26th June 2015
The Fiji National Provident Fund Board today declared an interest of 6% for the financial year ending 30 June, 2015, compared with 5.75% last year. This will equate to an estimated $224.8 million being distributed to FNPF members’ accounts on Tuesday night (30th June).
In a first for the Fund, this year’s interest is paid under the new interest crediting formula that was adopted in November, 2014. The formula ensures members get interest credited on their balances at the end of the financial year. In the past, interest
was paid on the previous year’s closing balance. The new formula brings FNPF in line with best practice.
FNPF Board Chairman Mr Ajith Kodagoda said 2015 has been remarkable and one of the best years for the Fund in over a decade.
“It is now very clear that the Government-initiated reforms and the hard decisions have benefitted our members,” Mr Kodagoda said.
“This rate has been reviewed by the Actuary, as required under legislation, to ensure that no undue pressure is placed on the solvency requirements for members’ funds. The Actuary has certified that this requirement has been met and FNPF is stable.” He said the 6% interest, which is tax free, closely matches the income earned from investment this financial year, after allowance for all costs of operating the FNPF.
“The Board is pleased that members will directly benefit from the Fund’s judicious management of its different investments.”
FNPF’s Chief Investment Officer Mr Jaoji Koroi said it has been a challenging but rewarding year for FNPF as it continued with the Reforms inclusive of investment rehabilitation.
He said the separation of the pension business from current members’ contribution fund continues to augur well for members. “The Retirement Income Fund caters for the pension business and has been further strengthened with allocated assets set aside to ensure its continuity as part of the solvency requirements,” Mr Koroi said.
“The current members’ fund purely accumulates members’ net contributions for their investments. FNPF then credits interest from returns made on investment to members’ funds. As such, members now directly benefit from the investment made on their funds as part of our continued commitment to grow our members’ savings to secure their future.”
The 6% interest is well above the inflation rate and shows advantages from investing in long-term retirement compared with short-term like 12 months with commercial banks for 2-3%.
Mr Kodagoda commended the Fund’s Management and Staff for driving the investments returns and managing costs despite widespread criticism.
“There were a lot of nay sayers and negative comments, and in some instances many employees of FNPF and the Board were targeted on a personal level. They now have been vindicated as the results are obvious,” Mr Kodagoda said.
Other notable achievements for the 2015 financial year include:
Increased income from new investments like the Vodafone Fiji Limited and offshore;
Continued growth in contributions;
Enhancement in our IT systems and processes with the implementation of the new ProMIS (Provident Management Information System)
Establishment of members’ two accounts _ the General (30%) and Preserved (70%) The commencement of construction of the Momi Hotel and the Greig Street Development Projects
The staging of the first PGA International Golf Tournament
The opening of FNPF branches in Sigatoka and Nausori
The revised withdrawal guidelines that includes the removal of FNPF charges from property buyers
Improved contribution collection through the new Contribution Schedule
Meanwhile, the FNPF has also retained the Special Death Benefit (SDB) for FY2015, $8,500, at a premium of $35, to be deducted from members’ accounts on 1 July, 2015. The SDB is currently under review.