Questions over the 2012 pension cuts, the disputed Buffer Fund and FNPF’s financial capacity fuel calls for a transparent investigation into pensioners’ claims and the protection of members’ retirement savings.
FIJI National Provident Fund (FNPF) in its statement, “Who pays for legacy pensions?” (FT12/10) makes several grossly unsubstantiated claims that do not reflect well on Fiji’s largest financial corporation, nor do they give confidence to its existing 440,000 contributing members about the security of their savings.
FNPF is fear mongering and using its current members against the so-called legacy pensioners, whatever this means. The fact of the matter is that the affected pensioners were contributing FNPF members all their working lives.
They too had entrusted their retirement savings with the fund. There was a cruel breach of their contracts. Their attempt to obtain legal redress was abruptly terminated by Decree 51.
The figure of $700 million as the possible pay out to affected pensioners is baseless as it has no actuarial backing at all. The late Jackson Mar (a finance expert) and the economist, Professor Wadan Narsey, having examined FNPF annual reports and other documents relating to the fund concluded that FNPF had more than sufficient resources to compensate affected pensioners.
The FNPF statement belittles the Buffer Fund Account, when 2 cents in every dollar of member contributions went to it since 1975. Mar and Narsey separately calculated that had the Buffer Fund been maintained with interest in a transparent manner, it would currently have more than $1.4 billion. In earlier communications the fund denied the existence of the Buffer Fund but later acknowledged it! Why did it lie?
Although FNPF claims that it would have become insolvent had it continuing to maintain pensions at the 2012 rates, this claim has never been substantiated. The fund’s annual financial reports were audited without qualification, or concern regarding bankruptcy.
To maintain members’ confidence in the FNPF, it had a government guarantee. It is unclear if Decree 51 removed this guarantee.
The 2012 Pension Committee has questions for the FNPF Board Chairman and members:
n Do they fully understand what happened in 2012? Why have they remained silent about it?
n What is their collective stand on the 2024 condemnation of then minister of finance, Professor Biman Prasad?
The minister declared in Parliament that in 2012, the military regime “unilaterally and illegally” reduced the pension rates for FNPF pensioners. Professor Prasad proclaimed that the regime “broke the statutory arrangement and trust between the fund and the pensioners”.
He added that the Government enacted a law to restrict these pensioners from challenging this “unfair treatment” in a court of law.
The minister announced that some pensions would be restored from August 2024 with the costs met by the Fiji Government.
The current Minister of Finance appears to be clueless about the view and action of his predecessor. He has appointed a ‘Facilitation committee’ to deal with the FNPF Act and other issues relating to the Fund.
The terms of reference of this government and FNPF committee are not in the public domain, nor is its membership and neither is the timeframe for the completion of its work.
In order to reassure all citizens that their mandatory contributory pension scheme is secure, and will not be arbitrarily reduced again, the current Government is duty-bound to appoint an independent tribunal to investigate and mediate the diametrically opposed claims regarding FNPF’s financial situation in 2011-12, and its current ability to meet the 15 years of monthly pension misappropriation of the victims of Decree 51.
n PROFESSOR VIJAY NAIDU is the 2012 Pension Committee Chair. The views expressed herein are his and not of this newspaper.
