Kapana, Pension Funds and the Art of Service!

On any Saturday and Sunday morning, the Single Quarters in Katutura is a hive of activity, with cars packed into parking areas or queueing to secure a spot at this popular venue.

This is where Namibians from all walks of life and international visitors go to experience succulent flame-grilled beef strips commonly known as kapana.

Smoke fills the air as you approach the kapana stands and are met by a frenzy of invitations from sellers to taste their beef strips, initially for free.

Your taste experience informs which kapana stand you will support.

My favourite service quote by an unknown author is, “In today’s world, meaningful differences between businesses are rarely rooted in price or product, but instead in customer experience!” 

How many of us really take the trouble to compare service providers and their products before transacting with them?

When it comes to financial services especially, what makes a person decide to use one or the other bank, or to take out insurance with a particular insurer?

There are four commercial banks and similarly four well-known life insurance service providers in Namibia.

So, what determines the size of market share or the overwhelming support of one bank or insurance service provider by individuals?

Knowing that the prices of bank and insurance products are not strictly regulated, the answer will have to be left to each reader.

FUNDAMENTALS

This brings me to pension funds. As in the rest of the world, Namibian pension funds use a long list of service providers.

Among others, each pension fund uses the services of an administrator – to keep accurate records and pay benefits; an actuary to determine financial soundness; an auditor to test and report on financial records; investment managers to grow the fund’s assets; banks for banking and safe custody, etc.

The new pension fund law, the Financial Institutions and Markets Act (Fima), which will, among others, regulate pension funds and some pension fund service providers, has recently enjoyed social media coverage.

It is important to note that pension funds are managed by a board of trustees. The board of an employer-sponsored pension fund is usually comprised of employer and employee representatives, while that of a commercial umbrella pension fund is usually comprised of independent experts and some appointed by the umbrella fund’s founder.

The underlying thread is that pension fund boards of trustees have fiduciary responsibilities to take care of the fund’s assets as if they are looking after their own affairs.

Service providers are appointed for their professional know-how.

Unlike the example of an individual choosing a kapana vendor, with a bank or insurance provider contracting a pension fund service provider is a more thorough process and guided by governance codes.

While a board’s reasons for choosing a service provider may still come down to the same as those of an individual, it must be recognised that the pension fund service industry is one of the most complex and competitive sectors of our economy.

Through prudent management, pension fund assets have grown exponentially to the point where they now attract a lot of attention.
The growth of pension fund assets has no doubt been driven by the protectionist legislative framework.  

AWARENESS

I believe the interest in and focus on pension funds is a good thing and should help in creating overall awareness of the importance and benefits of pension fund savings.

However, what has lagged substantially is the education of pension fund members to go along with the growth and the eventual right use of pension fund assets to eradicate poverty, especially in retirement.

Better informed members of pension funds and other users of financial products will not only help with choices, but also improve the management, innovation and competitiveness of pension fund products and service providers.

• Marthinuz Fabianus, managing director of RFS Fund Administrators, has 29 years pension fund experience. This article is written in his private capacity.