IN 2010, the FNPF announced a review of pension provisions which when implemented in 2012 led to pensions being reduced by up to 51.13 per cent causing severe financial hardship and distress to pensioners. In fact, a number were pushed below the poverty level.
What happened to these pensioners was a cruel and bitter experience.
Many believe that in proceeding with its changes, the FNPF:
* did not recognise the binding obligations that existed between pensioners and FNPF for payment of pensions. This had been recognised by FNPF when pensions were first reduced in 1995;
* claimed without any proven financial justification that the level of pensions being paid in 2012 by FNPF was unsustainable;
* did not implement the provisions of the FNPF Act Cap 219, Section 10 that if the FNPF is short of funds to pay pensions the government would provide these and government should be paid back as soon as practicable;
* would not enter into any discussion concerning the FNPF pension buffer reserve and why this had not been credited with interest since 1975 that would have provided some $860m for the payment of pensions;
* did not understand that the FNPF financial model was designed to provide for a steady and reasonable reduction in pension rates to ensure the long term stability of the fund. The reduction in maximum pensions from 25 per cent to 15 per cent in 1995 was the first step in this process;
* failed to either respond, or have the courtesy to acknowledge, the many emails, faxes and letters forwarded by aggrieved pensioners to FNPF protesting at the changes;
* ignored their consultant’s advice (promontory) to honour existing pension contracts by allocating sufficient assets to provide for the continued payment of pensions at the then existing levels;
* would not engage in any meaningful dialogue either publicly or in private to enable pensioners to have a fair hearing and question the merit of FNPF claims; and
* may not have understood that the changes when implemented would create financial hardship and distress for many elderly pensioners that has sadly proven correct.
Pensioners were also denied natural justice and the right to seek redress regarding the changes through the courts by Decree No 51 of 2011 that provided that there could be no court challenge to the changes and which has stalled a case brought by aggrieved pensioner David Burness .
Readers should refer to fijipensioners.com for further financial details and comment.
Click here: SubmissionAug2014FinalAtt
It is reasonable to suggest that affected pensioners will expect the new incoming democratically elected government to have a commission of enquiry into the FNPF, with terms of reference and power to enquire into the FNPF and to restore pensions to previous levels, and investigate the utilisation of the Pension Buffer Reserve.
RG McDonald, Pensioner, Suva