Illegial operations by China Railway in Fiji get a “we will speak to them” where others get prosecuted.

WAF disappointed with China Railway

07:03 Today

 

Taken from/By: Report by: MIka Loga

Water Authority of Fiji Chief Opetaia Ravai is disappointed with Chinese contractors China Railway Five Company for allegedly failing to pay FNPF contributions of its local workers.

The FNPF has confirmed receiving complaints from employees.

“We are definitely concerned we’ll speak to them in no uncertain terms if they want to operate in Fiji they need to abide by the laws of the land. So we’ll speak to them about this.”

The company is contracted to carry out water and sewerage works.

FNPF pensioners look for some security for their savings……. and ask for their dignity to be respected.

FNPF pensioners want full protection of their rights

Publish date/time: 14/10/2012 [13:03]

The Fiji National Provident Fund pensioners have requested that the constitutional Bill of Rights include full protection for the rights and interests of pensioners.
Making the submission on behalf of FNPF Pensioners, Ken Giblin said this should guarantee that legally-agreed pensions are inviolable.
He said the Bill of Rights should forbid any discriminatory treatment of pensioners and provide for their dignity to be respected.
The pensioners requested that it contains a clause affirming the right of citizens to petition their Government on issues and grievances and the obligation of the Government to give a full and considered response.
He said all laws that deny the right of appeal and redress should be repealed.
These fundamental rights should be specifically entrenched in the new constitution.
Giblin said the Constitution should have a special reference to the crucial role of contracts and contract law in a democratic society and emphasize that they can never be unilaterally breached.
He said the incoming parliament should be requested to review the laws applying to the FNPF with particular reference to its board, lending policies and the binding guidelines for these.
Other proposals made by the pensioners included that the 1997 constitution should form the framework for the proposed constitutional changes, a Constitution Court to be established to ensure that all matters pertaining to disputes regarding constitution matters be brought before this body for adjudication.
The pensioners say Voting system should be based on one-person one-vote and for the appointment of a caretaker government to manage Fiji’s transition to elections.
The pensioners also agree with the Peoples Charter that those found guilty of treason or coup related offences by a court of law be prohibited from contesting elections for life.
Story by: Sofaia Koroitanoa

Another $12 million wasted?

What’s the truth behind FNPF’s $12m land deal at Momi Bay?

FLP Website

Fiji Labour Party has written to the Fiji National Provident Fund seeking information on its decision last year to expend a further $12 million on the failed Momi Bay resort development project.

The FNPF Board spent $12m in July 2011 to buy additional land for residential lots for sale at the Momi Bay complex, work on which stopped in October 2006 after the developer defaulted on loan repayments to FNPF and was unable to pay the contractors and suppliers.

FLP wrote to FNPF last October seeking details on the purchase of the $12m residential lots. The Fund sent a perfunctory response without disclosing any details on the purchase of these lots.

One year later, with little visible activity at the resort, we are pushing for answers again. Obviously, something is not quite right here. Why is the FNPF management being so secretive about the $12m land deal? If all is above board, why are the questions not being answered?

Why tell us in November 2011 that a hotel operator will be appointed soon? But almost a year later, there is still no sign of a hotel operator!

FNPF had invested $99.7m in the Momi Bay development. In 2009, as the first mortgagee, it tried to auction the property, but failed to realize anything near its true value. Following this, the Board decided to write off $55m reducing the value of the property to $44.7m.

In its 2011 Annual Report, it disclosed that it had expended $12m in July 2011 to buy additional land at Momi Bay and this was to be part of the Momi Bay Development.

On 27 October 2011, FLP wrote to chief executive FNPF questioning the absurdity of the Board’s decision to “throw good money after bad”: “To put it bluntly, the purchase of the additional land to complete an incomplete development which did not attract any worthwhile offers when put to auction seems not only absurd but highly questionable as to its actual intent.

“It is a well known fact that over the years the Fund has made investments in projects which have resulted in accumulated losses of around $700m. A number of these projects were government/regime driven such as ATH, GPH, Momi Bay, Natadola Bay etc.

“As a consequence of these ego projects the long term sustainability of the Fund is now at risk and the Board has decided that it must bring in “Reforms” which, in short, means a substantial reduction in pension benefits of the existing and future pensioners…”

In the case of the additional $12m being spent on Momi Bay, FLP reminded the Fund that it had a duty to fully disclose to the public, FNPF members in particular, details of this highly questionable deal.

We sought the following information on the matter:

i. the total area of land acquired

ii. the previous owners/lessees of the subject land

iii. the land area and price paid for each allotment if more than one
property or parcel of land was acquired

iv. on whose advice/recommendation was the land acquired

v. was a due diligence report prepared

vi. the agents, if any, through whom the deal was negotiated and the commission/fees paid to them

FNPF replied on 2nd November 2011 to say that after considering various options, the Fund had decided that the best alternative for it was to complete the hotel and “to immediately sell the residential lots to recover investment. Work has commenced in this regard including the appointment of the Hotel Operator soon.”

It did not provide the additional details sought. Members of the Fund are still in the dark as to how much land was purchased with $12m of their money, who was the land bought from and how much was paid for each lot purchased?

Nor do we know the name of the agent, if any, that negotiated the deal and what commission or fees was paid for it.

It is well known that the Bayleys real estate company had been involved with the sale of the initial residential lots. It had also handled the failed auction of the property in 2009 which had realized a mere $41m bid for the partially completed luxury resort valued, at the time, at about $80m but later written down to $44.7m.

It is now more than a year since the additional land was purchased. Our information is that there is no visible sign of any activity at the resort site.

This week we wrote again to FNPF and its auditors, Pricewaterhouse Coopers seeking further information on the $12m expended and details surrounding the purchase of the land.

FNPF’s silence on the deal is highly suspect considering that the Fund has already frittered away massive sums of members’ money, some $700m, in bad investments.

Fund members are paying the price for such imprudence. In March this year, pension annuity rates were virtually halved for existing pensioners, down from 15-25% while a rate of 8.7% was set for future retirees.

It has left more than 90% of existing pensioners with an income of less than $400 a month – sentencing these seniors to a life of poverty in their old age! Nor will future pensioners be able to retire with dignity on an annuity of 8.7% considering that more than 60% of our workers receive below poverty level wages.

Yet the FNPF board and management feel they can continue to whittle away members’ hard earned contributions without being held accountable for their Ill-conceived investment decisions.

But this is not all. December last year, the Fund signed a partnership deal with Tokatoka Tahau, the Momi Bay landowning Unit (Fiji Sun 25/12/2011). The landowners were jubilant to receive $1.2m in premium from FNPF for a 99-year tourism lease for the resort site. They were also promised education and community development funds, training, business and job opportunities at the “new” resort…

Work on the site was to resume at the end of the second quarter this year. All very well … but one wonders whether these promises will ever be fulfilled!

The truth is that FNPF rushed into this exercise without much thought or expertise.

Delays in FNPF pension payments inexcusable

 

The Fiji Labour Party is absolutely appalled at the insensitivity and utter lack of responsibility FNPF has displayed in its handling of pension payouts.

Daily for the past week, scores of seniors have patiently crowded the Pensions office and walkways at the FNPF head office in Suva waiting for their meager pension payment.

As it is their pension payouts have been reduced by half and now they are being forced to fork out scarce funds in bus and taxi fares day after day in the hope of receiving their payments from the Fund.

All we have been getting from the Provident Fund management in response are empty promises that payout will be made today or tomorrow.

The truth is that FNPF rushed into this exercise without much thought or expertise.

It should have known that handling some 12,000 pension re-registration and payments would be a mammoth task. Even then it just gave itself one month after the cut-off date to handle all the paperwork.

What is the big rush? There is no danger of the Fund going bankrupt tomorrow. If it had to impose this illegal exercise (a breach of contract) on the country’s elderly, it should have at least given itself three clear months after the cut-off date to get all its paperwork in order before imposing the new rates.

FLP calls on the FNPF management to show more sensitivity towards the plight of seniors, the majority of whom are dependent on their pension payouts each month to put food on their tables and meet their other pressing commitments.

Mick Beddoes says the delay will do nothing to improve the lack of trust that people have for FNPF.

Delayed payout by FNPF is shameful-Beddoes

 

The delayed payout by Fiji National Provident Fund to pensioners on Friday has been labeled as outrageous and shameful by a Former Opposition Leader.

Mick Beddoes said that this latest delay was not the first that expecting pensioners have had to endure waiting for their payout and that it will do nothing to improve the lack of trust that people have for FNPF.

Meanwhile FNPF Chief Executive Officer Aisake Taito said that they extend their deepest apologies to all pensioners for the delay caused by process problems they encountered and is pleading pensioners for their understanding while at the same time acknowledging them for their patience.

He added that for pensioners who validated and chose an option before 29th February this year will be paid out tomorrow morning and those that chose their options after 29th February will receive their payment on 30th April which is the scheduled payment date.

Story by: William Waqavakatoga

FNPF fails to honour its 4pm promise. Our faith in our superannuation fund is failing further and further…….

FNPF pensioners yet to be paid

08:10 Today

 

 

Taken from/By:
Report by: Dev Narayan

Pensioners are furious that the FNPF has failed to honour its promise to pay out by four o’clock on Friday afternoon.

The first payment was due under a new arrangement on Monday however, dealys have been caused from a computer glitch.

Those who did not receive their payments want answers and late Friday afternoon, they had FNPFIT department in their sights wanting to know what happened.

