- June 30, 2020
- Posted by: fnpf_editor2
- Categories: Media Articles, News & Media
Members of the Media,
Good afternoon and thank you for accepting our invitation to be here today, for this important announcement.
At the close of every financial year, it is a requirement of the FNPF Act that the Board makes a crediting rate for the financial year. This crediting rate can only be determined after the Fund Actuary confirms that the amount will not place undue stress on the solvency requirements of FNPF.
This is a very important safeguard that was built into the Act as part of the reforms in 2012. Therefore, as FNPF members this is a time to anticipate, as it is a way in which the Fund contributes to growing all positive member balances.
Let me begin by stating, that the coronavirus pandemic has forced businesses to reassess their financial projections amid the rapidly shifting landscape of the global economy.
No one has been immune to the financial impact that the pandemic has brought about, the Fund included.
In particular, as required under the International Financial Reporting Standard (IFRS), the Fund has to revalue all its investments and take into account the negative impact of the pandemic. This is a not an easy exercise, given that there are no agreed framework for valuation under a pandemic.
Nevertheless, international valuation firms were engaged to ensure that we follow best practices.
Despite the tough investment & operating environment, I am pleased to announce that the Board has approved an interest rate of 5.0% for the financial year ending 30 June 2020.
This means that $286.2 million will be credited to over 388,071 member’s accounts at midnight tonight. Therefore, the Fund has now paid over $1.43 billion in interest to member’s accounts over the past five years.
The amount that each member gains will depend entirely on their average balance during the year but they must have a positive FNPF balance.
Last year, when we declared the interest, we had clearly advised members, that the interest declared was reflective of the one-off revaluation gains recorded in the accounts for the last financial year, and the rate would normalize this year. However, with the added economic downturn impacted by COVID-19, it has resulted in the declaration of 5 per cent. Whilst this rate is lower than we have initially anticipated, it is still very competitive given the current economic and investment environment.
I want to reassure our members that the Fund remains in a strong financial position. The full economic impact of COVID-19 is still working through the economy and will be more prominent in the coming year.
Accordingly, our investments in the Tourism sector will continue to be affected in 2021. We will therefore rely on our investments in the balance of our portfolio (including the 42% investments in safer Government bonds) to support our returns next year.
This is the benefit of diversification. The Fund’s investment team is closely monitoring the economic climate of the country and the global community; we will continue to seek opportunities that would optimize returns.
All industries, including the superannuation industry are facing immense challenges, with the key challenge being the need to strike a balance between helping our members during this difficult period without losing sight of our core objective, which is to ensure that our members will have a meaningful income when they reach retirement.
The Fund has also taken a more vigilant position in its commitments and is strategizing to ensure that its operations are smarter and conducive to the current operating environment to protect members’ hard-earned savings, now and in the future.
I also encourage members to save when you can. We have members that have signed up for Additional Contributions. These members have grasped the importance of saving with FNPF and have capitalized on the facilities or products available, as well as the tax exemption to boost their savings.
I urge members to utilize the Fund’s digital services to check their new balances tomorrow and to continue tracking their savings.
Over 70,000 members can check their balances on the myFNPF app, whilst 36,000 can view their latest statement on the member portal.
Members can download the MyFNPF App on their mobiles via Google Play Store or the Apple App Store, as well as the other FNPF digital services (Member Portal, myFUND SMS) to be able to check the change in their retirement savings balance.
Approximately 140,000 members will receive their updated statement via email in the next few months. Members are therefore encouraged to update their email records with the Fund to receive their statement via email.
The Board has also retained the Special Death Benefit (SDB) for FY2020 of $8,500, at a premium of $35, to be deducted from our members’ accounts on 1 July 2020. This amount is added to a member’s FNPF balance in the event that they pass away between 1 July 2020 and 30 June 2021 or financial year 2021.
We also would like to thank our Employers for their support in the FNPF COVID-19 Withdrawal schemes that we are currently providing to our members.
We understand the situation they are also facing and the challenges for them to comply with our laws given the current economic situation.We understand the situation they are also facing and the challenges for them to comply with our laws given the current economic situation.
Therefore, I would like to also announce that the Board has approved a relief package for our Employers; that will be effective retrospectively from January 2020 until June 2021.
We will be communicating the full details to our Employers in the coming week and hope that it will help them during this difficult period.
On that note, I would like to take this opportunity to convey our appreciation to our other key stakeholders – our members, pensioners and Government for their support during the last 12 months.
The next few months will not be easy, however more than ever, we will need to be more supportive of each other, as we tread through this period of economic recovery.