FNPF Expects 40% Reduction Until 18% Contribution Reinstated

“The reduction in rates resulted in a 9.3 per cent decline in contri­butions from $651.9 million in 2019 to $591.4 million.”
29 Nov 2020 13:38
 FNPF Expects 40% Reduction Until 18% Contribution Reinstated
Fiji National Provident Fund executives, from left,Chief financial officer, Pravinesh Singh, outgoing chief executive officer, Jaoji Koroi, general manager member services, Alipate Waqairawai, manager public relations and marketing, Risiate Biudole, and general manager business transformation, Millie Low

There is 40 per cent reduction in monthly contribution, says Fiji National Provident Fund (FNPF) chief executive of­ficer Jaoji Koroi.

During the FNPF forum in their office in Labasa yesterday, Mr Ko­roi explained this was due to the reduced employer and employee contribution.

‘In its COVID-19 response budget and the subsequent national budg­et, Government reduced the con­tribution rates from 18 per cent to 10 per cent effective from April 1, 2020 to December 31, 2021 to assist employers meet their operational expenses,” Mr Koroi said.

“The reduction in rates resulted in a 9.3 per cent decline in contri­butions from $651.9 million in 2019 to $591.4 million.”

$130 relief to employers

The Fund expects an average monthly contribution of about $23 million until the contribution rate of 18 per cent is reinstated.

“This is a reduction of more than 40 per cent when compared to

pre-pandemic monthly collec­tion,” he said.

“To help employers in Fiji, the statutory FNPF employer con­tribution was halved from 10 per cent to five per cent effective from April 1, 2020.

“This provided a $130 million re­lief to employers.”

He said the employee contribu­tion was also reduced from eight per cent to five per cent, putting back about $80 million in mem­bers’ pockets.

Well above buffer line

For withdrawals, he said the Fund paid out $438.9 million, an increase of 23 per cent, driven by retirment, migration and un­employment withdrawals that included COVID-19 related assis­tance totaling 101,879 applications valued at $55.8 million.

“Net contribution remained posi­tive at $152.5 million compared to $296.2 million recorded last year,” he said.

The Fund anticipates a negative net contribution next year as a re­sult of reduced contributions and high withdrawals.

He said the Fund’s cash flow de­clined from $889.2 million to $693.9 million, a reduction of 23.3 per cent.

“The current and projected cash flow position is well above the buffer limits and management is confident that we will continue to manage this situation,” he added.

“We have to make sure that we continue to have cash to meet your obligations and other require­ments.

“We can’t borrow from the bank.”

FNPF has 447,635 membership compared to 441,663 in 2019.”

Out of this total, 43 percent are females.

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