FNPF in­creases term an­nu­ity re­tire­ment rates

Fiji Sun - - Business -

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.

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