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.

1

Essential background

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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Click on the following for details of the draft decree

FNPF Decree 2011 – A
FNPF Decree 2011 – B
FNPF Decree – 2011 C
FNPF Decree 2011 D
FNPF Decree – 2011 E
FNPF Decree – 2011 F
FNPF Decree 2011 – G

The Proposed (Draft) Fiji National Provident Fund Decree 2011: Commentary

Dr Shaista Shameem 

1.0       Introduction

The proposed (draft) Fiji National Provident Fund Decree 2011 is, unfortunately, a piece of law that will make life very complicated for the ordinary citizen of Fiji. This will be particularly so for members of the Fund and pensioners who may want to know how their pension benefits will be affected in light of the new retirement policy to be put in place by the Government. This brief commentary confines itself to two main issues highlighted by a survey of the proposed Decree, namely, (i) its lack of clarity due to shortcomings in drafting and (ii) its substantive content adversely affecting rights of members and pensioners.

2.0       Problems with drafting

 Recent decrees promulgated by Government have revealed serious defects in drafting and the proposed FNPF Decree is no exception. New laws are particularly vulnerable to drafting defects mainly because of lack of consultation due to the current legal milieu in which these decrees are drafted. Normally, drafts of legislation are put through a number of readings in Parliament. However, this rigorous process is unavailable in a situation where the executive arm of government drafts laws for promulgation by the President. Consequently, defects, which have the effect of weakening the law itself thereby thwarting coherent interpretations of it by courts and/or public officials, do ultimately undermine public confidence in the law-makers. When Parliament sits again in future, it would be advisable for its members to revisit all the decrees promulgated since 2009 to ensure compliance with basic drafting rules. This would reassure the public that the laws affecting them do not suffer from internal contradictions and inconsistencies, have prospective application only, and are of a sufficiently generalized nature as required by the basic rules of legal drafting.

The proposed FNPF Decree’s drafting problems are many. In relation to pensioners’ rights it is not clear in the wording whether the new law will affect those already on pensions. This is quite a serious defect because those keenly following the David Burness case (Burness v FNPF, Republic of Fiji and AG Civil Action No 183 of 2011), will not have a clue whether David Burness’ pension (or pensions of others) will be reduced pursuant to the new law. The commencement date for the proposed decree has not been provided and, given recent history, retrospective application of decrees is now quite common in Fiji. According to section 3, the Minister has discretion regarding the commencement date of the new decree. In fact, different parts of it will come into effect on different dates depending on whether or not the Minister is satisfied (inter alia) that the Board has complied with ‘Part 2 of the transition law’.

This brings me to another drafting defect. The phrase ‘transition law’, according to the interpretation section, refers to the new decree itself; however the long and short titles of the decree do not refer in any way to it being a ‘transitory law’- transition to what, one may ask. Will there be another FNPF Decree later? If so, when? Will that decree more explicitly reduce pensions already granted to pensioners?

Section 29 (1) of the proposed Decree is another example of lack of clarity resulting from weakness in drafting. The section states ‘The Fiji National Provident Fund established under the former law continues in existence under that name, subject to the other provisions of this law and any provision of the transition law’.  If, as the interpretation section states, the transition law is the decree, what is meant by the words ‘this law’ in the same sentence? Given that this is quite an important section because it is supposed to tell us what relationship the proposed decree has with the FNPF Act Cap 219, section 29 (1) of the decree is a perfect example of confusion in the minds of the drafters about what exactly they are reforming- the long title states the decree is to ‘reform the Fiji National Provident Fund’. So, the question is, what is the relationship between Cap 219 and the proposed Decree? And, if section 29 (1) states that the ‘former law’ is still in existence, why not just draft a simple amendment to it, instead of putting in place a new convoluted ‘reform’ decree?
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Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as: 
– Knowing when to come in out of the rain; 
– Why the early bird gets the worm; 
– Life isn’t always fair; 
– and maybe it was my fault. 

Common Sense lived by simple, sound financial policies (don’t spend 
more than you can earn) and reliable strategies (adults, not children, 
are in charge).

His health began to deteriorate rapidly when well-intentioned but 
overbearing regulations were set in place. Reports of a 6-year-old boy 
charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition. 

Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. 

It declined even further when schools were required to get parental 
consent to administer sun lotion or an aspirin to a student; but could 
not inform parents when a student became pregnant and wanted to have an abortion. 

Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. 

Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault. 

Common Sense finally gave up the will to live, after a woman failed to 
realize that a steaming cup of coffee was hot. She spilled a little in 
her lap, and was promptly awarded a huge settlement. 

