‘Proposed Samoa National Provident Fund changes to do more harm’: economist

Photo: Samoa National Provident Fund/Facebook

Former Samoa National Provident Fund (SNPF) auditor and senior manager, Peniamina Muliaina has urged the SNPF Chair and Board to reconsider proposed changes to the fund’s small loans and short-term loans policy. 

Muliaina penned an open letter to the SNPF Chair and Board of SNPF outlining the impact of the proposed policies, claiming it would do “more harm than good” to both the members of the fund and its managers. 

“Your comments Chairman given to the Samoa Observer and published by the paper two weeks ago where you mentioned that the loan schemes have been ‘greatly abused’ show that you are concerned about the amount of borrowing that members do automatically on the SNPF Portal,” Muliana wrote in his letter. “People will always loan! Whether they do it online or in person the fact is the faalavelave fa’asamoa and activities of everyday living means people always seek financial help. 

“Is that abuse? Even if the Act says members can borrow? If the reason for your proposal to stop the small loan scheme is based on your concern about the ‘great abuse’ of the online service and the accumulation of loan amounts that will run down the net withdrawals when members reach 55 years then you are wrong and mistaken.”

Currently an economics lecturer at the National University of Samoa (NUS) Muliaina also argued that the practice of taking out loans isn’t bad. 

“This is a common misunderstanding that most people have that loans are bad and that the accumulation of loans will lead to a diminishing of the net withdrawal amount. Not correct,” he also wrote. “That thinking does not apply to the SNPF loan system. That view is correct if we are talking about borrowing from banks and other small lending businesses. 

“The case of the SNPF is different; the net withdrawal amount increases over time even if members continue to borrow up until they reach retirement age! Sounds weird? I humbly ask that your Board clearly understands this because your proposal will ruin something that works just fine.”

Muliana then listed a couple of critical points for the SNPF Board and Chair to consider regarding their proposal as well as a list of recommendations. 

The Minister of Finance, Mulipola Anarosa Ale-Molio’o whose ministerial portfolio covers the SNPF as well as the Chair Papali’i Panoa Tavita and the Board have not provided an update on whether Cabinet has endorsed the proposal to review the fund’s policies. 

Attempts by this newspaper to get comments from Papali’i Panoa Tavita and Mulipola on the issue have been unsuccessful. The SNPF management also called a press conference over three weeks ago, only for them to defer it at the last minute “until further notice”. 

Some of the changes being mooted include the scrapping of short-term loans and the entitlements which SNPF contributors can borrow against their contributions.

Muliana in his open letter suggested that SNPF should keep the current small loan and Short-term loan schemes for existing members. 

“Changes are made if the benefits outweigh the costs. The current system is just fine! We just have to make sure that we are fine with our understanding of the mechanics of retirement savings schemes,” he added.

The SNPF Chair in a previous interview with this newspaper said a meeting will be held between SNPF and its members as well as all its stakeholders. Papali’i said the meeting will be a first of its kind to offer the opportunity for the members to raise issues or suggest ways to improve SNPF’s service moving forward. 

This plan was revealed by Papali’i last month who claimed that the meeting would take place in June and that they would also have consultations with their members in Savai’i. 

He also emphasised members have the right to ask questions about certain areas relating to the fund’s policies and also make recommendations on how the service can improve moving forward. It is not known when the consultation meetings with the members will be held. 

Meanwhile, the Government is tightlipped on proposed changes to the loan policy of the Samoa National Provident Fund with the Finance Minister yet to give an update.

Over a fortnight ago the SNP. management was to announce major changes to the fund’s loan policy but cancelled the press conference at the eleventh hour. Numerous attempts by the Samoa Observer to get a comment from Mulipola Anarosa Molio’o and the Chairman of the board, Papalii Panoa Tavita on the proposed changes were unsuccessful.

This newspaper also did a doorstep with Mulipola outside the Legislative Assembly but she responded by saying she will reply in writing through email after the questions are sent to her. To date, she is yet to respond to questions sent to her through email.

Prior to that, Samoa Observer also contacted the SNPF Board Chairman as a follow-up, but he refused to comment as he said the matter has been submitted to the Cabinet for review and an announcement will be made.

It is understood that the about-turn by the fund’s management on the proposed policy changes came after SNPF contributors took to social media last month to condemn the proposed changes. Some of the changes being mooted include the scrapping of short-term loans and the entitlements which SNPF contributors can borrow against their contributions.

A long-time SNPF contributor and Faleata No. 3 MP. Lealailepule Rimoni Aiafi also appealed to the Cabinet last week to reconsider proposed changes to the fund’s loan policy, saying the SNPF management should do proper consultation with the fund’s contributors.   “As a contributor, I am happy that they have withdrawn this policy-change plan for reconsideration and review because although there was no formal announcement, the SNPF staff had already spread the word out when they saw that what the Chairman and the Board were trying to do is not right,” he said.