The illegal Military Regime has announced that they will make a Budget statement on their plans to reduce FNPF pensions.
Will there be yet another Military Decree purporting to revise the FNPF Act in order to reduce pensions, and stop legal challenges, such as the current Burness/Shameem case, supposed to be heard in February 2012?
The Coconut Wireless is hinting that the Regime/FNPF has devised a scheme which will give existing pensioners a “Hobson’s choice” or the “Morton’s Fork” between two options, both of which will mean that their current contracts with FNPF will be trashed.
Pensioners have no idea what will be thrust down their throats on Friday (for sure, no one will be singing “Thank God It’s Friday”), and some are now reduced to begging this Regime for “permission” to discuss their just grievances in the media.
While FNPF pensioners wait for that Friday drama, they might want clear their cobwebs on the following five statements (especially Statement 3) that the Military Censors will not allow in the Fiji media:
1. Existing FNPF pensions cannot be legally reduced under the FNPF Act and the laws on contracts.
2. The FNPF Act does not allow FNPF to vary the pension rates differentially for allegedly high and low income pensioners.
3. FNPF’s Buffer Fund does have the financial capacity to pay existing pensions at their current rates for another 18 years, if the Buffer Fund is properly credited with interest payments from 1975 to the present, AND if the provisions of the FNPF Act had been strictly followed by successive Boards.
4. Successive Fiji governments, including the current illegal Military Regime, have been directly and solely responsible for whatever mess exists at FNPF today, and should be responsible in the unlikely event that there are short-falls in FNPF cash-flows.
5. The only proper way to change the FNPF Act is for an Independent Expert Commission of Inquiry into FNPF to make recommendations which should only be considered by a future elected Government.
These statements would all be elaborated in the Burness case, if it ever sees the light of day.
The Fiji National Provident Fund is not a “government owned public enterprise” to be used for the benefit of the government, the Fiji public or tax-payers in general. It belongs only to the workers whose contributions have funded it, although their interests coincide often with those f the Fiji public.
Historically, however, FNPF has been totally controlled by successive governments, from its inception till today, both through legislation and actual operation.
The FNPF was originally intended to be a compulsory savings scheme for workers, with all the savings and interest thereon to be returned to the worker as a lump sum on retirement (read the Legislative Council debates in 1968).
The system was then lawfully changed by Parliament in 1975 to introduce a pension annuity option, which was set at the high rate of 25% for single pensions, to encourage retirees to take the pension rather than the lump sum.
Despite that high rate of pension, the pension uptake was way less than 15% and even till now, less than 35%.
When the uptake proportion did begin to rise (late 80s and early 90s), an ILO study (1993) advised that the annuity rate should be brought down gradually to 10%.
But the 1998 Parliament decided to bring the pension rate down to 15%, gradually over ten years.
Even if actuarially unwise, this was a lawful decision made by Parliament, thereby legally under-writing the contracts which all pensioners have entered into.
To break these contracts is to make a mockery of justice, law and order, constitutionality, and the sacred powers and responsibilities of a lawfully elected Parliament, and the people it represents.
But first, why has the ILO projection that in the long term some 35% of retirees would take the pension, never been reached?
The FNPF’s pension gamble: the “risk of dying early”
While actuaries and “smart rich people” have concluded that the annuities between 15% to 25% have been excellent value, the historical reality has been that the majority of retirees (more than 70%) have not been taking up the “excellent” pension offers.
Yes, excellent returns, but you could also die early, and lose all.
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