By:Carmen Forster

This is the third article in the series on ‘Understanding the Context of Pensions in Namibia in 2023’.
We have been looking at the Namibian pension provision per the Pillars defined in the World Bank Pension Provision Model. The first article covered Pillar 0 and we commenced with a consideration of Pillar 2 in the second article. In this article, we will continue with our review of Pillar 2, namely pension provision via employer sponsored retirement funds.
Pillar 2: A brief recap
In the previous article we looked at the context within which retirement funds operate as well as the key role that preservation, contributions, fees, and investment returns play in assisting retirement fund members to secure a reasonable level of retirement income when they retire.
In this article we will consider the social benefits of retirement funds, some factors to consider when a member retires, and areas of Pillar 2 reform that our policymakers are likely to be contemplating.

Social impact
Employer sponsored retirement funds have made a positive contribution towards the Namibian society for more than 50 years. In addition to providing a tax-incentivised opportunity for employees to save for their retirement, occupational retirement funds have played an important role for families whose breadwinner has passed away or is unable to work due to injury or incapacitation due to an accident or illness.
When a retirement fund member dies, the death benefit that is payable to his/her dependents is equal to the member’s accrued savings in the fund. Usually, an additional death benefit that is defined as a multiple of the member’s annual salary is added to the retirement savings benefit.
The Pension Funds Act, Act No 24 of 1956 (the PFA) indicates that retirement fund trustees are responsible for distributing death benefits to dependents of deceased members.
This means that the trustees must ensure that they have identified all people who were legally and/or financially dependent on the deceased member. This requirement ensures that due consideration is given to the needs of all the dependents – including those that are most vulnerable.
Retirement funds have also historically allowed for members who are disabled and receiving a monthly permanent health insurance (PHI) income to continue to be a member of the fund.
This means that they can continue to contribute towards their retirement savings benefit and their dependents can benefit from the death benefits payable by the fund if the disabled member passes away before reaching his/her normal retirement age.

Carmen Forster is the Head of Production Development & Client Retention (Corporate Segment) at Old Mutual Namibia