5pc interest for members

THE end of the Fiji National Provident Fund (FNPF) financial year is a time member’s look forward to in anticipation, as it is when the FNPF announces the credit interest rate for the year.

Since 1968, when the fund declared its first interest of 3 per cent to its members, FNPF has now paid out a total of $4.5 billion to its members — $2.4 billion was paid out in the past 10 years alone, a testament to the FNPF reforms.

On June 30, FNPF acting CEO Viliame Vodonaivalu announced that the FNPF board had declared a credit interest rate of 5 per cent for the financial year ending June 30, 2021. Within 24 hours, 389,986 members’ FNPF accounts increased by a total of $297 million.

The declaration by the board can only be made after the fund actuary has certified that the crediting rate will not place undue stress on the fund’s solvency requirement. Sections 32 and 47 of the FNPF Act respectively and Regulations 41, which came into force in August, 2014, govern the solvency requirement and the determining of the crediting rate.

Despite the subdued market conditions as impacted by the COVID-19 pandemic, the fund’s performance came out strong in financial year 2021 — the 5 per cent just may be the light of hope members needed, in a period of gloom and dampened expectations.

While investment opportunities are limited, the fund has continued to strategise and ensured that it is always maximising investment returns.

The fund also continued to receive steady returns from Government bonds during the year — a major contributor towards a positive performance. Other main drivers for investment performance were the banking sector investments in BSP and HFC, as well as gains from the sale of Energy Fiji Ltd shares and fair value gain for Vodafone Fiji Lid.

All eligible members — compulsory or voluntary, are paid the same rate of interest, as long as you have an active account with the average of your daily account balances throughout the year being positive at June 30, 2021.

The more balance you have, and less withdrawal taken, the more interest you will earn on your total balance every financial year. With compounding interest, this is the best way to grow your funds.

The longer your funds stay with FNPF, the greater the likelihood of building up your savings for a meaningful retirement. Over 45, 000 members have received full government top up through the COVID-19 unemployment’s benefits since it began in April, 2020. Some of these members have received payout for almost 14 months.

Members are encouraged to find alternative ways to source income. It is time to start saving and rebuilding your retirement balances, a step at a time.

This pandemic crisis has taught individuals to be resilient and selfsufficient. Members are now finding their feet and creating businesses that match their talents.

To fully realise the effect of the compound interest mechanism, members need to consistently save for a reasonably long period.

Any withdrawal will incur a negative impact on your ultimate retirement savings and will impact your capability of having a more secured future.