FLP writes to the President on FNPF

  • 26th July 2011
  • FNPF
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The Fiji Labour Party has written to HE the President Ratu Epeli Nailatikau to intervene in the FNPF pension dispute.

The CEO of the Fund has threatened that the reduction in the rates of pensions announced recently will be made effective from September.

Initially, the reduction was to kick off from July but was deferred following strong opposition by pensioners and trade unions.

FLP has asked the President to appoint a Commission of Inquiry into the FNPF as a whole, and in particular, into its unilateral decision to reduce the pension rate from the current 15% to 9%. 

 We post the letter below:

20 July 2011

HE Ratu Epeli Nailatikau LVO.OBE.,CSM,MSD,OStJ,jssc,psc
President of the Republic of Fiji
Government House

Your Excellency

re: Proposed cuts to the FNPF annuity rates

I write on behalf of the constituents of the Fiji Labour Party (FLP) to express concern at the proposal by the Interim Government and the Board of the Fiji National Provident Fund to arbitrarily and drastically reduce the rate of annuity to pensioners from the current 15% to 9% of their contribution in the Fund.

The FLP is a mainstream political party which has wide popular support and which won 33 seats in the House of Representatives in the 2006 general elections. We speak for and represent the views of our constituents on this vital matter, following widespread consultations with them.

FNPF’s case is that the reduction in the annuity rate is necessary to ensure the long term viability of the Fund. It engaged the services of overseas consultants to study the issue and recommend measures to “reform” the Fund. Based on these recommendations, it is now proposing to implement the reduction.

We are concerned at the manner in which the entire exercise was conducted, without any transparency. There was no consultation with the stakeholders on the issue prior to the recommendations being firmed up. No one knows how much the consultants were paid for a report that lacks in-depth analysis of the situation, that fails to take into consideration the socio-economic environment in Fiji, and more importantly, fails to take account of the real factors responsible for putting the Fund at risk.

Regrettably, the consultants do not appear to have considered other options to restore the long term sustainability of the Fund, without having to cause financial hardship to its members and retirees.

Other soft options are available and should receive preference over measures that will add to poverty and misery in the community.

We have attempted to provide a possible solution which we believe is pragmatic, achievable and consistent with the objective of the Fund to provide financial security in old age. We feel strongly that the government should not rush to give its seal of approval to the consultants’ recommendations without taking a serious look at other available options.

Our alternative proposals are outlined in the attached paper and we urge that due consideration be given to have the paper discussed at the appropriate level and with the stakeholders before a final decision is taken.

We believe that if the Fund is at risk today, it is because of gross mismanagement and a series of imprudent and highly questionable investments made by the Fund at the behest of successive governments. Details are provided in our submission.

The just concluded exercise in holding meetings and consultations that the FNPF engaged in was nothing but public posturing. It was staged simply to put the consultants’ proposals across to the people. We are reliably informed that the decision to execute the so-called “reforms” had been made and that they were scheduled to come into effect from July. This date has now been deferred to September as per a recent announcement by the CEO of the Fund.

If this happens, it will be another disaster for our hapless people. It will mean that some 80% of our senior citizens will be forced to exist in poverty with a monthly stipend that will be well below the poverty level. At this rate, there will not be enough money to put food on their table, let alone pay for medicines and other needs of elderly citizens.

Wage rates in our country continue to be quite low – at least 60% of the work force receives wages below the poverty line of about $180 a week. There is also an absence of any other social safety nets such as unemployment benefits, free/subsidised medicare or old age pension. Under the circumstances, a drastic reduction in the rate of pension, as proposed, will not allow our workers/senior citizens to retire in dignity on a liveable rate of pension.

Quite apart from the fact that these cuts are totally unwarranted and unnecessary, we submit very strongly that pension is too important a matter to be left to an unelected and unaccountable government.

The FNPF is in no immediate danger of collapse. It has sufficient reserves to meet its obligations and liabilities into the foreseeable future. This fact is borne out by the information provided in its latest (2010) audited accounts.

The issue is of great significance not only to the present but future generations of workers and should not be decided upon without a free and informed public debate and parliamentary sanction.

Regrettably, free speech is severely restricted under the PER, nor is there a parliament of peoples’ representatives to deal with the matter.

In the circumstances, and seeing the resolve with which the interim government is arbitrarily pushing the “reforms”, the only option the workers and retirees have is to seek Your Excellency’s intervention by way of exercising the powers vested in you under Cap 47 of the Laws of Fiji, to appoint an independent Commission of Inquiry into the FNPF as a whole and, in particular, its arbitrary decision to unilaterally implement changes to the rates of FNPF annuities (pensions) which would greatly disadvantage the current and future recipients of pensions.

We look forward to Your Excellency’s favourable consideration of our request.

Yours sincerely
Mahendra P. Chaudhry