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FIMA could be devastating for employers, says Employers Federation

FIMA could be devastating for employers, says Employers Federation

In its current form, the Financial Institutions and Markets Act (FIMA) poses severe risks for employers and imposes strict obligations as well on the employers, according to the Namibian Employers Federation.

Daan Strauss, the Federation’s Secretary-General said thousands of people could become unemployed and become dependent on the state for survival. According to Strauss, the Federation conducted a very basic survey among its members and the majority are very concerned about FIMA.

“The real concern is that the intended new legislation may well make a prospective employer think twice about offering a pension fund to their employees, which will have a devastating social impact on these employees. Experience had shown us that far too few employees take timely efforts to contribute to a pension fund if they need to make such a decision on their own,” Strauss stressed.

Under the Pension Funds Act, the employer only had one obligation towards the fund being payment of contributions within seven days of the month in respect of which they were deducted. Failure to pay contributions as required constitutes an offence, and the offender is liable to a fine not exceeding N$ 200 upon conviction.

Under the FIMA, the employer’s obligations and liability for fines will take on new dimensions. The company, its directors, and officers shall remain jointly and severally liable for any unpaid contributions and the prescribed interest thereon. Strauss notes that any director or officer may therefore face personal prosecution to recover outstanding contributions.

“Whilst there are employers who might make deductions from employees’ salaries and then either fail to pay it over to the pension fund or delay the payment thereof for other purposes, the sanctions for such failure seem to be draconian and completely out of proportion. You can hardly expect investment if a CEO faces the risk of being jailed for what could also be an innocent mistake or failure to ensure the timeous transfer of funds to the pension fund,” Strauss added.


About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys