- June 19, 2009
- Posted by: fnpf_editor2
- Categories: Media Articles, News & Media
The Fiji National Provident Fund Board has appointed Mercer (Australia) Pty Ltd to be the Actuarial Consultant to review the Pension Scheme. The recommendation from Mercer will be forwarded to the FNPF Board, who will hold nationwide consultations with all stakeholders.
Board Chairman Mr Parmesh Chand said the review is part of the reforms to ensure its major product, which is pension, remains viable and sustainable in the future.
“One of the major challenges that the Board has to undertake is this pension reform to ensure that the rates offered are actuarially sound,” Mr Chand said.
Actuarial reviews conducted by the International Labour Organisation in 1997 and 2006 have recommended the reduction to the rates. In 1999, the Fund regressively reduced this by 1% every year from 25% to 15% last year.
“A similar assessment held by the World Bank in 2008 suggested that the 15% rate was still not sustainable for the Fund in the long term and this needs to be reduced further,” Mr Chand said.
“Without a pension reform, members will experience an eroding pension scheme”.
Mr Chand highlighted that a majority of pensioners have outlived their pension, with some earning more than three times their balance on retirement.
“This is unfair and inequitable. We cannot allow this trend to continue, as the Fund is not only for those pensioners already enjoying benefits but for future generations as well,” he added.
“The review will highlight reform options the Fund can take to be sustainable hence making the pension scheme a stand-alone component of the Fund.”
Mr Chand said the discrepancies between the pension income and pension payments continue to increase, rising from $4.5million in 2003 to $20.4million in 2008.
“To continue to sustain current pensioners, the Board will continue to explore investment options and draw from its existing resources.
He assured members that the Fund’s reforms also included internal reforms to address and minimize risks and exposure. He added the Board has ordered cost-savings measures for the Fund and its employees.
The review will start soon and is expected to be completed within two months.