Common Sense was preceded in death, by his parents, Truth and Trust, by his wife, Discretion, by his daughter, Responsibility, and by his son, Reason. 

He is survived by his 4 stepbrothers; 
I Know My Rights 
I Want It Now
Someone Else Is To Blame
I’m A Victim

Not many attended his funeral because so few realized he was gone.  If you still remember him, pass this on. If not, join the majority and do 
nothing..

CHICAGO (Reuters) – When it comes to retirement, many middle class Americans said 80 is the new 65 and plan to delay retirement because of worries over money, according to a new survey.

Wells Fargo bank asked 1,500 Americans who earned between $25,000 and $99,999 and ranged in age from 20 into their 70s questions about retirement, savings and Social Security for its seventh annual retirement survey.

Three-fourths of those surveyed said they expect to work in their retirement years. One quarter said they will “need to work until at least age 80” to live comfortably in retirement.

Of Americans who will work in retirement, “47 percent said that they are going to continue in the same job or a similar job of similar responsibility,” Joe Ready, Well Fargo’s director of Institutional Retirement and Trust, told Reuters Insider.

“That raises a lot of social and economic implications. Will they have the physical ability to work, the mental capacity? What does that mean for the younger work force in terms of coming through and looking to get ahead?”

Three-fourths of Americans said it is more important to have a specific amount saved before retirement, regardless of age, while only 20 percent said it is more important to retire at a specific age regardless of savings.

In terms of saving for retirement, 53 percent of those surveyed said they need to significantly cut back on spending now to save for retirement.

“People are overwhelmed. They’re not saving enough,” Ready said.

On average, Americans have saved only seven percent of their desired retirement nest egg, with a median of $25,000 saved versus a median retirement goal of $350,000.

“For several years now, we’ve seen that Americans are undersaving for retirement and a majority do not trust the stock market as a place to invest for retirement,” Ready said.

“We did find a bright spot among middle class Americans – more than three quarters do not want to retire with mortgage debt. This is an important goal, particularly for younger Americans,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust.

Eighty-six percent of respondents said it’s important to own their home debt free by retirement.

On the issue of Social Security there was an age divide. Those in their 60s expect Social Security to provide 46 percent of their retirement funding. But more than a quarter of Americans in their 20s and 30s expect no income at all from Social Security during their retirement.

Older people live longer if they are happier, according to new research into the importance of emotional wellbeing.

Two recent media releases indicate that the FNPF Board and Management (at the instigation of the Military Regime) are digging the hole deeper for FNPF, with no accountability to the owners of FNPF, and media censorship stopping all public discussions.

The first is the bad restructuring of the $303 million loan by FNPF to Natadola Bay Resort Limited (NBRL); and the second is the massively risky $200 million loan to help Air Pacific buy 3 Airbuses in 2013, completely contradicting the most recent advice by recent consultants (Promontory) on sound investment policy for FNPF. 

Why interest free indefinite loan to NRBL?
The 2011 FNPF Report states that the $303 million loan to NBRL is being restructured so that while $100 million will draw an interest of 8% pa, the remaining $203 million will become an indefinite loan, and interest free.

FNPF will effectively in its accounts, give a $16 million subsidy annually to NBRL- some 40% of the total value of all the pensions currently being paid annually.

This is terrible accounting practice for three reasons.
First, any decent accountant or economist would advise that all transactions between a parent company and a subsidiary should be done at “arms length” with subsidiaries being charged the same interest rate that other borrowers are being charged.
To convert $203 millions into an interest free loan will artificially increase the apparent profitability of the subsidiary (NBRL), while reducing the apparent performance of the rest of FNPF.

Second, by not charging interest on the large loan, NBRL is being given no incentive to repay the loan as soon as possible- especially when it is “indefinite”.

Third, if in future, this Military Regime’s forced takeover of private assets at Natadola and vested in NBRL by Military Decree is legally and successfully challenged, then the assets of NBRL will become logical targets for litigants. 

The books for NBRL should therefore show its true worth- not artificially inflated through interest rate subsidies given by FNPF, which may then be claimed in future by legitimate litigants. 

Which financial institution in the world, gives an interest-free indefinite loan like this? Who dreamt up this scheme?  Who in FNPF management agreed to go along with this? Why would the unelected, illegal FNPF Board Members agree to this subterfuge to show the NBRL in a better light. Is it to allow more “write-backs” on asset value of this bad investment? 

