Attacked on all sides over his 2024-25 Budget, Minister of Finance Professor Biman Prasad can be commended for attempting – in his words – “to bring a permanent closure to” the “robbery of the 2012 Fiji national Providen Fund (FNPF) pensioners” whose lawful contracts with FNPF were illegally broken by the previous Bainimarama government, as he acknowledges again in his budget speech.
Except that the solution he is offering, while welcomed by many whose 2012 pensions will be restored without backpay, does not bring “permanent closure” because the minister erroneously limited the nature of the problem by stating:
“All pensioners that reluctantly opted for a reduced pension rate, will have their pension restored effective from 1st August 2024 and moving forward” and that “cost of reinstatement will be fully borne by the Government and we have agreed to provide a funding of $4million for this year. The full cost is estimated to be around $57m over the next two decades.”
Prof Prasad’s own former lecturer at USP Dr Ganesh Chand pointed out on his Facebook page: “This penalises all those who opted to withdraw their funds from 2011 on account of reduced pension rates”.
Mr Rishi Ram, a former senior public servant, went further on his Facebook account:
“Those who were forced to accept reduced pension will have their original pension restored. Good luck to them. On the other hand those who were coerced into withdrawing their fund are denied any compensation. It’s not fair. I am prepared to refund the money that I withdrew if the FNPF restores my original pension with interest from the date of the withdrawal. This is not only logical but fair and just especially in view of the way the government unilaterally, through its legislation, decided to reduce the pension rate and blocking the recourse for legal redress.”
Astute businessman Mark Halabe validly asked why taxpayers will be taking on this restitution and not the FNPF board.
The Minister of Finance weakly replied that because of an Act promulgated by the illegal Bainimarama government “the decisions that were made at that time cannot be challenged in court”. How utterly ridiculous.
I elaborate on the full facts, item by item for ease of understanding by the reader.
The salient facts of the 2012 robbery
Despite the reams of articles written on this FNPF robbery (all there in my volume two of community education articles A Fair Go For All Fiji launched last year by the minister himself) the Minister of Finance, does not admit:
(a) there are two groups of 2012 pensioners whose contracts were illegally broken (Group A and Group B);
(b) both groups lost financially because of the illegal Bainimarama Government’s illegal “acts”;
(c) that the FNPF gained financially because of the amounts lost by both groups of pensioners; and that
(d) it is the fiduciary duty of the current FNPF Board to be legally liable for restoration of justice for those robbed 2012 pensioners, including all arrears.
What the 2012 pensioners’ contract stated
I remind today’s readers again that after any retiree chose the pension option offered by FNPF and signed the FNPF form 9-OP:
(a) their original “lump sum” was no longer the pensioners’ property but belonged to the FNPF
(b) that contract explicitly stated the dollar amount of monthly pensions
(c) these were at rates which had been unanimously approved by both the Lower House and Upper House of the 1997 Parliament, legally binding according to the highest authority in the land.
The agreement explicitly stated: “Once you have made you (sic) choice it is final and cannot afterwards be changed or revoked.” Ipso facto neither was FNPF free to do so.
Indeed independent FNPF consultants Promontory (Stephen Mason and Shauna Tomkins) clearly stated in their report to FNPF (paragraph 25): “There have been some suggestions that existing pensions should be withdrawn, capped or reset at a discount. … Any retrospective adjustment of existing pension benefits would be difficult under contract law … it is not further considered in this paper”.
The Minister of Finance and the chairman of the FNPF board can see that legally, the aggrieved pensioners who were robbed through breach of contract are:
(a) Group A: Those who were forced to take the reduced pensions and they are today receiving partial compensation through the restored pensions from 1 August 2024 (for which they are all grateful);
(b) But also Group B pensioners (like Rishi Ram above) who were forced to take a lump sum instead of their contractually agreed pensions (no mention of them by the Minister of Finance);
(c) Both A and B groups have arrears of pensions, including those who have already died like David Burness whose legal case already in court were thrown out by an illegal Bainimarama decree;
Surely the Minister of Finance and the FNPF board chairman must see that.
