Fiji National Provident Fund Reforms

FIJI NATIONAL PROVIDENT FUND: THE CASE OF REFORMS

Submitted by Rovarovaivalu Vesikula

Submitted to: Professor James Grant

Course: Public Economics

Rovarovaivalu Vesikula Public Finance ECON 365 James H. Grant

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INTRODUCTION

The Fiji National Provident Fund, which is also known as the FNPF, is Fiji’s largest

financial institution and the only workers’ retirement social security program. It was established

in 1966 with the objective to set up a retirement savings fund that members (contributors) could

access upon retirement (national retirement age is set at 55). The Government of Fiji works with

the FNPF and currently mandates that working individuals and their employers make monthly

contributions of 8 percent and 10 percent respectively. The 10 percent contribution made by

employers for their employees was made effective as of January 1st, 2015. Prior to this, the

FNPF-mandated-employer contribution was also at 8 percent. FNPF has undergone various

reforms in the recent decade to provide better returns on its members’ pensions without

sacrificing the immediate financial needs of its members in times of economic hardship. One of

the most recent reforms includes the splitting of all members’ retirement savings into two

accounts: Preserved and General Account. The member’s Preserved Account comprises of 70

percent of his or her savings and is allowed to withdraw up to 30 percent of this to either

purchase vacant land, an existing home or to fund the building of a new one. The General

Account which constitutes the remaining 30 percent of the member’s savings is used for pre-

retirement or early withdrawals to supplement financial needs such as paying for medical,

education and funeral expenses as well as for providing unemployment benefits (Fiji National

Provident Fund 2013).

These reforms have arisen out of a need to address the FNPF’s solvency problems. On

November 25th

, 2011 FNPF decrees 051 and 052 were promulgated to implement drastic and

unprecedented changes to the pension benefits payable under the Fund. Following the decrees,


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Actuaries from Singapore and consultants from Promontory Group Consultants were hired by the

FNPF to carry out the pension reform; and on June 30th

, 2011, the consultants found and

announced that The FNPF’s total liabilities for the 11,000 pensioners amounted to $565 million

compared with $312 million set aside for pension payments (Fiji National Provident Fund 2013).

This meant that the shortfalls in pension income against pension payment would have to rely on

heavy subsidization from current workers’/members’ retirement savings to pay the difference.

More critical than just the cross-subsidization of pension payments was the fact that by the year

2050, the FNPF would have no more money to give out as pensions and thus fail its first

obligation, which is to be a workers’ retirement fund.

One of the most crucial and most criticized reforms was the transforming of the fixed

conversion rate of 25 percent for individual pensioners and 16.7 percent for joint pensioners to a

conversion rate system based on age. As will be explained later in this paper, the pension

conversion rates range from as low as 8.7 percent if the pensioner is 55 years old, to 23.3 percent

if the pensioner is 100 years old (Rashbrooke 2012). The reform not only changed the conversion

rate system but also lowered the rates. For those previously receiving 25 percent would

experience as much as a drop in monthly pension payments of 50 percent average. This paper

examines and evaluates the effectiveness of the current reforms aimed at tightening the future

security of pensioners’ funds. As such, the paper is structured in the following manner: Section I

will provide a background of the FNPF including the services it provides. Section II will provide

a brief chronology of the various problems the FNPF and its members had experienced over the

past two decades, along with the implemented reforms and will discuss and evaluate their


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effectiveness; And finally the Conclusion which will summarize the paper and highlight a few

recommendations.

I. FNPF BACKGROUND AND SERVICES

The FNPF offers a number of products for its members to ensure financial security during

their working years, their retirement and for their survivors. The most important product offered

of course if the Pension Scheme. However due to the growing financial needs of the FNPF’s

members as a consequence of Fiji’s slow lagging economy over the years, the Fund introduced

reforms that developed the retirement savings fund into a comprehensive scheme which provides

a number of pre-retirement withdrawals to members for Housing, Early Withdrawals (for

Education, Medical, Funeral and Unemployment needs) and Full Withdrawals (for Retirement at

age 55, Funeral assistance in the event of Death of the member, Physical and Mental Incapacity,

Migration for both local and non-Fiji citizens and Small Account Balances).

I.a Housing Assistance

Housing assistance includes funding for purchasing, building or renovating a home. The

assistance scheme provides full funding priority to non-retired members living in rural dwellings

such as settlements and villages on the outskirts of the urban periphery under the Village

Housing Scheme. For Urban Housing assistance, there is a little more constraint placed on

members to withdraw their funds and usually requires that the non-retired member only uses

their retirement savings as a supplemental source of funding; however, this is not to say that the

Fund will not provide the member full funding if need be, but this will all be dependent on their

current financial state. Non-retired members, both urban and rural residents, are allowed to


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withdraw up to 30 percent of their Preserved Account and their entire General retirement savings

account as long as they submit the appropriate documents (Fiji National Provident Fund 2013).