The pensioners, some without any cash but who travelled to Suva to find out when they’ll get their money just want answers.

Calling for an”Independant Inquiry” in Fiji?

Fiji pensioners call for inquiry into FNPF

Posted at 19:56 on 22 March, 2012 UTC

Pensioners in Fiji have sent a petition to interim prime minister, Commodore Frank Bainimarama, calling for an independent inquiry into the reforms being made to Fiji National Provident Fund’s pension scheme.

They say around 3,600 Fiji pensioners are affected by changes they call undemocratic and iniquitous, and say their fundamental rights have been breached.

Don Wiseman has more:

“The Fund wants all pensioners to validate their pension status and choose new options by the end of this month. It says the changes are needed to put the Fund on a sustainable footing but many people will face cuts to their pensions. The petitioners say former prime ministers Laisenia Qarase, Mahendra Chaudhry and Sitiveni Rabuka are among the 450 who have signed the document. Others include former opposition leader, Mick Beddoes, and Taufa Vakatale, who has just been appointed as a constitutional commissioner. The petitioners say that those pensioners facing cuts are mainly poor, retired working people and some from the middle class, and they are pleading for interim prime minister to intervene.”

News Content © Radio New Zealand International           PO Box 123, Wellington, New Zealand

A reminder of the plight now facing the elderly in these changing times.

FNPF pensions and challenges faced by older people

 PRESS RELEASE FCOSS/ HELPAGE CENTRE  FIJI.

The extension of the pension validation deadline to 31 March, is an act of mercy for which we are grateful, however, we now call on the 2000plus pensioners, who have not done so to come forward and take the advantage.

It is also an opportune time for all, particularly, the FNPF, to realize how it is to live as an older person and the challenges faced by the elderly include:

  • The eroding value of the dollar and the rising cost of goods and services.
  • Traditional and cultural changes arising from the economic policies and the cultural subsistence living versus money economy.
  • The diminishing traditional family security and the reliance that was inculcated in FNPF pensions security.
  • Increasing numbers of older people, especially those who are functionally disabled, suffering from strokes, multiple chronic diseases and their need for money.
  • Lack of finance to buy their own care because of reduced pensions
  • Greater dependency of these elders with limited functional abilities on public care as a result of nuclear family system.
  • Limited health care resources that cannot cope with the increasing socio-medical needs of the elders and more so in the rural areas.
  • Inadequate and poor financial and voluntary community based programmes that can provide socio-medical or socio-economic care for the older person.
  • There are not many trained persons who could provide qualitative and quantitative care to the senior citizens both by government and voluntary non-government sectors.
  • Meeting new demands brought about by electronic age and deregulation economic policies which are creating new and complicated problems.
  • The dilemmas of science and technology.

One of the key reasons of the introduction of VAT, was to have enough money for social services and particularly older persons needs. It is time for the Government to take serious look at the introduction of SOCIAL PENSIONS, particularly for those who are not on any form pensions and live in the rural areas.

Taito said the fund has validated about 30% of the total 750 pensioners. Does this mean the other 70% will lose their pensions?

4,000 pensioners yet to validate: FNPF

February 25, 2012 09:57:47 AM

The Fiji National Provident Fund (FNPF) has yet to validate about 4,000 pensioners with 8,000 already being validated.
Fund chief executive Aisake Taito in a statement reiterated the importance of validating by 29 February.
For overseas pensioners, Taito said the fund has validated about 30% of the total 750 pensioners.
Pensioners who have not validated by the stated timeline, Taito said they will not be able to transit into the new pension scheme, thus they would not be entitled to a pension option nor receive any pension payments from March onwards.
He said for current pensioners to access any pension option including lump sum payment, validation is mandatory.
He continued they have dispatched mobile teams to the remote locations and have also visited pensioners who are immobile, to assist in their validation and counselling.
Pension counselling centres will continue to be open to validate pensioners until next Wednesday.
By Ropate Valemei

Fiji’s Grey Power group say the changes will almost halve the amount paid to more than 3,000 senior citizens and amount to discrimination.

Fiji PM petitioned over pension cuts

Posted at 22:21 on 19 February, 2012 UTC

A group of elderly residents in Fiji is petitioning the interim Prime Minister in the hope of averting pension cuts.

The Substantive Fiji National Provident Fund Decree is due to be implemented on March the 1st when the current Transition Decree expires.

Fiji’s Grey Power group say the changes will almost halve the amount paid to more than 3,000 senior citizens and amount to discrimination.

A pensioners’ advocate Matt Wilson says existing contracts with the FNPF have been broken and court action against the changes blocked by decrees.

He says the petition is calling for an independent inquiry into the FNPF actions and is asking the Prime Minister to reconsider the cuts.

“We’re asking him to adjudicate in this matter and to show compassion, inclusion and respect for those who are in the last season of their time on earth. And it’s a poor reward for them to be victimised, and penalised and discriminated against in this manner.”

