Implementation of FIMA still on hold

Working individuals who wish to change jobs, go on early retirement or get fired, can still cash out their retirement benefits following the postponement of the of the implementation of the proposed Financial Institutions and Markets Act, No. 2 of 2021 (FIMA).
The proposed law, which requires compulsory 75% preservation of retirement benefits for people who withdraw from their retirement funds before the prescribed early retirement age of 55 years was supposed to take effect on 1October 2022.
In May 2022, the finance ministry announced the postponement of compulsory 75% preservation of retirement benefits, citing the need to allow adequate time for broader consultations.
The Namibia Financial Institutions Supervisory Authority (NAMFISA) in a statement said finance minister Iipumbu Shiimi needs to determine the date by which FIMA comes into operation.
“The date on which FIMA will come into operation will be communicated to the public at the appropriate time. Public and industry input on the subordinate legislation to the FIMA have been received, and feedback on these comments will be communicated during the last quarter of 2022,” the statement reads.
The objects of FIMA are to foster financial soundness of financial institutions and financial intermediaries, ensure stability of the financial institutions and markets sector and the highest standards of conduct of business by financial institutions and financial intermediaries.
FIMA will further ensure fairness, efficiency and orderliness of the financial institutions and markets sector, the protection of consumers of financial services, promotion of public awareness and understanding of financial institutions and financial intermediaries and reduction and deterrence of financial crime, NAMFISA said.
Opinion
According to local analyst Josef Sheehama, deciding not to decide until more information is available is also a decision. Before such sweeping changes are brought about through the Bill, there has to be an understanding of the purpose for such changes and whether these are indeed in the interest of affected parties and financial stability.
Technically speaking, FIMA is a good initiative. Domestic investment is one of the most important economic processes that attach great importance to as one of the most important components of the economic growth of the country and the main engine of the economic cycle. The reason given for the objection to the FIMA was as usual, lack of consultation. This seemingly indecisive posture of the NAMFISA makes people think that is not serious in their governance, he pointed out.
A serious governing body will not always come out with a reform and then withdraw it because what should have been done initially was not done. Lack of consultation and engagement, the flip flop will become the order of the day and nothing can get done.
NAMFISA need to understand that in our democracy, citizens express their views. The appropriate goal of regulation is to enhance, not undermine, societal well-being. In other words, regulation should do more good than harm. Without a counterfactual, it is impossible to know what a more disciplined regulatory environment would have meant for economic growth and well-being. The 75% vs 25% can increase inequality. NAMFISA further should understand the economic psychology effects. The retirement of the baby boomers will only exacerbate this problem. The only solution for reducing the ratio, other than painful tax increases or benefit decreases, is the faster economic growth that regulatory reform can bring, Sheehama said.
“Therefore, we welcome Indefinite postponement to allow more consultations and to ensure that all affected parties are involved,” Sheehama [email protected]