Namibia: Upped Retirement Tax Deduction an Economic Stimulus

The increased tax deductibility of retirement savings will, when made law, boost the country's savings pool and stimulate new economic activities, the chairperson of the retirement funds umbrella body, Sabrina Jacobs, says.

Jacobs was speaking at an event ahead of the Retirement Funds Institute of Namibia's annual conference, slated for 25 and 26 September 2019.

Finance minister Calle Schlettwein earlier this year announced that the tax deduction on retirement fund contributions will be increased from the current N$40 000 per annum to 27,5% of income, with a maximum of N$150 000.

"We hope that the decision will be gazetted soon to become operational and boost savings towards retirement," Jacobs said.

The Namibian reported in April that the N$40 000 cap has been in place for almost 13 years, despite the shifting economic needs of retirees.

Jacobs said the increase in retirement fund deductions, coupled with the new Cabinet decision to open up unlisted investments to close corporations with added controls or reporting requirements, will also provide more investment opportunities for the fund managers.

"These achieved positives, amongst others, reduce the problem in the financial sector, and inspire new economic activities and opportunities," she added.

Jacobs said they do appreciate that Namibia as a jurisdiction has its own unique laws and policies, but does not operate in a vacuum.

"The financial sector operates within the global arena, and is thus expected to align best practices and international standards, and is one of the tests that foreign investors would measure to make decisions and do business within the country," she added.

Jacobs noted that the industry faces issues such as changes in legislation, regulations and standards across banking and non-banking financial services. History also shows that in many instances, no proper cost-benefit analysis was performed before changes were made by policymakers, nor were proper consultations held with stakeholders.

According to the Namibia Financial Institutions Supervisory Authority's 2018 fourth-quarter statistics bulletin, there were over 91 pension funds under their watch, with a value of N$152 billion.

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