Every trustee of a small or stand-alone pension fund should ask: Can our fund and members afford to comply with FIMA and remain economically viable?

This is not an argument against FIMA. Stronger governance, member protection, risk management and accountability are necessary. The concern is whether the cost of achieving these objectives falls disproportionately on smaller funds, which must maintain much of the same regulatory infrastructure as larger funds, but across a smaller membership and asset base.

The answer may lie in what compliance requires in practice.

FIMA has increased the work behind the trustee table

A small fund may have the same obligations as a large fund, but not the same economies of scale.

Under FIMA, trustees are expected to exercise meaningful oversight of the fund’s affairs, governance, risk, service providers and compliance. Section 271 requires fund rules to comply with FIMA and prescribed regulations or standards, while section 271(5) requires members and beneficiaries to receive the fund rules.

The Act sits within a broader regulatory framework, including retirement-fund standards addressing fit-and-proper requirements, outsourcing, codes of conduct, and governance. Trustees must therefore understand not only what the fund does, but whether it has the policies, systems, controls and evidence to demonstrate that it is doing so properly.

This may require documented governance arrangements, risk-management processes, conflicts-of-interest controls, outsourcing frameworks, compliance monitoring, business-continuity measures, member communication and reliable record keeping. Annual reporting also requires information on board activities, meetings, service-provider interactions, governance practices, administrative changes, legal actions and rule amendments.

For a large fund, these functions can be distributed among internal departments. For a small fund, much of the responsibility may rest with the board, principal officer and external service providers.

Compliance has a price tag

Section 374 places obligations on administrators concerning proper records, secure and continuous backups of fund and member data, trained staff, compliance procedures, adequate financial resources, monthly reporting to the board and the provision of information to Namfisa when requested. Those obligations cost money. So does actuarial work. So does auditing. So does legal advice. So does compliance. So does technology. So does cybersecurity. So does maintaining appropriate systems, reporting and documentation.

The commercial consequences are becoming apparent, with service providers reviewing contracts and submitting FIMA-related fee increases to funds. Administrators, consultants, actuaries and other professional providers cannot absorb every additional obligation indefinitely. Ultimately, the fund and its members pay.

The issue is what compliance costs mean over time. Money spent on administration, governance, professional advice and systems is money not being invested for retirement. Stronger governance may prevent losses and improve outcomes, but trustees must still ensure that costs are proportionate and provide value.

For example, if a fund achieves an 8% investment return but expenses consume 2%, members receive a net return of 6%. If rising compliance costs increase expenses, the effect may appear small annually but materially reduce retirement savings over decades.

There is also a question about trustee remuneration. As responsibilities, fiduciary exposure and regulatory expectations increase, will trustees who serve without remuneration remain willing to do so? Will those receiving allowances require increased sitting or retainer fees? These are questions of governance sustainability, not merely expenditure.

Can small funds survive?

Perhaps. The more important question is whether every small fund can continue operating exactly as it did before FIMA.

At some point, economies of scale become difficult to ignore. A small fund may spend a disproportionately high percentage of its assets on administration, actuarial services, auditing, governance, technology and compliance because it must maintain much of the same regulatory architecture as a substantially larger fund.

This does not mean consolidation or an umbrella arrangement is automatically the answer. Members may value independence, an employer-specific structure and direct governance. Trustees must consider those benefits alongside cost, service quality, control and member interests. They should, however, examine whether their current structure remains sustainable; what they are paying for; what FIMA has added; and whether functions can be shared, streamlined or outsourced without compromising governance or member protection.

FIMA’s objective is stronger protection and better-regulated retirement funds. The challenge is ensuring that the cost of achieving that objective does not quietly make smaller funds economically unsustainable. The question for trustees is therefore no longer simply, “Can we comply with FIMA?” It is: “Can we remain small enough to be personal, but strong enough to carry the cost, expertise and governance expectations of the new regulatory era?”

Every small fund should ask this before the economics are decided for them.

*Vincent Shimutwikeni and Sabrina Jacobs are 

Directors at Retirement Funds Institute of Namibia (RFIN).