Around 8,000 members of the Fiji National Provident Fund (FNPF) now have less than F$35 in their General Account (GA) after exhausting it over COVID-19 assistance.
This was revealed by the Fund this week when it gave details of a second phase of assistance for members - to begin tomorrow (Friday June 5) with a payout of around F$1.7million ($220 each) to the 8,000 members.
"These are the members who came in during COVID 1 (COVID-19 Assistance Phase One) and have exhausted their GA balances. Why we have kept the $35? It is to cover their Special Death Benefits. So about 8,000 workers have between $0 and $35. For these 8000 members, the government will fully pay their assistance for the next five fortnights," said FNPF Chief Financial Officer Pravinesh Singh.
Phase 2, announced by government last week, will see FNPF members unemployed due to COVID-19 dipping again into their own accounts for a total of $1,100 per member, paced out in five fortnightly payment of $220 per fortnight, with those having less than $1,100 to be topped up by government.
Category 1 of Phase 2, which comes into force today, caters for 8,000 members, according to Singh.
While the first $220 will be directly deposited into their bank accounts this Friday, they will only qualify for the next fortnight's $220 and subsequent installments if they are able to verify, via their previous employer, that they are still unemployed.
Singh said the Fund expects total value of assistance for this first group to be at around F$8.8 million, if all 8,000 members qualify for the duration of the five fortnights.
Category 2 and 3 of Phase 2 will be activated on June 9, with total value dependent on number of applications approved.
The FNPF, a compulsory pension scheme for Fijian workers, maintains a 70/30 access rule for each member, where 70 percent of a member's account is preserved for retirement (Preserved Account) and 30 percent is for members to access for a list of approved benefits such as housing, unemployment and education(General Account).
According to CEO Jaoji Koroi, this 70/30 rule was instituted in 2012 following a reform of the Fund and this has helped build up members' Preserved Account from F$2.5billion in 2014 to F$4.72 billion at the end of June last year.
By Dionisia Tabureguci
Fiji’s national pension fund has broken with tradition by declaring the same interest payout to its members two years in a row.
In a statement, the Fiji National Provident Fund (FNPF) declared a 6.35 per cent interest on members’ accounts for its financial year ended June 30, 2018, the same rate as last year.
This translated to a total of F$289 million (US$137m) compared to $270m (US$128m) last year.
After providing for the fund’s solvency requirements, the flat rate was said to be still reflective of its “strong financial position.”
“The interest declared should be reassuring for the members as it continues to reflect the Fund’s strong financial position following the FNPF reforms. It is also very competitive under the current investment climate,” said FNPF CEO Jaoji Koroi.
The fund’s reform has been ongoing since 2010, where it sought to “address long term sustainability” and ensure that it “remain relevant, compatible and sustainable for its members.”
The exercise began with the new FNPF Act 2011 – which upgraded its governance framework and brought it up to par with international best practices – and culminated last year in an organisational restructure that saw it tweak its workforce.
But one of its key reforms was its investment rehabilitation programme, where it had to spend millions of dollars on capital works over the last few years to restore some of its non-performing assets, among them the Grand Pacific Hotel, Fiji Marriot Momi Bay Resort and the My FNPF Centre in Suva.
With the chronic limitations in available eligible investment opportunities locally, FNPF has had to push for changes over the years to allow it to produce consistent growth on overall returns, which in turn would spill over to members’ balances.
“Whilst the investment environment is an ongoing challenge, the Fund continues to pursue an active stance to optimise returns on members’ funds,” said Koroi.
Since 2012, FNPF has been paying an increasing interest rate to its members.
The last time the fund paid out a flat rate two years in a row was in 2009 and 2010, after it recorded a massive F$181 million (US$86m) loss in 2009 due largely to the investment flop in its Natadola Intercontinental hotel project.