Private Portfolio – Taking Stock

This is my second last column for 2012 and I wish to take stock of a couple of things that I think need to be attended to in the new year.
While one is a member of a pension fund, you should at least once a year get a statement of your retirement benefits and how the amount was calculated. When this member retires, he eventually is told what the amount of money is that he has accumulated over the years if not decades.
In spite of perhaps keeping annual benefit statements on file, he would not be a lot wiser of how his eventual retirement benefit was calculated. I think this is unfair.
It should be standard procedure that a retiring member of any pension fund should be provided with a very detailed statement of how the amount was arrived at over the entire period of his membership. It is the retiring member’s right and it is the decent think to do!
Trustees of pension funds should have the members’ interest at heart and if I were a trustee of a pension fund this is one of the many issues I would have fought for on behalf of the members who, after all, own the fund.
The second issue – on the same topic is – from my point of view – criminal although it is legal.
The most vulnerable members of pension funds are the members who are not registered as tax payers because they earn less than N$40 000 per year.
Being a member of a pension fund a monthly contribution is deducted from his salary and paid over to the pension fund for his eventual retirement. He gets no tax benefit because he earns less than N$3 333.33 per month.
Then, when this member withdraws from the pension fund upon  resignation or even dismissal before age 55, the receiver of Inland Revenue nonetheless takes 28% of this “tax-free” money before the rest is paid out to the pension fund member.
This is legal, but I am afraid, in my view this is nothing other than legalised highway robbery. The state has never lost a cent because of this employee’s membership of the pension fund. His income is supposed to be tax-free because it is so small!
He is the one who really needs every cent he can get purely from a survival point of view and then government comes and rakes off a massive 28% of his tax-free money! It should not happen and is grossly unfair. Grabbing money from the poor like this is just disgusting!
The entire pension fund industry should work together to end this (mal)practise on behalf of the people who maintain this industry – the contributing members of pension funds.
Having said all the above I also think the member is partly to blame for these issues because he does not take a big enough interest in how these matters are run. Or perhaps he has just given up hope or is not informed enough?
I think every pension fund should have representation from their side on how things are run and such persons should fight on behalf of all the members, no matter how big or small their membership in the fund is.
And as a last thought, please do not forget to take stock at home to ensure your risks over the holiday period are covered. From a household insurance point of view you only have time to the end of November to get this in place.