Our dear Directors and Trustees, I fully support issues raised in Ross McDonald’s email below. In addition, I would like to add the following:
Ultra Vires the Law Cap 219 Section 12B (1)
(a) (i) This section states that any duty by the Board as trustees to be in the best interests of all beneficiaries of the Trust (including the 1209 pensioners whose pension rates the FNPF is about to reduce). The Board is neglecting in its duty as trustees to this class of pensioners and is breaking the law.
(II) The Board has also neglected in its duty to act on the interests of all beneficiaries when it failed pay interest on Buffer Fund balances (amounting to $161.8m for the period 1998 to 2010 and interest on interest of $81.4m; in total $243.2m. Such Buffer Fund balances are used for investments that earn income. So the Buffer Fund Reserve Balance is not as low as stated by the FNPF CEO or in the Annual Report (stated as $107.284m but should include another $243.2m).
(b) This section states that any duty to act impartially towards beneficiaries and between different classes of beneficiaries. Again, by reducing the pension of those entitled to 25% and not for the others, the Board as Trustees is not being impartial and is breaking the law.
All pensioners were required to contribute to the FNPF based on 10, 12, 14 or 16 cents of each dollar of income irrespective of the level of income and from this, 2 cents was deducted and credited to the Buffer Fund Reserve. Hence all pensioners’ entitlement should be based on the same pension rate. The only difference is the amount of annual pension annuity received by a pensioner and this is based on the sum of money each member allocates to purchase an annuity.
Human Rights Breach
The Fiji Times tables in FT advertisement of 28 May and the headline article of 15 July stating that those earning below the poverty line (below$800) will not be affected by a reduction in pension rate, hence, those above $800 will be affected.
The differentiation is a breach my human rights on the grounds of economic status. I quote from Human Rights Commission Decree 11 of 2009 Part 1 Section 2 Interpretation:
Alternative Solutions to Dilemma of FNPF, Pensioners and Members
Pensioners and members are also in a dilemma. There have not been any genuinely open discussions and now there is a media ban on articles, advertisements and letters on FNPF.
Pensioners and members are concerned that reforms will be made without the opportunity for the stakeholders and the public to Pensioners and members to review, comment and make further recommendations.
There are alternative solutions which NPF may not want to make on its own including re-introducing the two cents deduction from contributions and or increasing employee and employer contributions. This is a financially viable solution to return the Fund to its financially sound position pre-1998 – at the same time, meeting the objective of pay low income earners a pension that will be more life sustaining the proposed 8.7% (which, in the future, will be lower especially with the low returns on investments – currently not much more than 6%). I suggest that all major stakeholders sit down, share information, ideas and come to a mutually acceptable and sustainable solution.