Changes to FNPF Pension Scheme
Ioane Burese in the Fiji Times Friday, November 25, 2011
FOLLOWING todays Budget address, the Fiji National Provident Fund (FNPF) will deliver the reform programs that will support changes to the FNPF legislation.In announcing the changes, the Prime Minister and Minister for Finance, Commodore Voreqe Bainimarama said there was a serious need to review the pension scheme, as in its current form FNPF would not be able to support Fijis current and future pensioners.
FNPF CEO Mr Aisake Taito, reinforced the Prime Ministers words.
We have consulted actuarial and legal experts, as well as the public, to design a pension scheme that will empower our pensioners and provide our members with the pension they deserve in retirement, he said.
As a result, the following changes will be made:
The new FNPF Decree will become effective on 1 March 2012, with a transitional decree to facilitate the changeover from the current Act to the new decree.
A new age-based, actuarially sound pension rate will be implemented on 1 March, 2012.
Current pensioners will be refunded the principal amount they had converted to pension.
Pensioners will then have to choose from a number of new options, such as a new Life Pension or Term Pension.
The above changes will enable FNPF to meet solvency requirements for its current members in accordance and compliance with international best practice. It will also set aside an allocation to cushion the impact for current pensioners, who choose to come back into the new pension scheme, Mr Taito said.
In addition to the major changes, the Fund has also set aside a provision for a top-up scheme to support FNPFs current pensioners.
The top-up policy will protect the most vulnerable and ensure that their transition into the new scheme is a positive one. This money is to be applied by way of top-ups to those who elect to apply all their refund to the purchase of the new Life Pension.
The top-ups will be applied on the purchase of a new Life Pension as follows:
2,500 pensioners who currently receive a monthly pension of below $100 will be brought up to receive $100 a month under the new rates. Some of these pensioners currently receive as low as $5 a month.
4700 pensioners whose income is between $100 to $300 per month will have their pension income protected and continue to receive the same amount as they do currently.
The remaining 4,265 pensioners, who receive over $300 per month, will be offered the most favourable, according to their circumstances, of two options - top-up their new pension level to $300per month or take 25 per cent of their total refund, capped at $10,000.
For the vast majority of our pensioners who continue with the regular Life Pension, there will be no change and many will in fact see their pensions improve. For everyone else, they will get their original pension amount back and they can choose from a number of options available, as well as contributing more to their pension.