No backdated reinstatement for 2012 FNPF pension cuts

Government has ruled out any backdated reinstatement of pensions reduced under the 2012 Fiji National Provident Fund (FNPF) reforms, citing constitutional, legal and financial constraints.

In a statement, Minister for Finance, Commerce and Business Development Esrom Immanuel said Cabinet had considered detailed technical advice from the Ministry of Finance, FNPF and the Office of the Solicitor-General before reaching its decision.

The 2012 reforms were introduced under the FNPF Act 2011 and the FNPF Transition Act 2011 after independent assessments found pension rates at the time were financially unsustainable. Pension payouts had exceeded members’ accumulated savings, placing pressure on the long-term viability of the Fund.

Government said reinstating pensions backdated to 2012 would undermine the sustainability of FNPF and unfairly burden more than 430,000 active contributors whose retirement savings must be protected.

The estimated cost of full retrospective reinstatement is about $582 million — including approximately $372 million in backdated payments and a further $210 million in future liabilities.

Government said FNPF does not have the capacity to absorb this cost without affecting member balances and returns. Funding the amount through the National Budget would also impose a significant burden on taxpayers and public finances.

The statement noted that Section 173(3) of the 2013 Constitution prohibits Parliament or Government from enacting any law that would retrospectively alter the legal effect of the 2012 FNPF reforms. It also referenced Section 26 of the Constitution, which protects property rights, stating that retirement savings constitute private property.

While backdated reinstatement is not legally permissible, Government said it had allocated funding in the National Budget to reinstate pension payments prospectively.

From August 1, 2024, pensioners who remained on reduced rates have had their pensions reinstated moving forward at a cost of approximately $57 million, fully funded by taxpayers.

Government said the approach balances compassion for affected pensioners with constitutional compliance and the long-term sustainability of the Fund.

Cabinet’s decision provides finality on the issue, with Government stating it cannot and will not retrospectively reinstate FNPF pensions to 2012.