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.
He said from FNPF presentations on the reform, the current pensions are unfair and unreasonable, and should be changed because they are being subsidized by members.
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 for current pensioners and future pensioners to ensure that FNPF remains sustainable.
Story by: Vijay Narayan
