For most employees, being nominated or elected as a trustee of a retirement fund is viewed as an honour. And rightly so. Trustees are entrusted with safeguarding the retirement savings of employees, often accumulated over decades of service and intended to sustain members and their families long after employment has ended. Yet under Namibia's new Financial Institutions and Markets Act (FIMA), trusteeship is no longer merely a governance role founded on broad fiduciary principles. It is now a position carrying clearly legislated duties, responsibilities and, importantly, legislated sanctions for non-compliance.
Under the repealed Pension Funds Act, obligations often referred broadly to "every registered fund". FIMA, however, deliberately shifts the language in several provisions to "the board of a registered fund" or directly to board members and officers. This is not accidental drafting. It reflects a clear legislative intention to place accountability squarely on those entrusted with the governance and oversight of retirement funds. While a retirement fund remains a separate legal entity, the individuals serving on its board can, depending on the circumstances, face both collective and personal liability for failures to comply with the Act.
This does not mean trustees should fear serving on boards. Rather, it highlights the seriousness of the office. Retirement fund trustees are not ceremonial appointments. They oversee contributions, investments, governance, compliance, benefit payments and the protection of members' rights. In many respects, trustees hold the financial futures of employees and pensioners in their hands.
One notable shift under FIMA relates to the role of the principal officer. In terms of section 260, every registered fund must appoint a principal officer and notify the Namibia Financial Institutions Supervisory Authority (Namfisa) of such appointment within the prescribed period. Failure to comply may result in a fine not exceeding N$1 million, imprisonment for up to two years, or both. Importantly, FIMA further provides that the principal officer must serve as an ex officio member of the board, although the principal officer may not serve as chairperson. This represents a significant governance development from the previous legislative framework, where the principal officer's position was not as expressly integrated into board structures under the Pension Funds Act.
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Section 261 further reinforces the accountability expected from board members. A trustee who becomes aware of any material matter that may seriously prejudice the financial soundness of the fund or the rights and benefits of members is legally obliged to notify Namfisa in writing. Failure to do so constitutes an offence punishable by a fine of up to N$2.5 million, imprisonment for up to five years, or both. The duty imposed here is not passive. Trustees are expected to remain vigilant, informed and proactive in protecting the interests of members.
FIMA also places increased emphasis on transparency and governance ethics. Section 264 requires board members to disclose to Namfisa, within 30 days after the end of each financial year, any payments or other considerations received directly or indirectly from the fund or contractors associated with the fund. Non-compliance carries similarly severe sanctions of up to N$2.5 million or imprisonment for up to five years.
The general duties of trustees are comprehensively set out in section 265. These include ensuring proper record-keeping, accurate administration of contributions and benefits, lawful and prudent investment of fund assets, effective risk management systems, proper communication with members and employers, and ensuring compliance with FIMA and other applicable laws. Trustees must also ensure that contributions are paid timeously, obtain expert advice where necessary, meet regularly as a board, and continuously monitor whether board members remain fit and proper to hold office. These duties reflect the standard expected of modern retirement fund governance under FIMA and confirm that trustees are expected to exercise diligence, skill and care in the execution of their functions.
Actuarial oversight also receives particular attention. Under section 268, boards must ensure that valuation reports are lodged with Namfisa within 180 days after the valuation period and that employers receive copies or summaries thereof. Failure to comply may attract penalties of up to N$2.5 million or imprisonment for up to five years. This provision reinforces the importance of maintaining the financial soundness and transparency of retirement funds.
Section 269 contains one of the most serious sanctions in the chapter. A registered fund or its board may not conduct any business other than the business of a retirement fund. Contravention may result in a fine not exceeding N$5 million, imprisonment for up to ten years, or both. The provision is aimed at preserving the integrity and purpose of retirement funds and preventing the misuse of pension assets or structures.
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FIMA further strengthens the rights of fund members to access information. Sections 271 and 272 require that members receive copies of the rules of the fund and any amendments thereto free of charge. Section 281 expands this right further by allowing members access to financial statements, valuation reports and other prescribed documents. Trustees and boards are therefore expected to embrace transparency and accountability as fundamental governance obligations rather than administrative formalities.
Suffice to say, trusteeship under FIMA increasingly requires competence, integrity, independence and ongoing suitability for office.
Ultimately, thepurposeofthese provisions is not to discourage individuals from serving as trustees. Retirement funds require committed, capable and ethical individuals willing to act in the best interests of members. However, FIMA makes it clear that trusteeship is an onerous legal responsibility requiring preparation, understanding and continuous oversight.
*Vincent Shimutwikeni is a retirement funds author and pension industry professional.