News Content © Radio New Zealand International           PO Box 123, Wellington, New Zealand

Existing pensioners threatened with starvation if the fail to “Validate” their account. This validation requires them to waive all legal rights to contest their new reduced (in most cases) pension. Hence the warning they will not get social welfare assistance if they fail to sign.

Pensioners are being warned they will not get social welfare assistance.

http://fijipensioners.com/2012/02/19/more-threats-from-fnpf/

Fiji National Provident Fund has advised pensioners to validate themselves for the new pension scheme.

However pensioners thinking of applying for social welfare assistance if they do not meet the validation deadline will be turned down.

Those who do not meet the validation deadline will not get any pension.

FNPF Representative Tevita Nagataleka says they work closely with the social welfare department to ensure pensioners do not get assistance.

Nagataleka says close to 4,000 pensioners who are receiving less than $100 monthly will receive $100 under the new scheme which comes into effect next month.

No changes will be made to pensioners who receive between $100 to $300 a month but those receiving more than $300 will receive less under the new method.

PM overrules FNPF… Proof that the main lender to the Government is under Government control. FNPF is fighting to remain solvent and was never designed to replace Government assistance.

PM reveals FNPF assistance is available

Sunday, January 29, 2012

Prime Minister Commodore Voreqe Bainimarama has revealed Fiji National Provident Fund will assist certain flood affected families.

Bainimarama told villagers of Semo assistance would be available from the fund but to only those who were in the worst affected areas.

Fiji National Provident Fund had earlier in the week stated they would not provide flood assistance like they did in 2009.

However the revelation today by the PM will come as a relief for families devastated by the floods.

The Prime Minister is visiting flood affected areas in the western division.

Report by : Apisalome Coka

FNPF needs an injection of around half a billion Fijian dollars to make it solvent.

http://www.islandsbusiness.com/islands_business/index_dynamic/containerNameToReplace=MiddleMiddle/focusModuleID=19991/overideSkinName=issueArticle-full.tpl

The case of the Fiji National Provident Fund (FNPF) is instructive on this count. FNPF is slipping into insolvency (i.e. where the value of current liabilities exceeds the value of assets). It needs an injection of around half a billion Fijian dollars to make it solvent. Finding this sum in the current uncertain environment will be costly. FNPF is in the process of trimming down pension payments from the prevailing 15 percent of equity to 8.7 percent which is to take effect from  March 1, 2012. This amounts to a drop in income of a retiree dependent on FNPF of 42 percent. It will hurt, particularly in a climate of high inflation and in a situation where there are no other sources of income. The capacity to replenish income falls with age and when medical expenses are likely to rise. So pensioners, beware!

Since when was a shortage of crew a mechanical problem?

FTUC calls for probe into Air Pacific

January 09, 2012  10:50:55 AM
              The Fiji Trade Union Congress (FTUC) national president Felix Anthony has called on the Attorney General Aiyaz Sayed-Khaiyum to instigate a full investigation into Air Pacific to determine the real cause of all the recent flight delays and cancellations.
      In a statement Anthony said passengers have been offloaded from full flights because of shortage of crew.
      He said these are the real questions that need answers.
      “People need to know what is really going on in Air Pacific and are fed up with promotional press releases that only show a glossy picture of Air Pacific,” he said.
      Anthony said these investigations are even more important now considering the fact that workers superannuation funds are being used by the airline.
      “It is ironical that the airline management has no qualms about using workers money to run it’s business while at the same time does its utmost to undermine the same workers and their representatives rights and privileges that have been there for decades through their continuous struggle,” he said.
      Meanwhile Sayed-Khaiyum said FTUC’s statement is rife with inaccuracies, which clearly demonstrates a lack of understanding of good corporate governance, the realities of the economy, and job creation, to name a few areas. He said Air Pacific’s current challenges are solely mechanical in nature, and have nothing to do with workers’ abilities.
      “Delays and mechanical issues are not new or confined to Air Pacific. All airlines experience this. It is simply a reality of the airline industry, and it should not be conflated with politics. Safety is always first,” said Sayed-Khaiyum.
      He said Air Pacific’s new management have been incredibly successful in improving the airline’s operations, which is proven in many ways, one of which is financial performance.
    By Nasik Swami

Disclaimer: The opinions expressed are the authors’ own and are not intended as legal or financial advice…….. There are other legal opinions that disagree with parts of this opinion.

FNPF reforms- myth and reality

Shauna Tomkins And Geoff Rashbrooke Saturday, December 17, 2011

Statements continue to be made about the FNPF reforms that are simply not true.

