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.”
Sunday 29 November 2020 | 12:38
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.
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“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.