I.b Early Withdrawals

As aforementioned, the Early Withdrawal portion of the Fund’s comprehensive scheme

allows non-retired members to withdraw from their General retirement savings to fund

education, medical, funeral assistance and unemployment needs.

(a) Education

For the education provision, any non-retired member can use their retirement savings to

fund themselves, their spouse, their children and their siblings for both local and overseas

education. For local education, members are allowed to withdraw the full funding of tuition costs

but are however restricted to only $2,500 and $200 per student per semester for accommodation

and textbooks, respectively. In addition, the Fund provides the member with a list of pre-

approved educational institutions and will only provide assistance for attendance to those

schools. For overseas education, the Fund conditions are that (i) students receiving assistance fall

in either category: Year 13 (Final Year of High School), Tertiary Foundation (Pre-University)

and Tertiary Level Education (University) and (ii) the withdrawing member can only receive up

to $10,000 FJD per student for the duration of study for incidentals (minor costs). Other

requirements include proof of acceptance, evidence of relationship to FNPF member, student’s

valid passport and visa and member’s bank statement.


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Tuition Accommodation Textbooks Incidentals

Local Full cost covered Max. $2,500 Max. $200 -

Overseas Cost covered by

Sponsor/scholarship

Dependent on

available General

Account funds

Included in

Incidentals

Max $10,000

Table 1: Maximum Withdrawals (Education), Source: (Fiji National Provident Fund 2013)

(b) Medical

Similar to Education assistance, Medical assistance is provided to the member, their

parents, spouse, children and siblings and is categorized into either Local and/or Overseas

treatment. The total amount withdrawn will depend on the level of savings in the member’s

General Account. The involvement of the FNPF provision for medical assistance requires that

the medical treatment be of an “urgent nature”, i.e. that the medical condition and the pain it

inflicts must be severe that it demands immediate medical attention from either local or overseas

medical doctors (Fiji National Provident Fund 2013). Additionally, the Fund may also extend

assistance to pay for incidentals of up to $10,000 FJD without health insurance coverage and

$5,000 FJD with health insurance coverage. Lastly and more importantly, the methods of

payment for both Overseas and Local treatment are made directly to the medical

institute/insurance companies depending on the urgency.

Medical Treatment Cost Incidentals with

Insurance

Incidentals without

Insurance

Local Dependent on available

General Account funds

- -

Overseas Dependent on available

General Account funds

$5000 $10,000

Table 2: Maximum Withdrawals (Medical), Source: (Fiji National Provident Fund 2013)


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(c) Funeral Assistance

The Funeral assistance, similar to both Education and Medical assistance is drawn from

the FNPF member’s General Account. The member is allowed to use the funds to pay for funeral

expenses for the deceased spouse, parents, siblings and children. The maximum amount that can

be withdrawn under the assistance scheme is to $1,500 FJD for each funeral. However, if the

deceased relative is covered under the Special Death Benefit scheme (SDB), which entitles them

$2,000 FJD, the withdrawing member cannot use his or her General Account funds to fund any

funeral expenses. The SDB is a scheme under which the FNPF charges the member a premium

of $35 a year to the member’s account so that in the event of their death, the member’s next of

kin, nominee or funeral administrator can withdraw funds of up to $2000 FJD to pay for funeral

expenses. (Fiji National Provident Fund 2013).

(d) Unemployment Benefits

An FNPF member who has resigned, been terminated, not received a contract renewal or

made redundant from work is eligible for Unemployment Benefits which can be withdrawn from

the member’s General Account. The maximum amount to be withdrawn is $2000 FJD, but this

depends on the amount of savings available in the member’s General Account (Fiji National

Provident Fund 2013).

I.c Full Withdrawals

FNPF members who have reached the retirement age of 55 are eligible for the Pension

Scheme in which they receive the full amount of their retirement savings, ie, funds from their

Preserved Account. However, there are other instances in which the member, retired or not, can


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receive their funds from their Preserved Account, and these include (i) Funeral Assistance in the

event of death of the member (also known as the Special Death Benefit), (ii) Physical and Mental

Incapacity, (iii) Migration for both local and non-Fiji citizens and (iv) Small Account Balances.