Predictably, the termination of the pension scheme has been met with anger and cynicism by those affected who even question the need for reforms in the first place. Many pensioners understand that the new life annuity arrangements are offered at a much lower conversion rate and alternative investments will not generate the returns enjoyed under the old life annuities arrangements. The reason is obvious ù there are no investments available to support pensions at a rate of 25 per cent or even 15 per cent that are of an acceptable risk for individuals or FNPF for that matter. There never were.

Prior FNPF boards, management and successive governments ù elected and otherwise ù failed to implement a proper fix to the problem. This is despite 20 years of warnings by the International Labor Organisation, World Bank, IMF, actuaries and special advisors. The 1999 changes did little to solve the problem. Ironically, subsequent drives to encourage taking the life pension at entitlement only made the problem worse.

Unfortunately, those pensioners most affected by the termination/refund plan will not be satisfied with anything other than the status quo ù no change. While an easy solution may have been to change only conversion rates on future pensions and leave the past pensions alone, to do so continues to discriminate against working members in favour of pensioners and compounds past mistakes. Status quo would mean that members continue to pay for the next 30 years. It means a 25yo in the work force today retires with potentially 30 per cent less because earnings must be redirected to pay these pensions.

The self-interest is understandable and so it is no surprise that mis-statements continue to be made by those who believe that they have the most to lose. The silent majority who will benefit from the changes remains just that ù silent.

Here are the 10 biggest myths about the FNPF reforms.

 

* Myth#1. Current pensions and conversion rates of 15 per cent are sustainable

* Reality: The FNPF scheme is established as a self-funded retirement savings scheme ù this is the foundation stone for sustainability. It should mean that the amount available to people at entitlement is the amount saved during their working life. This has not been the case for the 11,000 or so current pensioners whose pensions are not self-funding but rely on around $30 million every year to be diverted from crediting members to paying the pensions.

Even at the lower conversion rate of 15 per cent from 25 per cent requires FNPF to earn returns of more than 13 per cent. Such returns have never been achieved and are not available. Therefore, FNPF must divert money from members to make pension payments. In the 1990s, the International Labor Organisation alerted FNPF that less than 10 per cent was sustainable.

The suggestion that sustainable conversion factors be applied only to new entitlements would stop further deterioration but fails to address the funding shortfall on existing pensions. This shortfall would need to be paid for by current and future generations of contributing members for the next 30 years.

There have also been calls for a minimum pension. FNPF cannot fund a minimum pension in excess of what a member has saved. The issues relating to minimum wages, meaningful employment opportunities, provision of a universal pension and poverty alleviation are the responsibility of Government not FNPF.

 

* Myth #2. The reforms involve FNPF breaking contracts with pensioners

* Reality: Under the old Act, pensioners did not have a contract with the FNPF. The old Act allowed the minister to decide that persons entitled to receive their fund balances could instead receive a life annuity based on their account balance (in full or part). The pensioner did not have to enter a contact with FNPF to receive those balances as an annuity because the old Act created the entitlement. The FNPF Board’s obligation to pay the annuities comes from the old Act. There is no question of a contract. So when the old Act is repealed with effect from 1 March 2012, the entitlements of pensioners will also be repealed.

Despite this, and despite the payments made over the years to pensioners (in some cases amounting to multiples of their original balances) the FNPF Board is required by the new Decree to make a refund to those pensioners of the original amount converted to an annuity. The Decree does not seek to recover any payments made to date, in effect, tax free returns of up to 25 per cent.

The legal correctness of this analysis has been confirmed by the Solicitor General.

 

* Myth #3. The FNPF is owned by the members and the pensioners

* Reality: The assets of the FNPF are not owned by either members or pensioners ù they are owned by the FNPF Board. The FNPF Board is not owned by members or pensioners in the way a company owned by its shareholders. This is because the FNPF Board is a statutory body. No-one has shares in the FNPF Board.

Contributing members of the FNPF have the same basic relationship as a depositor with its bank. The FNPF Board has “fiduciary obligations” to contributing members. This mean the Board has obligations to act in the best interests of contributing members in managing the funds. These fiduciary obligations are emphasised by the new Decree.

The interests of pensioners are protected under the new decree by the detailed and extensive prudential and solvency requirements to be enforced by the Reserve Bank of Fiji.

The requirements are designed to ensure that there will be sufficient assets to pay ongoing liabilities, even if there are adverse circumstances affecting the value of the rest of the assets of FNPF.

It should also be noted that FNPF is not owned by the government. It is a statutory authority, and government has responsibility with respect to certain governance matters, but without ownership of the assets ù which are applied in accordance with the law to make payments to members and pensioners.

 

* Myth #4. The reforms have always been about punishing pensioners

* Reality: The reforms have been long overdue. The reforms are comprehensive and address structure, solvency, refocus on retirement, prudential regulation, governance, greater independence from political interference and sound risk management. The reforms are robust and aim to avoid a repeat of the current problems. They should also mean better and more appropriate retirement products, improved efficiency and less red tape, and better returns for members.

