As with most Government announcements these days, the decree making 55 the compulsory retirement age (except in some circumstances) is seen by some as a diabolical act with horrendous consequences. This post seeks a more balanced account.Government says the move is to save Government expenditure by reducing the size of an over-heavy civil service; create job opportunities for some of Fiji's 1,000 unemployed graduates and other young unemployed people, and encourage some of those retiring to start their own business or otherwise enter the private sector.A Fiji Times editorial on March 15 agreed with them.
Anti-Government Bloggers, however, say the money saved will be spent on the military, and the decree will be used as a way of getting rid of civil servants the Government does not like. NZ Public Service Association Nat.Sec.Richard Wagstaff, who lives in a country with longer life expectancies and far lower levels of unemployment, says its a "deplorable" move that discriminates against age and breaches, fundamental human rights. [I wonder why someone thought his opinion is relevant to Fiji.]
Some Government opponents have also expressed concern that the Fiji National Provident Fund could be bankrupted, not just by the retirees claiming their pensions, but because nominees of an "unelected military clique" have taken over the FNPF and, apart from general mismanagement, are using the funds to service recurrent government expenditure and debt, military overspending, and several unwise investments, such as the purchase of BP Pacific and several tourist ventures - the Natadola and Momi developments, and the restoration of the historic Grand Pacific Hotel in Suva.
Prof. Waden Narsey wrote of "people's life savings being under threat." This, and the fact that commercial banks, unlike the FNPF, had "wisely" decided not to lend to Government, is one of the points in his Fiji Times May 13 article "Coup Wolves Circling FNPF." (The Fiji Times cartoon that accompanied the article neatly summaries his argument.) It is unfortunate that the FNPF was not invited to respond to Narsey's attack and was obliged to take out a full page advertisement to make its case.
Prof. Narsey saw "nothing wrong per se with FNPF financing the Fiji government's budget deficit" but with an unelected government in place "we are unlikely to see the required economic growth, income and increased tax revenues, which could repay the loan. All that is likely to happen is an increase in the money supply, increased imports, reduced foreign reserves, bigger public debt, and an upward pressure on inflation."
The FNPF replied that it is not the normal function of private banks to lend to governments; that budget deficits are often used in recessionary times to stimulate economic growth; the Funds bond investments were earning more than the inflation rate; that the FNPF cannot become insolvent because, unlike banks, there cannot be a "run" on its money, and that it always has significant cash reserves. The Fund is thought to have assets worth more than $F3million. Readers wishing to follow these arguments further are referred to the Fiji Times and FNPF links above.
For the record, the FNPF was established in 1966 to provide financial security for workers when they retired aged 55 (sic!). Membership is compulsory for state sector employees who contribute 8% of their wages or salaries to which Government adds another 8%, and interest accrues to these contributions. As of June 2005 there were 317,000 members and 9,000 pensioners whose average monthly pension was $F372. Since 1976 members have been able to opt for a single or joint (with spouse) pension in lieu of a lump sum payment. The average single pension was $F407 and the joint pension $F322. The 55-year old pensioner living in rented or mortgaged housing in Suva, with no other savings and with dependent children, will certainly not be well off, but he or she will be much better off than the female garment worker earning less than a dollar an hour; the estimated one-in-three people in Fiji who are living in poverty -- and the many unemployed graduates without a job. There is no unemployment benefit in Fiji.
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