Justice for the workers: reimburse FNPF withdrawals

  • 21st March 2022
  • 2022
  • // Display comment count + link

Labour strongly believes that  FNPF members compelled to withdraw moneys from their pension savings to survive the Covid crisis, must have these monies credited back to their accounts.

We said so for the first time by way of a resolution passed in FLP’s Delegates Conference held in December 2020.     

Labour firmly believes that government  must do so in the interest of justice to the workers.

At a recent Budget consultation in Ba, Economy Minister Sayed Khaiyum said in response to a question that government would not reimburse the members as it will have “to look for $180m”. There were other more immediate priorities, he was reported to have said by the media.

Let me say that where there is a will, there is a way and that there are options that can be chosen to make it possible without having to fork out a lump sum of $180m all at once.

One of these is to top up a member’s balance by the amount withdrawn and interest accrued on it when the member reaches the age of 55 years – age at which he/she can withdraw retirement benefits.

An annual allocation for this can be provided in the Budget to meet the payments. This will considerably ease the burden, spreading it over several years.

Ethical issues

What the Fiji First government needs to understand and appreciate is that the Fiji National Provident Fund is not a cash cow or a de facto bank it can use to bail it out of its responsibilities to the people. It is a retirement fund and members’ savings deposited there must be preserved to provide them financial security after retirement.

At times of national crisis such as natural disasters or as in this case, the Covid pandemic, it is the bounden duty of a government to respond and provide for the basic needs of the people. Such assistance should come from government coffers and not from workers’ own pension savings.

Yet, this government has permitted the use of the Fund as a surrogate institution forcing members to withdraw their own savings to meet their emergency needs during a crisis. They were simply told to withdraw from their FNPF accounts to survive the crisis.

The Fund was set up in 1966 as a tripartite institution managed by the workers, the employers and the government. The FTUC and the Fiji Employers Consultative Association had two representatives each on the Board with the government holding the balance as the Chair.

Regrettably, this tripartite aspect has today been completely obliterated. Under the so-called FNPF restructure and reform undertaken in 2012, the FNPF Act was repealed by Decree 52 of 2011. Under the new Act, appointments to the Board are now at the sole discretion of the Minister for Economy.

It is, thus ironical that although the moneys in the Fund belong to the workers, there is not a single worker representative on its Board to keep a watch on their behalf.

Furthermore, one must question why non-Fiji residents are being appointed as members to the Board of an institution of such great national importance?  FNPF is a trust fund and by far the biggest financial institution in the country. It must be in local hands – it’s a question of our sovereignty. We have capable people in Fiji to do the job.

Reduction in the rate of annuity

 The so-called reforms and changes to the Board structure came as a prelude to drastic anti-member (worker) changes that were initiated as part of the restructure. All done under the guise that the Fund’s long term viability was under threat.

The rate of annuity, initially placed at 25% was progressively trimmed by the Qarase government to 15%, ostensibly to ensure the long term sustainability of the Fund. Although debatable, at least the reduction was gradual and carried out in consultation with the workers’ representatives on the FNPF Board

The 2012 restructure arbitrarily slashed it to 8.7% (almost 50% reduction) without any discussions with the workers’ representatives.

Given that at least 65% of our workers earn below poverty line wages, they would hardly accumulate sufficient savings to pick up even $50 a week in pension at this reduced rate.

Secondly, those who had already retired had their pensions slashed by virtually 50% causing a lot of distress and hardship to most of them who had made financial commitments based on their pensions at the time of their retirement.

The imposed cuts were unlawful, immoral and inhumane. But aggrieved members were denied any challenge to it through the Courts. The FNPF Transition Decree   51 of 2011 s11(4) stated clearly that :

Where any relevant proceeding, claim, challenge, application or dispute of any form whatsoever is brought before any court, tribunal, commission or any other adjudicating body, the presiding judicial officer, without hearing or in any way determining the proceeding or the application, shall immediately transfer the proceeding or the application to the Chief Registrar of the High Court for the termination  of the proceeding or the application and a certificate to that effect shall be issued by the Chief Registrar of the High Court.”

I know of at least two cases challenging the drastic cuts in members’ pensions which were thus thrown out by the High Court.

Labour’s long stated policy since then has been to restore the annuity rates to 15%, increasing it gradually to its previous level of 25%. We believe this can be done through reforms without endangering the Fund’s long term financial viability.

Furthermore, the Fund will need to be ‘rebranded’ as a retirement fund for workers dedicated to their welfare, weaning it away from serving the political interests of the government of the day.

The impact of COVID

The onset of the Covid pandemic in March 2020, was another major disaster for FNPF members – thousands of whom lost their jobs as a result. According to FNPF’s 2020 annual report, 50,000 members lost their jobs to 30 June 2020 and 25,000 were sent on extended leave.

In another totally insensitive move, government told them to draw from their own pension funds to survive the crisis while government assisted those in the informal sector (non members) who had lost their source of income.

As a result, over the past two years or so, some $181 million of members’ funds have been withdrawn for Covid relief by some 142,000 members. An additional $183m was forked out by government as top-up for those who had run out of balances in their accounts.

This is another tragedy. According to the Fund’s 2021 Annual Report, 58,712 members had zero funds in their accounts as at 30 June 2021.

While some of these may date back to pre-Covid times, the fact that government had to provide $183m in top-up, shows that a significant number now have zero balances in their accounts due to the Covid withdrawals.

The 2021 report also shows that 25,550 members with zero balances in their accounts are over 55 years of age and likely to retire any time now. How are they going to live in retirement with the measly pension they will receive? Are they going to join the ever-lengthening poverty queue?

Labour believes that workers must be able to live in dignity in their retirement years. The scenario at present is quite tragic, made worse by low wage levels and further aggravated by the Covid pandemic.

Labour’s policy objective is to see the restoration of the FNPF annuity rate immediately to 15%, increasing it gradually to the previous level of 25%.

Secondly, pensions must be reviewed periodically to compensate for increases in the cost of living

Thirdly, all members who withdrew funds to survive the Covid crisis must have the funds re-imbursed to their accounts.

This can be done and should be done in the interests of giving justice to the workers.   

(This article appeared in the Fiji times on Saturday 19 March 2022)