the trouble to compare service providers and their products before transacting with them? Especially when it comes to financial services, what makes a person decides to bank with one or the other bank or to take out insurance with one and not the other insurer?
To continue with the example of banks and insurance service providers, it is common knowledge that there are 4 commercial banks and similarly 4 well-known life insurance service providers in Namibia. So, what determines the size of market share or the overwhelming support of one bank or insurance service provider by individual customers? Knowing that the prices of bank and insurance products are not strictly regulated, the answer to this question will have to be left to each reader.
This brings me to pension funds in Namibia. As with the rest of the world, all Namibian pension funds make use of a long list of service providers. Amongst others, each pension fund makes use of the services of a pension fund administrator – to keep accurate records and pay benefits, an actuary – to determine financial soundness, an auditor – to test and report on financial records, investment managers – to grow assets of the fund, banks – for banking and save custody, etc.
Pension funds, the new law that will amongst others regulate pension funds known as the Financial Institutions and Markets Act (FIMA) and along with these some pension fund service providers, have enjoyed social media coverage over the last 3 months or so. It is important to note here that pension funds are managed by a board of trustees.
The board of an employer sponsored pension fund is usually comprised of employer and employee representatives, whilst with a commercial umbrella pension fund, it is usually comprised of independent experts and some appointed by the founder of the umbrella fund. The underlying thread is that pension fund board of trustees have fiduciary responsibilities to take care of the pension fund assets in a way than they would looking after their own affairs.
The different service providers to a pension fund are appointed by the board of trustees for their professional know how. Unlike the example of an individual choosing a kapana vendor, a bank or an insurance product provider, the process involved in contracting a pension fund service provider by the fund’s board is a lot more thorough and guided by governance codes.
Whilst the reasons of a board to choose a preferred service provider may still come down to the same as used by an individual in choosing their service provider, it must be recognised that the pension fund service industry is one of the most complex and competitive sectors of our economy. Through prudent management, pension fund assets have grown exponentially to the point where it is now attracting a lot of attention. The growth of pension fund assets has no doubt been driven by the protectionist legislative framework.
I believe that the interest and focus on pension funds is a good thing and it should help in creating overall awareness of the importance and benefits of pension fund savings. However, what has lagged substantially is the education of members of pension funds to go along with the growth and eventual right use of pension fund assets to eradicate poverty, especially in retirement.
Better informed members of pension funds and other users of financial products will not only help the choices, but also improve the management, innovation and competitiveness of pension fund products and service providers.
*Marthinuz Fabianus is the Managing Director of RFS Fund Administrators and has 29 years pension fund experience. The article is written in his private capacity