(d) the “permanent solution” cannot and should not be the responsibility of Fiji taxpayers whose funds are being generously disbursed by the Minister of Finance; but legally is the responsibility of FNPF which
(i) was the contractual party; and
(ii) which directly gained financially because of the robbery of both Groups A and Group B.
To make readers better understand the matters raised above, I give the real life example of an exemplary senior civil servant who served Fiji at the highest levels for decades.
The case of a most senior dedicated civil servant
Let me give the real example of a most senior dedicated civil servant who has served Fiji for decades at the highest levels of public service, diplomatic services, and Fiji Parliament, with the highest of integrity unquestioned by any government or Opposition. He provided me with his details, and I respect his privacy by not naming him. In 2012, this dedicated senior civil servant was on a monthly pension of a mere $1800 per month or $21,600 per year. No one would call this luxurious retirement income by any stretch of the imagination even though this was at the highest rate of 25 per cent agreed to by Parliament. Most of the other 2012 pensioners had much lower rates going down to 15 per cent.
The Fiji Times readers might try to find out what are the astronomical monthly and annual pension of Voreqe Bainimarama, given to himself by his own government. I kid you not that Bainimarama’s monthly pension (which he may be enjoying today) massively exceeds the annual pension of Mr Senior Civil Servant, with his unquestionable service to Fiji in sharp contrast to Mr Bainimarama’s contribution.
Mr Senior Civil Servant’s pension was nevertheless callously and illegally slashed reduced by the Bainimarama Government to $1089 per month or a mere $13,073 per year- just above the poverty line in Fiji. How utterly vicious.
Compared with what he would have got had he remained on his original pension, Mr Senior Civil Servant by 2024 was worse off by $110 thousand because he took Option A. From my rough estimation (without interest rates) this is what he is still owed by FNPF even if his old pension of $1800 per month is restored by Fiji taxpayers from August 1, 2024, through the 2024-25 Budget.
Had he chosen the lump sum option (option B), he would have been ahead only for the first four years after 2012, but then the loss of his monthly pension would have begun to bite from 2016. By 2024 he would have been worse off by $194,000 and that loss would be growing every month by $1800.
Mr Dedicated Senior Civil Servant lost significantly because he chose option A ($110,000), but he would have lost even more had he chosen option B ($194,000 and mounting).
Who gained from the illegality in 2012
Let us be absolutely clear that when the FNPF implemented with great fanfare their reduction of pensions (which their management called “reform”), they immediately gained financially by virtually halving the annuities they were paying out- a saving of more than $27m annually (see the massive drop in annuities paid between 2011 and 2013, as shown by the graph. While good management of FNPF has also paid a part in the FNPF’s current excellent financial situation, so also was the retention of an extra $27m a year for the past 12 years, now easily amounting to about $324m plus compound interest at the rates enjoyed by FNPF (less the lump Sums paid out).
Who should recompense the 2012 pensioners: not Government
It is abundantly clear that the contractual party with the 2012 pensioners was FNPF and not the Bainimarama government, which forced the reductions, nor the taxpayers of Fiji (whose funds the Minister of Finance intends to use from 1 August 2024).
FNPF is the contractual party that gained financially.
I point out that the FNPF management can give any advice that they wish, but the Board of the FNPF is not obliged to listen to this group who are all employees of FNPF and accountable to the FNPF board.
The fiduciary duty of the FNPF Board
The Minister Finance has already stated noted that “the military regime in 2011 unilaterally and illegally reduced the pension rates for many FNPF pensioners and broke the statutory arrangement and trust between the Fund and the pensioners. To deny justice, the government enacted a law to restrict these pensioners from challenging this unfair treatment in the court of law”.
It is also clear that the FNPF board (chairman Ajit Kodakoda, Taito Waqa, Tom Ricketts, Sashi Singh and Tevita Kuruvakadua) should have understood, if they were honourable men, that
(a) it was their fiduciary duty to protect the lawful interests of the pensioners:
(b) to resign if an illegal treasonous Bainimarama government promulgated Acts (not through an elected Parliament but an illegal declaration by their illegal president) which forced FNPF to break their lawful contracts with the 2012 pensioners.
