FNPF increases term annuity retirement rates
Improving returns on investment has led to the Fiji National Provident Fund reviewing and increasing the rates of its Term Annuity retirement product. The new rates are based on recent Reserve Bank of Fiji yield curve reports, indicating that the current investment market allows improved rates. The Term Annuity product is offered as retirement choice for retiring FNPF members. Members who purchase the product can opt for a 5, 10 and 15 year pension term. They will receive a monthly pension payment over the period selected. The new rates have taken into account investment returns expected to be obtained over the selected term, based on the current market conditions.
FNPF chief operating officer, Jaoji Koroi, said the reviewed rates ensure that retirees who purchase the Term Annuity product are fairly charged for the guaranteed payments they are acquiring. “As an investment product, term annuity rates may change and to be consistent with the market movement,” he said. “The new rates will only apply to new retirees who opt to take up the term annuity product from the date the rates are implemented. “Current annuitants who had previously purchased this product will not be affected by these changes.” Mr Koroi added changes in rates will be made under regulations to ensure that no cross subsidy to or from other funds or business of the FNPF should occur.
About FNPF Term Product Annuity
The product makes regular monthly payment to an annuitant, the person who purchases the product, for a fixed term of either 5, 10 or 15 years. Should the annuitant die before the end of the fixed term, payments will continue to be made to the person nominated by the annuitant (the nominee) until the end of the term. The nominee can apply to have the remaining instalments exchanged for a lump sum at a rate set by the Fund. Annuities are provided from the Retirement Income Fund (RIF), a separate fund within the FNPF, established to provide life pensions and term annuities. The purchase price is paid into the RIF, and the annuity is paid out of the RIF which is supported by the investment earnings on its assets, less expenses attributable to its management. A solvency reserve is held within the RIF to ensure that the promise, to meet annuity payments, will be kept in all reasonably foreseeable circumstances. The adequacy of the solvency reserve is monitored by the Reserve Bank of Fiji which sets standards and obtains regular reports on the RIF from the FNPF. These reports include a Financial Condition Report signed off by the FNPF actuary.