For the purpose of this subsection, we will focus on just the Pension Scheme. The FNPF’s

pension scheme is divided into three retirement options: Life Pension, Term Annuity and Lump

Sum. The Lump sum is self-explanatory as it entails the pensioner converting their retirement

savings to a lump sum amount that basically cleans their Preserved and General Account. For

this option, the FNPF is no longer held to any obligation whatsoever to the pensioner.

(a) Life Pension

The Life pension is a regular monthly payment made to the retiree as soon as they reach

the age of retirement at 55. The recipient, who is also called the pensioner, chooses to convert

either the entirety or just a portion of his/her life savings for the life pension option. This life

pension is offered as either a single or joint pension (but the option of taking on both – one for

the pensioner and one for both the pensioner and spouse - is available). The joint pension, as

mentioned previously, is taken out by pensioners for themselves and their spouses. The spouse

will only start receiving pension payments in the event of the original pensioner’s death provided

the spouse outlives him/her. More importantly, the spouse recipient should be the original spouse

registered on the start date of the pension, and not any later spouse. Furthermore, if it so happens

that within the entire joint pension’s 5 year guaranteed time period (total of 60 payments) both

the recipient and the spouse pass away, the remainder of payments shall go to a pre-nominated

nominee of the pensioner’s choosing for the remainder of the 5 year period. The guaranteed time

period of 5 years does not mean that payments will cease upon the 6th

year. It basically means


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that if both the pensioner and their spouse were to become deceased, the payments will continue

to the nominee. Upon the pensioner and spouse’s death this nominee will have the option of

either continuing the monthly payments or converting the remainder of the life pension to a lump

sum at the FNPF actuarial rate. Failure by the living pensioner to nominate a future nominee will

result in the remaining funds being transferred to the Fiji High Court who will then decide its

future recipients (Fiji National Provident Fund 2013).

PENSION CALCULATION AND CONVERSION RATES

Pension conversion rates depend on age, therefore an older retiree will receive a higher

pension than a younger retiree on the same pensionable amount. The current pension conversion

rates for ages 55 to 100 are shown in Table 3 below.

Age Single Joint Age Single Joint Age Single Joint

55 8.7% 7.5% 70 12.3% 9.8% 85 19.5% 16.4%

56 8.9% 7.6% 71 12.7% 10.0% 86 20.0% 17.0%

57 9.0% 7.7% 72 13.1% 10.3% 87 20.4% 17.6%

58 9.2% 7.8% 73 13.5% 10.6% 88 20.9% 18.2%

59 9.4% 7.9% 74 13.9% 11.0% 89 21.3% 18.7%

60 9.6% 8.0% 75 14.4% 11.4% 90 21.6% 19.2%

61 9.8% 8.1% 76 14.9% 11.7% 91 21.9% 19.8%

62 10.0% 8.3% 77 15.3% 12.1% 92 22.2% 20.3%

63 10.3% 8.4% 78 15.8% 12.6% 93 22.5% 20.8%

64 10.5% 8.6% 79 16.3% 13.1% 94 22.8% 21.2%

65 10.8% 8.8% 80 16.9% 13.6% 95 23.1% 21.7%

66 11.1% 9.0% 81 17.4% 14.1% 96 23.3% 22.1%

67 11.4% 9.2% 82 17.9% 14.6% 97 23.3% 22.4%

68 11.7% 9.4% 83 18.5% 15.2% 98 23.3% 22.7%

69 12.1% 9.7% 84 19.0% 15.8% 99 23.3% 23.1%

100 23.2% 23.3%

Table 3: Pension Conversion Rates, Source: (Fiji National Provident Fund 2013)


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The monthly pension formula is one-twelfth (

) of the amount converted to pension by

the FNPF member multiplied by the pension conversion rate:

Monthly pension =

So even though a 60 year old and a 70 year old both converted their life savings of an equal

amount of $50,000 FJD, the 60 year old would receive a less monthly pension compared to the

70 year old. In this example the 60 year old would receive $400 (Single) or $333.33 (Joint) while

the 70 year old would receive $512.50 (Single) or $408.33 (Joint).

(b) Term Annuity

The Term Annuity option is a regular monthly payment to the pensioner (referred to as

the annuitant) for a fixed term of either 5, 10 or 15 years. Conversion rates differ by term, and

not by age of the pensioner like the Life Pension option. The fixed terms for the Term Annuity

are guaranteed as well, meaning that in the event of death the elected nominee will receive all

future payments. However, the disadvantage of this option is that all payments cease by the end

of the term. So a pensioner will not receive any more of their retirement savings at the

conclusion of the fixed term (it follows of course that by the end of the term the pensioner should

have exhausted his or her Preserved Account because the conversion rates are much higher than

in the Life Pension option) (Fiji National Provident Fund 2013).

