Sam Camerill
The Natal Joint Municipal Pension/KwaZulu-Natal Joint Municipal Provident Funds (NJMPF) is a top achiever in both the South African retirement sector and the international arena, having accumulated a total of 33 awards both locally and globally in recent years, which reflects the fund’s focus on achieving more than its responsibilities and meeting the expectations of members.
“The awards instil confidence among NJMPF members,” says Sam Camilleri, chief executive and principal officer at the NJMPF.
“However, although the awards signify superior performance, the NJMPF has always maintained that true recognition rests in improving the lives of members and pensioners.
“At the NJMPF we believe that being a champion is based on seeing the bigger picture. It’s not about winning and losing; it’s about embracing the value of economic growth, transformation and improving the retirement outcomes for members, pensioners and stakeholders through everyday hard work and thriving on a challenge.
“This requires setting a standard of excellence in all manner of retirement funding principles and practices relating to governance, investments, education and communications, finances, administration, information technology and social responsibility, including trustee development,” explains Camilleri.
He says the manner in which the Charles Dickens novel Great Expectations depicts resilience, tenacity, commitment, a positive attitude, motivation and taking responsibility to overcome adversities could be seen as being symbolic for the South African retirement funding environment.
“The economic conditions locally continue to be sluggish, making it increasingly difficult for individuals to save and retain enough capital for retirement. The performance of the local stock market in the past few years has been poor in some sectors.
“The South African economy is faced with the challenges of a technical recession, a high rate of unemployment at over 27%, low investor and business confidence, and poor household savings rates.
“The latest mid-year population estimates produced by Statistics South Africa show that South Africa’s population is estimated at 56.5-million people. The estimates indicate that the proportion of elderly (60 years and older) in South Africa is growing, reaching 8.1% in 2017.
“According to the estimates, there are 4.6-million people in South Africa over the age of 60. The problem of ageing is significant because it means households have to save more, as people are living longer.”
However, Camilleri says despite the fundamental economic problems, the NJMPF is weathering the storms well, ensuring its members’ expectations, values and aspirations are achieved.
“The NJMPF has achieved excellent investment performance over the years, enabling it to improve benefits and provide good returns to its members. Its Provident Fund is ranked third out of 17 companies over 10 years in the Alexander Forbes Global Best Investment View, and has dramatically outperformed its five-year benchmark of CPI plus 5%.
“Mosaic Investment Consultants conducted an independent study, which indicated that the NJMPF was the best performing fund over seven years compared to other municipal pension funds in South Africa.
“The auditor general for South Africa has given the NJMPF a clean audit report for over a decade, confirming the NJMPF’s compliance governance practices.
“The fund since 2010 has achieved an overall score of AAA based on the Institute of Directors in Southern Africa’s independent assessment criteria, which is the highest score achievable.
“The fund’s efforts, via its interactive webpage (www.njmpf.co.za), mobile application, and financial-highlights booklet, among others, provides education and communication to encourage financial literacy and information sharing around investments and the world of money.
“A recent NJMPF drive linking with the regulator (National Credit Regulator) to educate and inform stakeholders and communities about debt management and the need to save has also shown positive results,” says Camilleri.
He reports that in recent years, the NJMPF has been able to sustain sound investment returns, with NJMPF pensioners being awarded increases that significantly improve their standard of living. If the market performs well, NJMPF pensioners also receive ad-hoc bonuses or one-off special increases, the most recent being a special increase of 8.33% which was paid from January 2016. Since July 2015, pensioners of the NJMPF have received monthly increases totalling 25.92%.
New act creates opportunity in the financial services sector
The Financial Sector Regulation Act (FSR Act) was signed into law by President Jacob Zuma on August 21 2017, signifying another step in government’s reform of the retirement fund industry.
Wayne Hiller van Rensburg, IRFA president and chairperson, says the FSR Act provides the framework for the new “twin peaks” method of regulation to be introduced to South Africa’s financial services industry, which will separate the regulatory responsibility into two regulatory authorities: the Prudential Authority and the Financial Sector Conduct Authority that will be housed in the South African Reserve Bank (SARB).
“At the moment all South African banks are regulated by the Banking Supervision Department of the SARB and all non-bank financial service organisations, such as asset managers and retirement funds, are regulated by the Financial Services Board.
“However, now, the Prudential Authority will regulate the prudential aspects of banks and non-bank financial institutions alike, while the Financial Sector Conduct Authority will regulate market conduct and fair treatment of financial consumers. The Reserve Bank will oversee both authorities,” says Hiller van Rensburg.
He contends that the biggest challenge of the new twin peaks model will be to change the thinking and the internal structures of the existing organisations so that they transform smoothly to accommodate their new focus and function.
Abigail Viljoen, Financial Services Africa Risk Management leader at Ernst & Young, says the primary aim of implementing the proposed twin peaks model is to provide a stable and mature financial services sector, which provides accessible, affordable and well-designed products and services that meet consumer needs.
“There will be benefits from the new supervisory approach for the entire financial sector, including consumers, regulated firms and the regulators themselves. However, as with any change of this nature, there will inevitably be challenges in implementing the new structure and its associated requirements,” adds Viljoen.
Hiller van Rensburg contends that while the FSR Act is unlikely to alter the prevailing regulatory framework with immediate effect, the act empowers the two authorities to publish prudential and conduct standards that will need to be complied with, and provides a new regulatory framework that should allow for the creation and regulation of financial products that are not narrowly defined and consequently regulated.
“We look forward the a reinvigorated financial services sector with new and exciting products that are more suited to a broad range of South Africans,” says Hiller van Rensburg.