Politicians fingered in pension squandering
Politicians have been fingered by the Government Institutions Pension Fund (GIPF) as some of the culprits when it comes to squandering pension money, subsequently subjecting them to rely on money from family and friends to get by.
The trend of workers blowing their pensions before hitting retirement age is one of the many factors that gave birth to the controversial Financial Institutions and Markets Act (FIMA) that has pitted the Namibia Financial Institutions Supervisory Authority (Namfisa) against the public.
GIPF CEO David Nuyoma said the rate at which pension pay-outs are depleted even affects public office-bearers who formerly served in Parliament.
According to its own observations, GIPF said it takes - on average - 18 months for members to deplete their pension pay-outs.
“I’ve seen honourable members, former honourable members walking, taking taxis... Even two weeks ago, I saw one [politician] approaching our building [enquiring about his depleted pension] because that honourable member no longer has the benefit of a pension or a steady income, hence the issue of preservation,” he said yesterday when GIPF appeared before the Parliamentary Committee on Economics and Public Administration.
The committee questioned GIPF on planned changes which will make it compulsory for pension funds to retain 75% of the capital invested while paying only 25% to pension fund beneficiaries upon retirement, resignations or retrenchments before the age of 55.
While the fund is yet to make its position known on the matter, it said it will continue holding consultations with its members before pronouncing itself on the proposed regulations.
Nuyoma said while it’s unpopular, the controversial pension fund amendments should not be frowned upon, as it will instead help to preserve the capital workers have for their twilight years as pensioners.
Alarming rate
The fund further expressed concern that there had been a worrying trend where pension pay-outs were being depleted “at an alarming rate”.
“There are cases where we have cashed out millions to a single member. Believe me, it looks a lot, those zeros are very impressive; but as fast as it comes [is] as fast as it goes,” Nuyoma cautioned.
He added: “There are some members who have elected to resign before they could retire and cash out, irrespective of even the heavy tax burden or penalties that will come. We have seen [this] time and again... and there is an average pattern of [the] time it [the money] lasts - plus minus 18 months”.
Namfisa has in the meantime said the planned amendments are yet to come into effect on 1 October, pending further public consultation.
Currently, employees have the option to either receive cash (net tax), preserve their funds tax-free in a preservation fund or transfer funds tax-free to their new employer's retirement fund.
The trend of workers blowing their pensions before hitting retirement age is one of the many factors that gave birth to the controversial Financial Institutions and Markets Act (FIMA) that has pitted the Namibia Financial Institutions Supervisory Authority (Namfisa) against the public.
GIPF CEO David Nuyoma said the rate at which pension pay-outs are depleted even affects public office-bearers who formerly served in Parliament.
According to its own observations, GIPF said it takes - on average - 18 months for members to deplete their pension pay-outs.
“I’ve seen honourable members, former honourable members walking, taking taxis... Even two weeks ago, I saw one [politician] approaching our building [enquiring about his depleted pension] because that honourable member no longer has the benefit of a pension or a steady income, hence the issue of preservation,” he said yesterday when GIPF appeared before the Parliamentary Committee on Economics and Public Administration.
The committee questioned GIPF on planned changes which will make it compulsory for pension funds to retain 75% of the capital invested while paying only 25% to pension fund beneficiaries upon retirement, resignations or retrenchments before the age of 55.
While the fund is yet to make its position known on the matter, it said it will continue holding consultations with its members before pronouncing itself on the proposed regulations.
Nuyoma said while it’s unpopular, the controversial pension fund amendments should not be frowned upon, as it will instead help to preserve the capital workers have for their twilight years as pensioners.
Alarming rate
The fund further expressed concern that there had been a worrying trend where pension pay-outs were being depleted “at an alarming rate”.
“There are cases where we have cashed out millions to a single member. Believe me, it looks a lot, those zeros are very impressive; but as fast as it comes [is] as fast as it goes,” Nuyoma cautioned.
He added: “There are some members who have elected to resign before they could retire and cash out, irrespective of even the heavy tax burden or penalties that will come. We have seen [this] time and again... and there is an average pattern of [the] time it [the money] lasts - plus minus 18 months”.
Namfisa has in the meantime said the planned amendments are yet to come into effect on 1 October, pending further public consultation.
Currently, employees have the option to either receive cash (net tax), preserve their funds tax-free in a preservation fund or transfer funds tax-free to their new employer's retirement fund.
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