Current pensioners have enjoyed the greatest benefit from the past mistakes in the design of the annuities scheme. The FNPF Board understands well and grappled with the possibility of financial hardship for some pensioners but on balance committed to the adjustments to achieve fairer outcomes overall.

At 30 June 2011, the amount to be set aside (technical provisions) to support future pension payments of all pensions current at that date was $565 million. The FNPF Board, underpinned by the Transition Decree, will apply a large part of this amount to pay around $310 million in refunds plus up to $100 million in top up payments to support those pensioners who decide to take up a new life annuity product.

The remaining $150 million or so will support the FNPF Board to meet member liabilities and the new solvency requirements. That is, more than $400 million goes to support the 11,000 pensioners and $150 million goes to support the 300,000 workers.

 

* Myth #5. Government should just make good the guarantee

* Reality: Section 10 of the FNPF Act is often identified as a government guarantee of FNPF. It is not a guarantee but a liquidity facility.

The section provides for the government to make a loan to FNPF and then takes priority for repayment. Given that 70 per cent of FNPF assets are in government bonds that can be turned easily into cash, FNPF could keep making payments even when insolvent. That is, it could have cash in the short term but in the longer term, the value of liabilities would be greater than the value of assets. Without reforms, this balance sheet insolvency could occur as soon as 2018.

 

* Myth #6. The Pension Buffer Contribution fixes all these problems and has been misused

* Reality: The Pension Buffer Contribution levied to support the unsustainable 25 per cent conversion rate has characteristics of a Ponzi scheme. A Ponzi scheme makes the promise of fabulous returns — well above realistic market returns and then uses money from new “investors” to payout those who leave the scheme.

As long as the number of pensioners was very small, this levy from hundreds of thousands of workers was adequate to make the generous payments to the lucky few.

After the contributions were terminated in 1999, the overt 2 per cent cross-subsidy was replaced by a “levy by stealth”. This levy was the reduction in distribution of earnings to members through a lower crediting rate.

The Pension Buffer levy was fundamentally unfair and had the effect of taxing the poor and giving to the rich, that is, it was a wealth transfer to those people who did not access FNPF savings until entitlement.

Much has been said about the earnings on the Pension Buffer Contributions and that had these been credited to the reserve there would have been adequate funds to meet ongoing pension obligations. While this would have delayed and narrowed the funding gap, it was not a fix.

In any case, the reality is that those earnings were used by the FNPF Boards in the 80s and 90s to bolster the crediting rate to members above the actual return on investment achieved at the time. This money cannot now somehow be recovered and written back to the reserve. In fact most of today’s pensioners have already enjoyed these earnings because the value was reflected in their savings at entitlement.

 

* Myth #7. The FNPF must wait and consult more

* Reality: It is human nature to not want a change that takes away some personal advantage. If change is inevitable then the next best thing may be to delay implementation.

The problem is that no amount of delay or consultation or rational argument will convince every pensioner that the reforms and termination/refund approach is a good thing.

Clearly, for those who will no longer receive generous payments that are subsidized, it is not a good thing. However, every month the FNPF delays costs the membership more than $2 million in transfer payments. The calls to wait for the 2014 election would make the problem worse and could cost members another $100 million.

 

* Myth #8. The current government and FNPF Board are to blame

* Reality: The problems with FNPF and the bad design of the annuity arrangements go back to 1975. Successive Boards and governments — elected and otherwise — failed to heed the warnings given by multiple experts over nearly 20 years to fix the problem permanently.

The failure to take on proper actuarial advice with respect to conversion factors; failure to restructure FNPF activities to separate insurance and savings businesses; investment decisions such as ATH and Natadola Bay all pre-date the current government and Board of FNPF. The FNPF Board and government inherited these problems and have a long standing commitment to putting FNPF on a sound prudential footing.

 

* Myth #9. Pensioners are being forced to pay for bad investment decisions and the Natadola write-down

* Reality: The pension scheme was flawed fundamentally regardless of past investment decisions and write-downs. Even at the lower conversion rate of 15 per cent, in 2002 the ILO pointed out that technical provisions to support such annuities are $2 for every $1 converted. That is, the day FNPF accepts $10,000 in savings to be converted to a life annuity at 15 per cent, it must set aside $20,000 to support those future payments. The extra $10,000 must come from assets supporting member liabilities.

Therefore, the Natadola Bay losses and underperformance of a minority of assets has not contributed to the pension problem.

In any case, it has been the members who have borne the brunt of any poor investment performance through lower crediting rates. The investment issues do highlight why the need for other reforms relating to decision making, board responsibility, transparency and accountability, board independence and risk management are so important.