Pie-in-the-sky loan to Air Pacific
Another far more dismaying media announcement has been the $200 million loan by FNPF to Air Pacific.  

If the current management at Air Pacific know what they are doing this loan may turn out OK for FNPF.
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Members please take heed this is FNPF money, YOUR MONEY

Fiji National Provident Fund Investments Limited (FIL) incorporated a total capital utilisation of $141 million for investments in the country says chief executive Aisake Taito.

The investments were for the financial year end 30 June, 2011.

Taito said some of the investments carried out by the FIL, a fully owned subsidiary of the Fiji National Provident (FNPF), were rehabilitated under the funds reforms programme including the Natadola Project, Grand Pacific Hotel (GPH) and some distressed loans. 

The subsidiary companies for FIL include Natadola Bay Resort Limited, Natadola Land Holdings, FNPF Hotel Resorts Limited, Grand Pacific Hotel Limited, Dareton Limited and Penina Limited.

Grey Power says:
For Penina Ltd,  read Tappoos, we remember the fiasco and the report given by Ernst & Young, relating to this loan, that was quickly covered up by instructions of a leading government minister, even though it was the FNPF members money and we had the right to be kept informed. No doubt another inquiry would establish that Penina is included in the distressed loans made by FNPF management. This used to be called throwing good money after bad. It is now called Assisting Friends of the Minister.

It boils down to or simmers down to DISTRESS for the FNPF Members, because it is our savings that are being pillaged by a group of immoral and arrogant individuals, who believe they are not accountable to anyone, least of all the people the money belongs to.

Despite having been constantly under the spotlight for undertaking major reforms this year, Fiji’s only superannuation fund has recorded a significant 16 per cent increase in the net operating surplus for 2011.

The Fiji National Provident Fund (FNPF) yesterday announced a net operating surplus of $242.6 million for the financial year ended June 30, 2011 compared to $209.5m in 2010.

A major contributor to this considerable increase was growth in investment income which grew steadily from $221.7m in 2010 to $240.4m in 2011 representing a 6.8 per cent return on investments.
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FNPF CEO Aisake Taito, right, works with Bijay Kumar to build railings at the Samabula Senior Citizen’s Home, Suva on Saturday. Picture: ELIKI NUKUTABU

THE Samabula Senior Citizen’s Home was treated to a makeover on Saturday by Fiji National Provident Fund staff members and their families.

The FNPF took a family day out to clean the home and entertain residents of the home.
“FNPF is a retirement fund care of the senior citizens of Fiji,” said FNPF chief executive Aisake Taito who was part of the clean-up.

He said they also prepared lunch for the residents. 
“There were donations of toiletries, a television, chairs and clothes,” said Mr Taito, adding the clean-up was carried out in conjunction with National Old Citizen Week.

FNPF staff member Angeline Prakash said she felt good and proud to  be part of the event.
“It is a good opportunity to come out and assist the old people,” said Ms Prakash. She said young people tended to neglect senior citizens. “This is a good time to give back to the community,” she said. 

Customer care staff member Krystel Gavidi said it was an opportunityto mingle with staff from other departments.

Grey Power Comment  

Grey Power is astounded at the hypocrisy of FNPF and Taito Aisake in this Fiji Times story.

Grey Power says that if the FNPF is trying to do a public relations exercise to mitigate and make up for the effects of its proposed policy to reduce pensions of the older people in Fiji (most of them are over the age of 65), then we have to tell him that the beneficiaries of the FNPF pensions whose lives FNPF is trying to destroy are no fools. 

Come on Mr Aisake Taito- FNPF helping the elderly? You can help them better by not destroying their pensions.

Drastic cuts in interest rates and the Bank’s policy of printing new money have delivered a triple blow to pensioners. Their income from savings has been sharply reduced, inflation is eating away at their capital and annuity rates, which determine the income from private pension pots, have fallen significantly.

Ros Altmann, the respected economist who is director general of Saga and a governor of the London School of Economics, estimated that recently retired pensioners were receiving £4,245 a year less than if they had retired just before the credit crisis. This amounted to a cut of 40pc.

Assuming that pensioners had £50,000 in savings and received interest at Bank Rate, their income from these savings would now be just £250 a year, compared with £2,875 in 2007 – a fall of £2,625 or 91pc – as a result of the Bank of England cutting Bank Rate from 5.75pc to 0.5pc.

Annuity incomes have fallen by about 21pc since 2007, Ms Altmann said. At that time a £100,000 pension pot would typically produce an income of £7,600 a year; now the same sum would yield only £5,980, fall of £1,620.
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