It is the last day today for all submissions on the proposed changes to the FNPF Act and Pension Scheme.
Submissions have to be handed in by members, employers, pensioners and other stakeholders as it was earlier revealed that the changes are expected to be rolled out in phases from the 1st of July this year.
In this bulletin, we will look at some of the major issues discussed:
Some of the major proposed changes include the annual pension rate to be reduced from 15 percent to around 9 percent and the proposal to get members to go on compulsory pension and stop lump sum withdrawals when FNPF members turn 55.
FNPF's consultant Mercer's Richard Codron had earlier told Fijivillage News after the introduction of the proposed reform that they have calculated the future life expectancy of men in Fiji at about 74 and women at 77, and based on this the pension rate has to be reduced to ensure the sustainability of FNPF.
Codron said the rate also needs to be reviewed regularly.
The Fiji Islands Council of Trade Unions today handed in its submission to FNPF requesting the fund not to rush into the proposed reforms and give time for further consultations.
FICTU General Secretary, Attar Singh said they will propose for the current pension rates to stay and FNPF to look at increasing the employer and employee FNPF contributions in 2015 by 1 percent each, and again in 2020.
Singh said they believe this would resolve the current issue.
Singh said there is no need to rush with the pension reduction.
FICTU had a public forum on the proposed reforms earlier this week and Attar Singh said lawyer, Richard Naidu also raised the issue of property rights if FNPF decides to stop the members from withdrawing their lump sum amount after 55 and implement a compulsory pension system.
Meanwhile a Fiji National Provident Fund pensioner and businessman, Ross McDonald has written to the Fund Chief Executive asking whether the government guarantee under the FNPF Act still stands when the FNPF is in need.
McDonald said Section 10 of the FNPF Act Cap 219 states that if the Fund is, at any time, unable to pay any sum which is required to be paid under the provisions of the Act, the sum required shall be advanced to the Fund by the government and the Fund shall, as soon as practicable, repay to the government the sums advanced.
McDonald said he understands that as FNPF was established as a compulsory scheme, the Act provided a reassurance that should there be any shortfall, this would be guaranteed by the government.
McDonald said he felt after attending the presentation at the Civic Centre that pensioners are being made out to be the bad guys in all this.
He said it should be mentioned that since FNPF's inception in 1966, present and past pensioners and all members were required under the law to contribute to the fund and they had no other choice.
McDonald is also asking for more time for consultations and said there is no rush to implement the reforms now.
In his letter to the FNPF CEO, McDonald also said that all FNPF pensioners have an irrevocable contract with FNPF for the Fund to pay their pension.
He said this is a contract that cannot be voided or changed.
Under the proposed reform, the FNPF pension rate will be reduced from 15 percent to around 9 percent.
This is the pension amount for FNPF members after they reach 55 years.
Currently, some single FNPF pensioners are on 25 percent annual pension while others are on 15 percent.
FNPF consultants, Mercer and Promontory have already stated that these rates are unsustainable because people are outliving their total FNPF balances.
They also say the reduction in the pension rate needs to take place as soon as possible.
They say most of the pensioners are living beyond 7 years after they reach 55 and if they are on 15 percent pension rate then their balance is exhausted after about 7 years.
The same has been said about the pensioners on the 25 percent rate where they have outlived their FNPF balance which is used up after 4 years.
The consultants have said the tough decision needs to be made to reduce the pension rate to ensure that FNPF remains sustainable.
Story by: Vijay Narayan
Last day today for all FNPF submissions
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