Serious concerns have been raised regarding the significant growth in the partial withdrawals and the impact this might have on the original objective of the Fiji National Provident Fund's pension fund.

Co Chair of the NCBBF Task Force on Growing the Economy interim Minister for Finance Mahendra Chaudhry highlighted these concerns while presenting their report to the NCBBF yesterday.

Chaudhry said the fund faces a dilemma between its social obligations role and its retirement fund objective. He said pension rates are being reduced from 25% to the current level of 16% and 15% next year.

Chaudhry added that the rate may have to be reduced further in the future to ensure the sustainability of the FNPF.

On the other hand, the National Task Force Team noted that the deregulation of the superannuation industry where the Reserve Bank has already initiated a study of the different ways in which this might be achieved.

Chaudhry said they are also concerned that one major distortion exists in the Financial market in that while the FNPF accounts for about 40% of the financial systems assets, the Fund has been constrained from carrying out international diversification, which is prudently necessary for the pension fund of a small open economy.

Meanwhile, Chaudhry also stressed that the State needs to seriously reconsider its involvement in commercial activities and divest itself of those entities that is best managed by the private sector.

The Task Team Chair also told the NCBBF that over the years, the State has become too involved in all phases of the economy and in the process, it has hindered the activities in the private sector.

The 5th NCBBF meeting continues at the Nasova POlice Barracks. A press conference is expected to be called this hour, where the draft Peoples Charter will be made public.