II. ISSUES AND REFORMS

As stated before, the FNPF was established in 1966; however the pension scheme which

is widely used today was established 9 years later in 1975 and was an option for members aged


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55 to receive a pension. Geoff Rashbrooke (2012) mentions in his paper Reform of the Fiji

National Provident Fund that despite the introduction of the pension scheme, it was actually

operating on an unsustainable basis and not self-supporting and hence had to require significant

subsidy from active members as the number of pensioners grew. This section will highlight each

issue with its corresponding reform in chronological order beginning with the first and most

important issue: the initial conversion rate of members’ pension funds.

ISSUE I – Conversion Rates

In 1975 the conversion rate for individuals’ pensions was 25 percent whereas the rate for

the join pension (pension payments made to a member and their spouse, or two married

members) was 16.7 percent. These rates were unchanged with age and as such there was a clear

incentive for workers who reached age 55 to start receiving their pension. Pensioners could

receive the conversion rates every year for as long as they lived (and there is a discussion later in

the paper that will highlight how some pensioners accumulated over twice – and in some cases

three times - the savings they invested into FNPF). The rationale for the high conversion rate at

the time was to encourage members to take up the pension option and for the Fund to provide

meaningful pensions from low accumulations (due to the FNPF operating only for 9 years).

Since the pension scheme was considered to be generous, the FNPF and its members had no

issue with the imposition of a 2% Pension Buffer Reserve levy (PBR) on payroll wages that was

in addition to the employer-employee contribution. The PBR levy was initiated as a cross

subsidization scheme which took an additional 2 percent from worker wages and salaries and

placed it in the Pension Buffer Reserve which was used to pay the current pensioners at the time

(the FNPF was still fresh and had low accumulations at that point). From 1966 to 1975, the


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employer-employee contribution was 5 percent each. From 1975 to 1980, the employer-

employee contribution was still 10 percent in total but plus the 2 percent, to make a total of 12

percent deducted from the payroll. By 1980 the employer-employee contribution increased to 12

percent (6 percent each) whilst still maintaining the 2 percent PBR levy.

As the Chart 1 shows below, the PBR levy dominated in terms of incoming cash flow

from 1975 to 2000. This is due to the fact that pension payments and conversion amounts were

still picking up momentum. Rashbrooke (2012) suggests two factors as to why this was the case:

(i) Low pension take-up rates, plus matching of conversion sums and pension outgo through the

growth stage to the end of the century, allowed the PBR levy to dominate the financial reporting

and (ii) The trend appears to reveal some Ponzi scheme attributes however this was only because

the cash flow appears to have been monitored more heavily, coupled with a continuing absence

of any rise in the likely consequences was due to low actual take up of pensions, despite the

incentive.


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Chart 1, Source: (Rashbrooke 2012)

Reform mid-1990’s

The unsustainable nature of the pension conversion rate was only realized in 1990 - about

15 years later from its inception in 1975. An actuary for the International Labor Organization

(ILO) by the name of Giovanna Ferrara wrote a report in 1993 stating that the conversion rate to

be brought down from 25 percent to 10 percent and proposed that it be carried out over a

transition period of 10 years (reduction of 1 percent each year) and be financed by the PBR

balance. An additional report in 1994 reviewed the ILO findings and while it was agreed that the

conversion rate should be brought down, the phase in period should take 15 years and not 10 as

previously proposed; in addition, when the conversion rate reached 15 percent that the pension

scheme be placed under another lengthy review. Another important decision made during this

period was to have the PBR levy cease immediately due to the “poor value” it represented.

In 1998 the reforms were implemented to reduce the 25 percent to 15 percent over 10

years beginning in 1999 as well as the halting of the PBR levy in 2000. There is no clear

explanation for why the phase-in had to take 10 years to reach 15 percent. In fact, many

established academics argued that the conversion rate be reduced immediately to 15 percent.

Rashbrooke (2012) points out that despite the good intentions of the reform, it simply did not

work because it did not address the real issue which was the increasing number of retirees

seeking pension payouts. As shown in Chart 1 earlier, the take-up rates began picking up even

before 1982 which if being observed carefully was clear sign of a growing liability. Indeed, the

high take up rates in the mid-2000’s were most probably from people taking out their pensions as

they reached age 55 rather than continuing to accumulate. The pension payments continue to

grow but from 1999 onwards they flatten out as the number of retirees stabilizes (the conversion


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rate was falling by 1 percent each year, which incentivized pensioners to withdraw their funds

quickly).

