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FNPF Pre-reform Shenanigans Revealed

FNPF Pre-reform Shenanigans Revealed
Acting Prime Minister and Attorney-General Aiyaz Sayed-Khaiyum outside Parliament on March 13, 2018. Photo: Ronald Kumar
March 14
10:00 2018

Prior to the review of Fiji National Provident Fund, some pensioners were receiving about $10,000 per month as their returns from the superannuation fund.

Acting Prime Minister and Attorney-General Aiyaz Sayed-Khaiyum revealed this in Parliament yesterday while explaining why the reforms had to kick in, and how the future of young Fijians today was at stake.

This meant that one pensioner alone was receiving $120,000 out of FNPF every year. In four years, the member had received $480,000 as returns.

This shocking figure revealed that from the fifth year the money paid out was coming out of the savings of younger Fijians. This was done prior to the reforms Government undertook.

Mr Sayed-Khaiyum called out the Opposition for their obsession with the few members whose pension was cut from $10,000. Those pensioners still receive $6700. He said Government on the other hand, was concerned about the youths of this country.

“It should be in all of our interest to ensure the FNPF is strengthened, the FNPF balance sheet is strengthened and that we need to support FNPF but not try to debunk it. We are concerned about the poor people of this country, we are concerned about the ordinary workers of this country, we are concerned about the youth of this country who are currently working and we need to have sustainability of their Funds,” he said.

Mr Sayed-Khaiyum explained that five years ago in 2013, FNPF credited 5.5 per cent into members’ accounts.

Last year, 6.35 per cent was credited into members’ accounts and as opposed to previous years (before reforms) profits now are not overstated. Over $1 billion has been credited into members’ accounts in the last five years.

He also revealed that there were still employers who do not pay FNPF dues. Now, he said, the penalties were quite high. Mr Sayed-Khaiyum revealed that some companies deducted eight per cent from peoples’ salaries but did not direct that towards the superannuation fund.

The total assets of the Fund now stand at $5.7 billion, which is more than sufficient to cover its liabilities of $4.8 billion.

This means that if tomorrow every member needs to be paid out, the Fund will have more than enough money left within the superannuation scheme.

Prior to the reforms, the Fund had negative $331 million in assets. During Cyclone Winston when members were allowed to withdraw, a total of $275 million was withdrawn from FNPF.

“If FNPF was not in a good financial situation, they would not have allowed members to withdraw $275 million. We of course know some people did withdraw the funds and went on to watch Hong Kong 7s.”

He said members were allowed to withdraw because there was an element of trust.

“Some members on the other side have posted on social media about this- the fact of the matter is that the total Government bonds has come down from 56 per cent in 2010 to 41 per cent in 2017. Therefore, the exposure of FNPF to Government is far greatly reduced,” he said.

Mr Sayed-Khaiyum explained that before the reforms, there were two employer representatives, two representatives from employees/unions and two representatives from Government on the FNPF Board.

“Now, there is stringent requirement on who can sit on the Board and what qualification they have. They need to have financial acumen, they need to have an understanding of the investment market, they need to have the right level of qualification. The largest pool of funds in Fiji, Madam Speaker, was governed by a Board of people who may have had absolutely no idea of finance or commercial transactions. This is why we saw some of the shenanigans that took place in Natadola and indeed in Momi,”
he said.

“We now have people who have the right level skill sets. We now have a CEO Jaoji Koroi. He has been in the investment market for a period of time. He has come from Fijian Holdings. He has been in the system for a while and has competent investment officers who have specialised skill sets in looking at various proposals that come to FNPF as opposed to fly by the night people who are now locked up in prison in New Zealand for commercial fraud. These are the kinds of things from the past we need to get rid of.”

The future

Mr Sayed-Khaiyum highlighted that the Singapore superannuation fund had been the driving force behind that country’s growth. They invested in their airports, their airlines and even in their housing projects.

This is where FNPF can also play a role in addressing the housing issue in Fiji.

“We are talking to FNPF to get them to put a foot into housing projects. We have a very low rate of house ownership in Fiji, we all agree with that. We have identified Matavolivoli as we have announced in 2017/2018 budget. FNPF can step into this, they can make money and they can be able to provide a particular level of opportunity to ordinary Fijians,” he said.

Mr Sayed-Khaiyum got into a heated exchange with SODELPA MP Viliame Gavoka who asked when will Government table a Bill in Parliament to form another superannuation fund. He said it was high time the Opposition recognised the achievements of FNPF post-reforms.

“It should be in all of our interest to ensure the FNPF is strengthened, the FNPF balance sheet is strengthened and that we need to support FNPF but not try to debunk it,” he said. 

Edited by Naisa Koroi


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