Pensioners and their beneficiaries failed to claim over N$229.1 million in benefits last year, the Namibia Financial Institutions Supervisory Authority (Namfisa) has revealed.
The 2022 unclaimed benefits represent an increase from N$176.4 million reported at the end of 2021.
According to Namfisa’s Annual Report for 2023, “the increase during the reporting period is discouraging, as it indicates that more members (or their dependents) whose pension fund membership ended without receiving their benefits were neither traced nor paid.”
This comes as, despite the growing number of unclaimed benefits, the pension industry in Namibia witnessed a substantial increase in the total benefits paid out in 2022, reaching N$11.5 billion.
“The total amount of benefits paid in 2022 was N$11.5 billion, an increase of 10.8% from the previous year. The growth in benefits correlates with continued withdrawals due to retrenchments and dismissals on account of economic pressures,” the Namfisa report noted.
Moreover, retirement benefits pay-outs have consistently outpaced contributions for the past five years.
To address potential threats to the continued payment of members’ benefits, Namfisa said it remains vigilant and committed to closely monitoring the industry.
Meanwhile, contributions received in 2022 amounted to N$9.9 billion, representing a 2.1% increase compared to the previous year.
Namfisa attributes the discrepancy to high inflation and rapidly rising interest rates that pressured both employees and employers.
“This slow growth in contributions has been an ongoing trend since 2018, coinciding with a decline in economic growth in the country. The situation worsened with external factors such as the COVID-19 pandemic in 2020, geopolitical tensions in Europe sparked by Russia’s invasion of Ukraine, and supply chain difficulties,” stated the report.
Namfisa’s report also noted that pension fund assets decreased by 3.3% to N$205.8 billion in 2022.
Similarly, current liabilities decreased by a substantial 22.2%, amounting to N$2.6 billion at the end of December 2022.
“This reduction in liabilities can be attributed to the lower benefits payable balance reported for the same period,” said the regulatory body.
The report also highlights the changes in account balances as active members’ share accounts increased by 1.4% to N$113.9 billion, while pensioner accounts saw an increase from N$25.8 billion to N$38.3 billion.
In contrast, the amount held in reserve accounts decreased from N$67.5 billion to N$48.3 billion as of December 31, 2022.
This shift in balances between active member accounts, pensioner accounts, and reserve accounts is indicative of the movement of funds within the pension system.
