Many Namibians have no appetite to save before retirement, placing a burden on the State to sustain them beyond 55, finance minister Ipumbu Shiimi says.

Shiimi was responding to what has now been termed as ‘pension grab’ in the public domain in a ministerial statement on Tuesday,

It has been proposed for members of retirement funds to preserve at least 75 per cent of their minimum individual reserve (fund credit) until the age of 55.

Effective from 01 October 2022 based on the current draft, this specific regulation has been met with sheer consternation, with many Namibians feeling the government is grabbing their pension funds.

Shiimi, however, says the contrary is true.

“I would like to reiterate that the main purpose of a retirement fund is to accumulate and grow savings to provide an income to the member when they retire, or otherwise to the member’s dependents if the member passes away before the set retirement date,” he told the National Assembly.

In the Namibian context, he opined, the history of preservation is very poor.

This is attributed to a myriad of challenges, including the high cost of living, household indebtedness, high levels of unemployment and slowing growth in assets, which have placed retirement planning low on the priority list for most people.

“This is further compounded by the high number of informal sector employees that do not fall within the ambit of any savings pool,” Shiimi advanced.

This, he said, has long term ramifications.

“At an aggregate level, low retirement savings increase the future burden on the state due to more people becoming dependent on social grants and public services,” he said.

This is why a larger proportion [75 per cent] of retirement funds must be preserved throughout the working lifetime of an individual, resulting in increased security after retirement.

“But this must be weighed against genuine financial requirement for emergencies before retirement,” he added.

Shiimi emphasised that the regulations are still in draft form, calling interested parties to provide their submission to the Namibia Financial Institutions Supervisory Authority.

“Constructive debate and participation by various interested bodies in the industry needs to take place before a final strategy is formalised,” he said.

Affirmative Repositioning leader and land activist, Job Amupanda, has been at the forefront, challenging the envisaged regulations.

“Despite his [Shiimi] bureaucratic explanations, he doesn’t provide any study or scientific evidence that accessing your money before 55 is bad. It’s a circus,” Amupanda tweeted.

Source: The Namibian Press Agency