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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The study conducted by the Fiji Council of Social Services in partnership with Help Age International finds that the elderly believe that there is a need for top up by government to compensate for the VAT and other taxes for those on FNPF pensions.

Can the board and management of FNPF please take note, “TOP UP” does not mean cutting pensions.

There are alternatives and whilst we can understand the reluctance of the FNPF Board to admit they have been hasty and not taken all factors into consideration, now is the time for them to reconsider and go back to the drawing board and act on the submissions received.

Clearly their original proposal was framed without consultation with the members, as proven by the presentations at Public Meetings.

Greybeard 

Minister for Pensions Steve Webb said:

“We’ve taken a decision to restore the link with earnings and increase the basic State Pension by the highest of prices, earnings or 2.5%. This triple guarantee will ensure that pensioners can expect a decent offering from the state in retirement.”

Alongside the new benefit rates, a consultation setting out proposals and seeking views on the impact of using the Consumer Prices Index (CPI) for private sector occupational pension schemes is also launched today. It looks at whether there is a case for making it easier for occupational pension schemes to move to using CPI. The consultation recommendations propose to preserve and promote confidence in saving into private pensions.

Steve Webb said:

“We do not believe that Government should intervene to give pension schemes powers to change their rules if they do not already have such powers and our consultation out today will seek views on this approach. We need to ensure that people can have confidence in their pensions.”

When a gang of armed robbers targeted a jeweller’s in a violent smash and grab operation, the coast was clear except for a frail-looking pensioner.
But the trio made a tactical error by ignoring the 82-year-old woman, who was peering into the window of the shop.

As they started smashing a reinforced pane outside the premises with two baseball bats and a sledgehammer, she turned on them with her walking stick

The brave woman refused to back down even when the men rounded on her and hit her over the head and they eventually fled the premises of G Davison & Sons in Leigh, Essex, empty-handed.

The pensioner was later treated in hospital as a precaution for a bump on the head but was released the same day.
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WHILE the write back on the Grand Pacific Hotel was $4.5million, it is understood the Fiji National Provident Fund (FNPF) sold its 75 per cent shareholding in the property at a much higher price.

This week the fund through its chief executive Aisake Taito announced a $33.5m write back on assets for the year ending June 2011.

The write back was also because of the revaluation of the Natadola InterContinental Hotel to $133m, an increase of $29m from the last valuation which had resulted in a $301m write -down on the property.

The FNPF sold 75 per cent of its shares in the Grand Pacific Hotel Limited to its new joint venture partners from Papua New Guinea – the National Superannuation Fund and Lamana Development Group.

“FNPF has recovered $4.5m from what was written down earlier in 2009 and the value of our 25 per cent shareholding in the new project should increase in future,” said Mr. Taito.

Mr Taito said the rehabilitation work for GPH was a two-staged process. The first, was the partial sale of the shares to the joint venture partners and the second was the redevelopment work for the new hotel which would commence soon.

He said that the outcome of the investment achievements was in addition to the other major reforms currently undertaken by the fund.

Ross McDonalds Response:

An article in the Fiji Sun of 15 September 2011 “$44.5m write back on FNPF assets”  following an announcement by FNPF CEO Mr Aisake Taito deserves comment. 

According to the article FNPF have written back $29m on the Natadola Intercontinental Hotel following their previous write down by $301m.  The write down was in line with a “valuation” of the property that had valued it at significantly under the FNPF book value. 

This raises questions about the “valuation” FNPF obtained.  Presumably FNPF are using fair market value.
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Economists say that the elderly face a higher rate of inflation than younger people, this is particularly true in Fiji where Pensions are not cost of living indexed.
As a result they are NEVER increased, regardless of devaluations of our currency and consistent increases in the cost of food, power, gas, fuel and water.

Not only does the Think Tank (term used very loosely) of the FNPF fail to take this into account, they continually compound their error by wasting money on full page colour advertisements in the press, attempting to justify a cut of 64% in existing pensions, which is a blatant misuse of the pensioners funds.
Greybeard