Cabinet has ruled out the backdated reinstatement of pension payments for Fiji National Provident Fund (FNPF) pensioners whose benefits were reduced under the 2012 reforms, citing an estimated $582 million cost and constitutional constraints.
Government said the decision followed detailed technical advice from the Ministry of Finance, the FNPF and the Office of the Solicitor-General, which examined the legal, financial and constitutional implications of reversing the reforms retrospectively.
Minister for Finance, Commerce and Business Development Esrom Immanuel said the 2012 changes, introduced under the FNPF Act 2011 and the FNPF Transition Act 2011, were necessary to address serious actuarial risks facing the Fund.
“At that time, independent assessments confirmed that the previous pension rates were financially unsustainable, with pension payments exceeding members’ actual accumulated savings,” Mr Immanuel said.
“This placed the long-term viability of the Fund at risk.”
Government said reinstating pensions backdated to 2012 would undermine the Fund’s sustainability and unfairly burden current and younger members, or require fiscal resources beyond the State’s capacity.
The estimated cost of full retrospective reinstatement is about $582 million, made up of $372 million in backdated payments and $210 million in future liabilities.
Officials said FNPF could not absorb such costs without compromising member balances and future returns, while funding the measure through the national budget would place a significant burden on taxpayers.
Mr Immanuel also pointed to constitutional barriers. He said the 2013 Constitution prohibits retrospective reversal of the 2012 reforms, with Section 173(3) barring laws that would retrospectively alter their legal effect, and Section 26 protecting the property rights of FNPF members.
“Using members’ retirement savings to finance retrospective reinstatement would amount to taking private property without consent and expose Government and FNPF to significant legal challenge,” he said.
However, Government said it remained committed to addressing hardship in a lawful and sustainable way. Funding has been allocated in the national budget to reinstate pension payments prospectively.
From August 1, 2024, pensioners who remained on reduced pensions have had their rates reinstated going forward. This measure, fully funded by taxpayers at an estimated cost of $57 million, does not place any burden on FNPF members.
Government said the decision brings clarity and finality to a long-running issue, balancing compassion for affected pensioners with constitutional obligations and the need to protect the long-term sustainability of the Fund.