(c) and also denied them recourse to the courts as was their basic human right.
May I suggest that if the board of any company, private commercial or public found today that twelve years previously, their company had illegally deprived one of their previous clients or employees or shareholders of their lawful property, then it is their fiduciary duty today to right that historical wrong.
They cannot like Pontius Pilate wash their hands of that 2012 robbery and as excuse say that their hands are bound by the illegal Acts of a previous illegal government.
The current board chairman is Daksesh Patel, and the members are Adish Naidu, Attar Singh, Joeli Vueta Taoi, and Shiri Gounder. I call on them to act as below.
It would be interesting to know what the FNPF’s current lawyers would advise them as to ethical practice would require them to do today.
There is a lawful permanent solution
Is there any entity in Fiji which would try to stop the FNPF board from taking the following ethical steps:
(a) As the Minister of Finance has publicly done, acknowledge that the actions of the FNPF relating to the 2012 pensioners were fundamentally illegal, with the board (and management) blindly following the legislation enacted by the Bainimarama government which was itself illegal.
(b) The FNPF board acknowledges that a grievous wrong was done to both groups of the 2012 pensioners who were forced to either accept the reduced pensions (group A) or take out the lump sum with the immediate ending of their monthly pensions (group B).
(c) The FNPF board now agrees that it is their fiduciary duty to correct the historical wrong done to the 2012 pensioners by restoring all the 2012 pensions from the month they were discontinued:
(i) adjusted for group A by the pensions already received.
(ii) adjusted for group B by the lump sum paid them in 2012.
(d) The FNPF board agrees to recompense all 2012 pensioners (or their stated beneficiaries) who have passed away since 2012 up to the time of their death.
(e) that all arrears be paid in five instalments annually, with August 1, 2025 being the date of the first instalment.
Does the current board have the moral courage to do so, or will they also like Pontious Pilate wash their hands of the robbery, while the board boasts today of their wonderful liquidity situation.
The costs will be manageable
I point out that the costs of this genuine “permanent closure” to the 2012 pensioners’ robbery will be manageable by FNPF.
The annual cost to Government and taxpayers of renewing group A pensions is a mere $4m a year as revealed by the Minister of Finance. This can stay in place as Government’s contribution to a problem that a previous government created. The cost of renewing group B pensions may amount annually to $8m a year (I am sure the FNPF can provide an accurate figure- they have already provided the Minister of Finance with his liability for group A pensioners).
The total cost of FNPF taking on these two corrections will be a mere $8m a year of the Government offer for group A in the 2024-25 Budget is retained.
May I point out that the FNPF board has in the past made outrageous decisions which have cost FNPF substantial revenue, such as a perpetual interest free loan of $300m on investments at Natadola.
The annual interest foregone is easily about $18m a year, far more than the annual amount required to restore the pensions of group A and group B. This year the FNPF has declared a massive interest rate to members of 8 per cent amounting to more than $650m a year.
Not only the annual pension payments, but also the larger lump sum payments in arrears for the 2012 pensioners will hardly make a dent in FNPF cash balances if spread out over five instalments as I suggest.
May I humbly plead with the Opposition MPs that they unite with the Coalition Government in principle on bringing a “permanent closure” to the 2012 pensioners’ robbery through a motion which requests the FNPF board to make the decisions that I have outlined above. This will give them far greater credit than their combining with Government vote for massive salary increments for themselves.
FNPF can assist government in many ways
The FNPF board chairman has recently informed the public that the previous Bainimarama government exercised undue influence on the FNPF board to lend to their desired borrowers.
I am sure the current Government will not be guilty of this unethical practice.
The FNPF is always willing to continue to assist the borrowings of the Government of the day at reasonable lending rates, especially when the domestic investment market is quiet. It is also good that the Minister of Finance has agreed to have formal representatives of employers and unions on the board, and can we request also of the FNPF pensioners so that their interests are also safeguarded.
- PROF WADAN NARSEY is one of the region’s senior economists and a regular commentator on political and economic issues in Fiji. The views expressed in this article are not necessarily the views of The Fiji Times.
