FNPF: Sound and Stable

The Standing Committee on Social Affairs has found the Fiji National Provident Fund to be in a sound and stable financial position. This was noted in Parliament when FNPF’s 2018 annual reports were tabled.

But, like every time when the annual report of the Fiji National Provident Fund is brought to Parliament, there were lengthy tirades on the FNPF reforms. For at least SODELPA parliamentarian Viliame Gavoka, this is a personal issue because his pension was affected but those reforms were necessary to ensure people who are in their 20s and 30s today would have money left in the fund when they retired.

The operation of the Fund is guided by the FNPF Act 2011 with Section 6 prescribing its functions and responsibility to collect and manage contributions, hold, invest and manage the funds, research, develop and offer financial products and services, conducting edu

cation and awareness programmes including publication of materials to promote savings for retirement and providing the Government of Fiji advice on matters affecting retirement savings.

FNPF is a major investor in Fiji and one of the largest property owners.

Some facts about FNPF:

FNPF also owns the majority of shares in Amalgamated Telecom Holdings Limited, Vodafone Fiji Limited, Home Finance Company Limited and fully owns the Natadola Bay Resort Limited, InterContinental Fiji Golf and Spa, Holiday Inn in Suva, Momi Bay Resort Limited, Fiji Marriott Resort, Grand Pacific Hotel and Sheraton and Denarau Villas.

The Board:

Today, the Board members can only serve two terms of four years, no more than that. The appointments have to be vetted first by the Reserve Bank of Fiji to see whether these people have the required qualification and background to sit on our superannuation board. Some of the backgrounds which is required is: expertise in investment with management, corporate governance, accounting and auditing, finance and banking, risk management, law, information technology and engineering discipline.

Attorney-General Aiyaz SayedKhaiyum informed Parliament when SODELPA parliamentarian Anare Jale was Chair of the Board, “a number of investments were done with people who were

actually undischarged bankrupts in Europe. These are the kind of shenanigans that went on. To come here now and paint and pontificate the virtues of how FNPF was wonderful before, is actually completely false and misleading.”

Under the current FNPF laws, the Board members are criminally culpable viz a viz the Company’s Act, should they knowingly make decision that would be detrimental to the investment of the FNPF members. Now, when the FNPF lends money to any organisation, whether it is Fiji Airways or is buying properties at the Marriott, whether it is doing any other investment, the Board has a legal obligation to make sure that investment is going to provide returns for them

Profits:

Net profit increased by a record 27.5 per cent from $4224 million in 2017 to $538.7 million attributed to 9.8 per cent growth in return on investment. The Fund maintained the interest rate accredited to its members’ of 6.35 percent paying a total of $297 million to its members.

Through its prudent investments, the Fund has paid over $1 billion to its members in the last four years. This is unheard of.

Assets:

The total assets of the funds increased by 13.5 per cent to $6.6 billion in the review period which is more than sufficient to cover its liabilities of $5.5 billion.

What it means in simple terms is that if today all the members took all their money out of FNPF, the Fund will still have $1 billion left. Fun fact: During the Alliance Government days, 70 per cent of FNPF investments was with the Government. They bought government bonds and that is how the Government finances its deficits.

Today, FNPF investments in government is 40 percent which is 30 per cent less.

70 per cent of the Fijian population today is below the age of 40 years and FNPF today caters for 430,000 members.

Pension:

This year, 7215 pensioners received an additional payment of $4.34 million and annual membership contributions increased from $288 million in 2009 to $652 million in 2019.