FNPF

FNPF to credit $239million to members’ accounts

The Fiji National Provident Fund (FNPF) will credit approximately $239 million to its members tomorrow evening following the Board’s decision to declare a 6.25 per cent interest for the financial year ending 30th June 2016. In a statement, FNPF’s Chief Operating Officer Mr Jaoji Koroi said the interest declared was a testament of the positive flow-on […]

Peni Shute

June 29, 2016 4:07 pm

The Fiji National Provident Fund (FNPF) will credit approximately $239 million to its members tomorrow evening following the Board’s decision to declare a 6.25 per cent interest for the financial year ending 30th June 2016.

FNPF’s Chief Operating Officer Jaoji Koroi (Newswire).
FNPF’s Chief Operating Officer Mr Jaoji Koroi. (Newswire)

In a statement, FNPF’s Chief Operating Officer Mr Jaoji Koroi said the interest declared was a testament of the positive flow-on effect of the FNPF Reforms and commitment by the Board to continue to grow members’ funds.

KOROI: “This would be the fourth year since we embarked on the FNPF Reforms that have now placed the Fund in a sustainable footing. Some of these changes included the separation of the pension business from current members’ contribution, the adoption of an actuarially sound pension rate, the requirements to meet solvency and the allocation of assets to ensure that the Fund remains sustainable.”

Last year, FNPF declared a 6.0% interest totalling a payout of $226 million.

KOROI: “Since then, the Fund has continued to reshape and strengthen our investments and operational strategies to grow our members’ savings and improve the returns to members through Investment Rehabilitation, enhance operational efficiencies and improve the quality of our services through the IT Reforms.”

Mr Koroi said a key investment strategy has been to pursue investment that grow and maximise returns on members’ funds. Some of these included the acquisition of shares in Vodafone Fiji Limited, the Fiji Ports Corporation Limited, and Vision Group Limited.

KOROI: “The rehabilitation program for impaired assets continued, with major projects progressing well. In determining the interest for this financial year, the Board considered returning to members something close to the net Return on Investment (ROI) earned on their funds and retaining some surplus to finance future requirements for solvency.”

He confirmed that the rate has also been certified by the Fund’s Actuary, as required under international best practices and in compliance with FNPF Regulations 41(4).

The latest International Monetary Fund report on the review of the FNPF Reforms have reaffirmed the success of the reforms in terms of the separation of accounts, restructure of the pension business and the streamlining of withdrawal facilities.

The major conclusions are that the reform process has been beneficial in making the operations of FNPF easier to understand and manage from both a financial and operational perspective.

KOROI: “I am also pleased to report that FNPF is on track to implementing the International Monetary
Fund’s recommendations.”

Operationally, Mr Koroi highlighted the TC Winston Assistance as being the biggest withdrawal assistance provided to its members since the Fund was established in 1966.

KOROI: “181,000 applications from 160,000 members were approved for the Tropical Cyclone Winston natural disaster assistance with a total payout of $275 million. We encountered major challenges that are associated with such large-scale operations, nevertheless, the Fund’s new administration system, Provident Fund Management Information System (ProMIS) successfully processed the high volume demanded of it.”

Mr Koroi also took the opportunity to acknowledge the resolve of the FNPF Team and the support of their families during that testing and stressful period.

He said the process has demonstrated the important social security role that FNPF plays for their members and also left lifetime learnings for the Fund to take into the future.

Mr Koroi clarified that the ROI has not been affected by the TC Winston withdrawals this year, although members’ balances have reduced by $275 million.

Members who withdrew their funds under TC Winston natural disaster assistance lost out on partial interest which would otherwise be credited on 30th June 2016.

This is the second year that the Fund will apply the new interest crediting formula that ensures that partial interest is credited on contributions received less withdrawals for the period, as well as for the full year on the opening balance.

KOROI: “It is, therefore, important for members to understand that the 6.25 per cent interest credited depend entirely on the balance of their account, plus taking into considerations movements during the financial year 2016.”

Mr Koroi also confirmed that the Board has also retained the Special Death Benefit (SDB) of $8,500 for the financial year of 2017 at a premium of $35, to be deducted from members’ accounts on the 1st of July 2016.

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