Fima pension preservation hold brings relief to workers

Finance minister Ericah Shafudah has confirmed that the controversial pension preservation provisions under the Financial Institutions and Markets Act (Fima) have not yet been implemented, despite the law coming into effect on 1 May.Delivering a ministerial statement in parliament, Shafudah described the commencement of the law as a historic milestone that marks a decisive shift towards a modern regulatory framework for Namibia's non-banking financial sector.She said the legislation was the culmination of nearly two decades of policy development and included the formulation of more than 150 regulations that underwent extensive public consultation between 2021 and 2025.The minister said the law will strengthen consumer protection, provide greater regulatory certainty for investors and contribute to economic growth.Shafudah, however, sought to address one of the most contentious aspects of the legislation by clarifying that the proposed pension preservation regulation remains on hold pending further refinement and broader stakeholder consultation.She stressed that the current retirement benefit commutation provisions contained in the Income Tax Act of 1981 remain unchanged.As a result, members continue to retain their existing rights to receive up to one-third of their benefits as a cash lump sum from pension, retirement annuity and preservation funds. In contrast, provident fund members may still access up to 100% of their benefits.The clarification comes against the backdrop of years of public opposition to provisions that would have required workers leaving employment before retirement to preserve most of their retirement savings until reaching the retirement age of 55.Under the proposed preservation model, members would have access to only 25% of their accumulated retirement savings, with the remaining 75% preserved until retirement.The preservation provisions became one of the most debated aspects of Fima after the legislation was gazetted in 2021 to replace the Pension Funds Act of 1956.Strong public opposition led to the postponement of the Act's original implementation date to 1 October 2022.In 2024, the parliamentary standing committee on economics and public administration recommended that the government place the controversial preservation provisions on hold and subject any related regulations to parliamentary scrutiny before implementation.The committee further recommended that the attorney general provide guidance on the constitutionality of mandatory pension preservation.Retirement savingsThe recommendations followed extensive consultations with stakeholders.During those consultations, Namfisa chief executive Kenneth Matomola defended the preservation principle, arguing that it was intended to protect workers from exhausting their retirement savings before reaching retirement age.Matomola told lawmakers that the existing Pension Funds Act of 1956 was outdated and no longer aligned with international regulatory standards. He also cited concerns raised by the International Monetary Fund regarding the regulation and supervision of non-banking financial institutions in Namibia.“This stipulation is opposed to the common practice of withdrawing retirement savings early to meet short-term financial needs, which ultimately results in many people not having sufficient savings after retirement. Pensioners mostly end up depending on social grants from the state,” Matomola said.He argued that Fima would strengthen protection for retirement savings by shielding them from creditors and bankruptcy proceedings.However, representatives of the Retirement Fund for Local Authorities and Utility Services in Namibia (RFLAUN) opposed the preservation provisions, arguing that they failed to account for Namibia's socio-economic realities.The fund warned that many workers who leave employment depend on their retirement savings to repay housing loans, pay down debt and meet immediate household expenses.RFLAUN also questioned whether concepts such as compulsory preservation and forced annuitisation were appropriate for Namibia, arguing that some provisions appeared to have been adopted from foreign jurisdictions without sufficient consideration of local conditions.

Fima pension preservation hold brings relief to workers

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Namibian Sun 2026-06-30

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Fima pension preservation hold brings relief to workers

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Namibian Sun 2026-06-30

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