 

* Myth #10. Pensions are sustainable if the right life expectancy assumptions are used

* Reality: FPNF must use life expectancy tables based on pensioners and not the general population. This is standard insurance practice. Based on experience in other countries, pensioners usually live longer than the average population because they start in better health at entitlement and have greater means to obtain medical care.

FNPF continues to collect data to improve its forecasting and modeling with respect to life tables but the adjustments that have been built into the model are consistent with the World Health Organisation experience in improvements and are considered modest for a pensioner population. This is a factor that will be monitored closely over time but will not have the wishful impact that some opponents to the reforms have suggested.

 

Opponents of the reforms conveniently ignore the long time warnings from the ILO, World Bank, IMF, actuaries, regulators and specialist advisers. As recently as last month the IMF once again called for reforms of the pension scheme. However, the alternative economics and financial rationale presented by opponents to reforms lack an understanding of long tail insurance products and even basic financial mathematics.

The Fiji National Provident Fund is a pivotal institution in the Fiji economy and the lives of many Fijians. The decisions made today impact operations and the well-being of 300,000 workers for the next 40 years.

The FNPF Board has been brave and taken a comprehensive approach to try and deliver a balanced solution rather than just cherry pick the reform package and only apply those aspects that were easy or non-controversial. Pensioners are not being victimised although clearly some individuals will feel a greater financial impact than others.

There is no surprise in a number of pensioners claiming that they are being victimised and that they are the big losers in these reforms. The reality is that they are not big losers – they have just stopped winning at someone else’s expense.

 

* Disclosure: Shauna Tomkins was engaged previously by FNPF to provide technical assistance on the reforms of the FNPF Act. Geoff Rashbrooke is contracted currently to provide technical assistance to FNPF on developing actuarial and data analysis capacity.

 

* Disclaimer: The opinions expressed are the authors’ own and are not intended as legal or financial advice.

Not Reported in Fiji …….here we are not allowed “the right to be heard” even though it is a fundamental element of common law ratified by Fiji in the UN Charter, which includes protection for all human rights.

Fiji pensioners call for courts to challenge superannuation fund decree

Posted at 04:08 on 09 December, 2011 UTC

A group of Fiji pensioners has written an open letter to a Fiji High Court judge asking that he reject any application to cancel their suit over the Fiji National Provident Fund.

The pensioners are seeking redress over the interim government’s plans for drastic reforms to the fund.

But the regime has since issued a decree giving it the power to terminate any legal action.

The pensioners’ group says Justice Pradeep Hettiarachchi should not accept this, saying the decree removes a fundamental human right.

They also point out that Fiji’s interim Prime Minister recently confirmed Fiji’s commitment to the UN Charter, which includes protection for all human rights.

The group says the right to be heard is a fundamental element of common law, which they understand as no one being deprived of their rights and possessions without a hearing in a court of law.

News Content © Radio New Zealand International           PO Box 123, Wellington, New Zealand

Proof of a dictatorship is that “no legal challenge is allowed”. Even Robert Mugabe has had his decrees challenged in court.

FNPF defends legality of pension fund reforms

Posted at 01:56 on 06 December, 2011 UTC

The head of Fiji’s National Provident Fund has defended the legality of its new scheme, brought in by decree by Fiji’s interim regime.

The Fund’s CEO, Aisake Taito, was responding to criticism long-standing contracts have been broken.

Sally Round reports.

“Changes to the long-established national pension scheme include refunds on original sums invested and top ups for pensioners on lower payouts. Some pensioners are angry, not because they’re against reform but because they have long-standing contracts with the Fund which they say should not be trashed. Mr Taito says the new scheme has been created well within legal structures and endorsed by the Solicitor General. He says the scheme is fair, equitable and sustainable and the best thing for Fiji as a nation and the reforms have been supported by the Reserve Bank, the IMF and World Bank. The legality of changes was due to be tested in the Fiji courts in a human rights case brought by pensioner David Burness but that now looks in doubt as the regime has also decreed no legal challenge is allowed.”

News Content © Radio New Zealand International           PO Box 123, Wellington, New Zealand

FNPF continues to be the government’s leading local creditor holding 76% of total government bonds. The total outstanding domestic debt at the end of September this year stood at $2.7 billion.

Govt focuses on reducing deficits

http://fijivillage.com/?mod=story&id=30111156fbbff6d72a102ebab177d3

The government is now focusing on reducing deficits and maintaining an efficient market for government securities and prepaying expensive loans.

Government bonds have been mostly taken up by FNPF and insurance companies.

The total government debt stood at $3.5 billion as at September 2011 compared to $3.4 billion in 2010 and $3.1 billion in 2009.

FNPF continues to be the government’s leading local creditor holding 76% of total government bonds.

The total outstanding domestic debt at the end of September this year stood at $2.7 billion.

According to the 2012 National Budget documents released, government’s external debt level continued to increase over the years with the disbursed outstanding balance totaling $548.5 million at the end of 2010.

