Letters

FNPF pension

Tevita Nagataleka Assistant GM Prime Services FNPF We refer to Mahendra Chaudhry’s letter on February 6, 2014 in regards to the FNPF Pension Scheme. The Board is glad to note
19 Feb 2014 09:25

Tevita Nagataleka
Assistant GM Prime Services
FNPF

We refer to Mahendra Chaudhry’s letter on February 6, 2014 in regards to the FNPF Pension Scheme.
The Board is glad to note that Mr Chaudhry has indirectly admitted that the pension conversion rate was unsustainable. As a result the rate was gradually reduced from 25 per cent to 15 per cent. However, the rate was still higher than the sustainable rates of around nine per cent recommended by the International Labor Organization and the World Bank, hence the need for the pension reform.
Had this continued unchecked, the FNPF and the lifetime savings of about 300,000 members would have been in jeopardy.
FNPF believes that it is morally wrong to reverse the reform for the sake of a few pensioners, who have largely benefitted from what experts have described as one of the most generous pension system in the world.
The Board had gone a step further in securing members future through wide-ranging reform measures that include the accumulation of members savings now they are no longer required to pay part of the pensioners’ monthly income and the implementation of necessary legal framework to ensure good governance and general improvements in services to members.
All these reform measures are benchmarked to international best practices and with regular monitoring, the Board will continue to ensure the Fund complies with these standards.
Whilst we acknowledge previous government’s input in increasing the rate of contributions by members and other measures to assist members, it must be noted that not enough was done to address the more critical issue of the unsustainable pension conversion rates. Increasing the rate only reinforced the cross subsidy element which was inherent in the pension system as more money was available to subsidise the pension payments.
We would like to assure Mr Chaudhry that all submissions on the pension reform were considered and the best solution adopted and implemented.
Fiji is part of the global financial and investment landscape and must comply with the relevant best practices based rules and standards which requires regular revaluation of investment assets by international and reputable firms and also reflect in the books in compliance to International accounting standards.
The Board would like to state that it has taken ownership of the non-performing investment it inherited and is working on rehabilitating them. However, it would be only fair to give credit where it’s due for some good works by previous boards which brought the FNPF to where it was when the Board took over and could be only better going forward.
As for Mr Chaudhry’s invitation to a public debate, the Board believes that it is not necessary or in the best interest of members. Instead the Board had extended invitations to all members to attend the Fund annual member forum where they would be able to address matters of their concern. It would also prefer, however to let the results speak for itself.
The Board seriously regards its fiduciary duties to always to the best for members.
Feedback from recent member forums and various talanoa sessions conducted around the country and customer satisfaction surveys shows that the reform is producing the outcome anticipated and the Board would not allow itself to be sidetracked from its mission to ensure that our members’ retirement savings are secure.


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