Dear Mr Kodagoda and associates
I refer to my previous letters and emails to you that you have not replied to.
To further enlarge on my previous comments it appears that you have missed the plot in your deliberations to restructure FNPF pensions.
The Real Problem
The real problem you should be tackling is to immediately take action to reduce future pensions as this is where your biggest problem lies. It does not take a mathematician to deduce that everyday that you procrastinate and do nothing FNPF future liability for pensions is increasing daily as future pensions will continue to be paid at 15% and so the FNPF liability for future pensions gets bigger and bigger and bigger and bigger ……………………………..
FNPF continues to pay new pensioners 15% when this liability could be reduced today, and so your liability for future pensions would steadily decline.
The constantly growing FNPF liability for future pensions is a far, far greater problem for FNPF than your erroneous assumptions concerning the Unlucky 1,209 pensioners where you have a steadily declining liability.
The sad fact is that we the Unlucky 1,209 pensioners are a declining liability as our numbers are constantly reducing as we steadily pass on to our Maker, and so the FNPF liability for our pensions is continuously reducing. It’s just a matter of time. In this respect can FNPF give an update on the current number of surviving pensioners from the initial 1,209 FNPF announced.
As previously advised to you the solution is to not only immediately adopt the Blaxland Report recommendations, but to go one step further.
FNPF should immediately announce future pensions will reduce by 1% annually from the current 15% down to 9%. This goes 1% further than Blaxland who recommended 10%. The reason you should go to 9% is that this is the figure FNPF have announced is sustainable. These changes should be implemented over six years, in the same manner the Blaxland recommendations were implemented over ten years. The commencing date for the change should be either 1 January 2012 or 2013, or it could even be 30 June 2012. Making this announcement now will immediately place a cap on future pension liability and bring future pensions to a maintainable level.
FNPF should also adopt the Blaxland recommendation that existing pensions should be left unchanged, in view of the legally binding contract that exists between pensioners and FNPF. The FNPF balance sheet can be restructured in line with the Promontory recommendations to provide for these existing pensions.
FNPF should also announce it will review the position of the Unlucky 1,209 pensioners annually, in consultation with a representative group from these pensioners so that their position is constantly monitored.
In immediately adopting this modified Blaxland recommendation FNPF will have implemented a practical and effective solution to the problem it faces.
Most importantly there will be no need for FNPF to call up the Government guarantee, honour will be preserved as it is a win win situation for all stakeholders and FNPF can be assured it has put in place a realistic solution that will enable FNPF to confidently meet its’ future long term obligations to both pensioners and members.
I can be available at any mutually convenient time to assist in discussing this solution with you.