THIS is the first of a series of articles on the role and functions of the Fiji National Provident Fund (FNPF). These articles have been compiled to assist our members understand the Fund’s business and what FNPF offers them as Fiji’s only superannuation fund.
The origins of FNPF
The concept of a national savings scheme was first mooted in the 1940s by A. A. Ragg.
In a speech to the Legislative Council in 1945, Mr Ragg planted the idea of a savings plan aimed at the old and disabled.
Although his ideas were not supported at that time, it sowed the seed for what would eventually, some two decades later, become the Fiji National Provident Fund.
It was several years later that the Fiji Industrial Workers Congress (now known as the Fiji Trades Union Congress) actively pursued the idea again, through its then general secretary, Mohammed Ramzan.
In 1963, a government appointed social security advisor, J. E. Ashford, produced a report titled Social Security in Fiji.
This report was published as Legislative Council Paper #26 of 1964 and primarily recommended the establishment of a provident fund.
Three years later the FNPF was established and was managed by Hugh Robinson who had also managed the Malaysian Employees Provident Fund. The first chairman was J.F. Griffiths.
To start its operation in 1966, FNPF had loaned £10,000 ($F30,000) from the Fiji Government.
This loan was paid off in less than a year.
Now, the Fund has grown to a $5.1 billion institution, and is the country’s largest financial institution.
Over the years, the fund’s primary objective remains to provide financial security for Fijians.
In so doing, the fund is committed to understanding our customers, offering quality services and ensuring sustainable returns so that members can enjoy a meaningful retirement.
FNPF continually strives to live its core values of humility, accountability, integrity, innovation, teamwork, excellence, passion and courage in all facets of its operations and services.
FNPF board and its functions
The FNPF board is the body corporate responsible for the fund.
Prior to the FNPF reforms of 2011, the FNPF board composition reflected the tripartite arrangement of its key stakeholders, allowing for equal representation from employees, employers and government.
Now, the FNPF Act requires the Minister for Economy to appoint members, recommended by the Reserve Bank of Fiji, who have between them appropriate skills and expertise in investment management, corporate governance, accounting and auditing, finance and banking, risk management, law, actuary, information technology or a similar engineering discipline.
The current board members are chairman Ajith Kodagoda (chief financial officer C J Patel & Company and is also chairman of the Fiji Revenue and Customs Authority), deputy chairman Tevita Kuruvakadua (general manager iTaukei Lands Trust Board), members Makereta Konrote (permanent secretary for Economy), Bhavna Narayan (Partner Lateef & Lateef Law firm) and Sanjay Kaba (Civil Engineer and Principal of HLK Jacobs).
Between them, these members have the necessary skills and expertise required to be members of the board.
The Act entrusts the board with the necessary and convenient powers to carry out all its functions.
The board is entrusted with managing the affairs of the Fiji National Provident Fund in an efficient and effective way by establishing and implementing appropriate and effective governance systems and processes, including quality assurance processes and processes for measuring the performance of the fund benchmarked to internationally accepted standards
The board is duty-bound act honestly in all matters related to its functions; to exercise a high degree of care, skill, diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide; to ensure that its duties and powers are performed and exercised solely in the best interest of members.
As stipulated in Section 6 of the FNPF Act 2011, the FNPF board is mandated to:
* collect and manage contributions;
* hold, invest and manage the funds in accordance with this Decree;
* develop and offer financial products and services in accordance with this Decree;
* conduct education and information programs, and carry out other activities, to encourage people in Fiji to make informed and appropriate arrangements, through saving and effective money management, for income after they retire from the paid workforce;
* provide to the Government of Fiji and its agencies information and advice on matters affecting retirement savings policy and post retirement income policy; and
* collect contributions from employers.
Currently, FNPF collects 18 per cent of the employees’ gross wages as contributions. Of these, 8 per cent is the contribution from the employee and 10 per cent from the employer.
Each employee should have the amount deducted towards their FNPF contributions reflected in their pay slips.
It is important that all employees insist on receiving their pay slips to sight deductions made by their employers to their FNPF account.
Every month employers pay the contributions deducted from their employees, in addition to their contributions to FNPF.
Employees are able to check whether these are paid to their accounts by contacting or visiting the nearest FNPF office.
Employees can also track their FNPF balances by registering for MyFund, an SMS facility that allows you to check your balances and eligibilities via your mobile phones at a minimal charge.
The total number of members registered with the fund as of June 30, 2016, was 406,065 compared with 403,316 in 2015.
Registered employers totalled 10,564 compared with 9770 for the same period in 2015.
Total contributions collected was $480.6 million in 2016.
These contributions are invested by the board to grow members’ savings.
Hold, invest and manage funds
The FNPF board takes seriously its fiduciary role to safeguard its members’ savings by ensuring that it invests contributions in growth assets so that members realise the benefits of these investments through annual interest payments to their accounts.
FNPF’s broad investment objective is to maximise long-term investment returns, by investing in growth assets.
Investments assets or options are selected in order to:
* provide a wide range of investment opportunities in various asset classes so as to allow for diversification and cover a wide risk/return spectrum;
* maximise returns within reasonable and prudent levels of risk;
* provide returns comparable to returns for similar investment funds or compared with market rates; and
* control administrative and management costs of investment activities.
Currently, the board invest members’ funds in the following asset classes:
* government securities;
* equities;
* term deposits;
* commercial loans;
* properties;
* fixed income securities; and
* cash.
In the past financial year, FNPF achieved a return on investment of 6.9 per cent, and declared an annual interest rate of 6.25 per cent resulting in $239m being distributed to members accounts on June 30, 2016.
In a nutshell, members’ funds with FNPF come from three sources:
* employees (compulsory members) contribution of 8 per cent of their gross salary;
* employers contribution of 10 per cent of their gross salary; and
* interest earned by FNPF and paid out on June 30, every year.
In the case of voluntary members, they source their own contributions and these earn an annual interest as declared by the board, and as paid out to compulsory members
* In our next article, we will inform you all about FNPF membership and member accounts. For more information please contact info@fnpf.com.fj