This is an increase of 4% when compared to 2009 levels and is mainly attributed to disbursements for on-going projects funded by the ADB and the EXIM bank of China.

As at September this year, external debt stood at $806.7 million, representing an increase of $258.2 million.

The major increase was attributed to the Global Bond of US$250 million issued in March this year.

Story by: Vijay Narayan

Breach of Contract…..Sub Judice…..and other concerns on FNPF raised.. (and surprisingly published)

Pensioners question pension legality

Wednesday, November 30, 2011

http://www.radiofiji.com.fj/fullstory.php?id=41761

Pensioners have questioned the legality of the new pension rate.

The Fiji National Provident Fund held a public consultation at the Civic Centre in Suva where a majority of pensioners voiced their concerns.

Seona Smiles says FNPF’s new rate is illegal.

“36% is going to lose by the new arrangement are basically being punished for a lack of inaction and a lack of accountability and a lack of transparency by the FNPF – we should not be punished – there is a legal action in front of the court and I wonder what best practice advices changing the law while the matter is still under consideration in the court”

Another pensioner claimed that the forum is a formality as the pensioners views is not reflected in the new FNPF Decree.

The consultation must come in before you come up with the scheme – there is nowhere where we can give in our opinion or our input _ I wonder if all this is legal – No -I don’t think so”

David Burness, who has taken the FNPF matter to the court also criticised FNPF for not honouring the initial agreement which was made when they first joined FNPF.

“You cannot touch the current contract – you cannot amend it and yet today you are here standing and telling us that you going to cut it by certain percent – you are offering nothing – we did not contribute all our money for the whole working life into a bank – we put our money in our bank to use on a daily basis -we put our money into FNPF to sustain us for the rest of our life – you have taken that sustainability away from everybody in this country”

Meanwhile, FNPF Chief Executive, Aisake Taito says pensioners who are receiving less than $100 will receive $100 and those recieving between $100 to $300 a month will still receive the same amount.

He says FNPF will refund the actual amount to pensioners and it depends on pensioners if they wish to rejoin the new pension scheme.

Report by : Dev Sachindra

Dr Shaista Shameem questions Budget Announcement on FNPF provisions for Judges.

Commentary on Budget Announcement re ‘Civil Pensioners or those who fall outside the FNPF Scheme’- is this ‘windfall’ fair?

Dr Shaista Shameem

http://fijipensioners.com/2011/11/28/fnpf-scheme-is-this-windfall-fair/

The Budget Speech on Fiji National Provident Fund Pensions was a shocker. Pensioners supporting the David Burness v FNPF and AG case are still reeling from the implications of it for them, that is, having their FNPF contracts cancelled without compensation.

What astonished most pensioners, however, was the part of the budget speech titled ‘Pensioners’, on page 19 of the speech.

This part is quoted in full below:

‘Regarding civil pensioners or those who fall outside the FNPF scheme, they will receive an increase on their existing entitlements. The last time these civil pensioners received an adjustment it was for 1 percent, back in 2005.

This time, former civil servants, their spouses, former members of the disciplined forces, war veterans, retired judges, former prime ministers, ministers and former members of parliament will all receive a 20 percent increase on their existing entitlements’ (my emphasis)

From the perspective of the Burness case already in court, consider what this provision means. It seems judges who retire will get a refund of their FNPF balance (hard cash) plus a 20% increase in their judicial pensions.

An example may illustrate our disquiet in relation to this provision better: if Judge Smith had worked as a lawyer before being appointed a judge, he or she would have been a member of FNPF and therefore entitled to a FNPF pension. If Judge Smith had chosen to take the pension option, he or she would now be entitled, under the new decree, to both a refund of his or her FNPF balance, as well as a 20% increase in judicial pension upon retirement as a judge.

No one knows how many of the judges are members or beneficiaries of the FNPF pension scheme but the public perception that judges in this category will receive a windfall at the expense of other FNPF pensioners cannot be dismissed. FNPF pensioners’ pensions, on the other hand, are not inflation adjusted.

The possible implications of a decree bequeathing such a windfall on the hearing of the Burness case cannot be ignored or dimissed.

A landmark House of Lords case is pertinent in this regard: In Re Pinochet Judgment of 17th Decemner 1998 and 15th January 1999, where the Law Lords said…’it is of the last importance that the maxim that no man is to be a judge in his own cause should be held sacred. And that is not to be confined to a cause in which he is a party, but applies to a cause in which he has an interest’.

Public perception in this instance, in which a FNPF pensioner’s pension is to be reduced significantly whereas judicial pensions are to be increased by 20%, all by decree, is surely something to consider quite seriously in light of the aforementioned Re Pinochet decision.

Under these circumstances what would be the judicial attitude towards the strike out application currently being made by the FNPF and Government in the Burness case?