Table 4, Source: (Singh 2013)

As Table 4 shows, the pension conversion rates began falling every year after the 1998

reforms were implemented. Later articles write that despite the reduction in conversion rates

brought on by the reforms, they still were not enough to reduce the overall liability and shortfall

that the FNPF was facing with regards to its pension payments. This leads to the second issue:

solvency.

ISSUE 2 - Solvency

In 2007, the World Bank and IMF provided a technical note to the FNPF as part of their

2007 Financial Sector Assessment Program report on Fiji. Their evaluation stated that the

FNPF’s annuity business was highly unsound (Singh 2013). It observed that the financing of

pensions by transferring resources from active workers was a heavy cross-subsidization from

poorer and younger workers to older and richer ones. The principle policy recommendations

were: (i) Place the annuity business on a sound and actuarial basis (statistical method to


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determine periodic payments to a pension fund whereby the total contributions plus income

earned on them must equal the payment to made from the pension fund), (ii) Implement a

separation of accounts by major area of activity (As was seen earlier in the separation of the

members’ accounts into the Preserved and General Account) and (iii) Compile detailed records

on the mortality experience of pensioners. The third recommendation is carried out by requiring

pensioners to present pension renewal certificates every six months, however the FNPF does not

follow-up when no certificate is forthcoming. Therefore the record of pensioner deaths is

therefore patchy at best (Rashbrooke 2012).

The following year in 2008, after reviewing the modeling works done by the World

Banks and IMF, the FNPF hired Mercer Consulting to carry out actuarial valuation of the

pension liabilities. In the absence of scheme-specific data, the Actuary had to make general

assumptions as to mortality and longevity improvement founded on general considerations of

pensioner mortality, but still based on Fiji population mortality. For the June 30th

, 2008

valuation, life expectancy figures from 2001 were scaled to Australian data, and with mortality

improvement gave projected life expectancy at age 55 of 17.9 and 21.4 for males and females

respectively. By the last valuation, as at June 30th

2011, 5 year mortality rates based on the

experience from 2001 to 2008 had been published by the World Health Organization, showing

life expectancy at age 55 of 18.6 and 22.6 for males and females respectively. Continued

application of mortality improvement based on Australian experience resulted in projected life

expectancy of 24.9 and 27.9 respectively (Rashbrooke 2012).

Furthermore, the consulting firm evaluated the strength of its returns to assets,

specifically the returns to members’ pension funds based off government bonds that were valued


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on a “hold to maturity” basis. They found that there was an initial net return of 7 percent pa after

expenses were accounted for. By 2011 the valuation fell to 6.5 percent pa. Thus the inclusion of

liability in the accounts began to show that existing pensions were worsening the FNPF’s

solvency situation, specifically by negatively affecting the solvency requirements set forth by the

Reserve Bank of Fiji. This also meant that all attempts at reducing the conversion rates would

still be insufficient to ensure the soundness of the FNPF. With the continued modeling work by

Mercer Consulting, it was decided that continued solvency would require continued diversion of

a part of the return on investments on members’ accounts to support existing pensions of about

0.5 to 1 percent.

2011 Reform

Pension reduction was a fundamental requirement of any reform if the unfair cross

subsidy from active members was to be brought to a halt. The FNPF hired Promontory

Consultants to develop new legislation with the levels of governance and separation of funds that

reports such as the World Banks and the IMF were recommending. What they developed were

age-based rates using the basis adopted by Mercer for liability valuation. So this meant that a 55

year old would be assigned a new conversion rate of 8.7 percent compared to the current 15

percent (Singh 2013).

In terms of addressing the on-going cross subsidy required for existing pensions, the

Consulting firm also covered a variety of “haircuts” in its reform proposals. Generally, monthly

pensions below $800 were unaffected however one particular proposal had 15 percent, 20

percent, 25 percent, 30 percent and 40 percent for each subsequent $800 per month tranche of

pension, with a 50 percent reduction for any pensions above any pension payments above


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$5,600. However, these reform proposals were met with strong opposition especially by those

pensioners who were “well-to-do” (Consumer Council of Fiji 2010).

Table 5: Revised Summary of FNPF Solvency, 30 June 2011 - $FJD million, Source: (Rashbrooke 2012)

In a September 2011 meeting of stakeholders, board members and consultants, the

following proposal was made by Shauna Tomkins, a consultant for Promontory (Association

2011). Her observation was that $310 million was what was currently owed in pension

conversion amounts, but the pension liability (as shown in table 5) was $565 million. She

proposed to reduce the pension liability by terminating entitlements and refunding to pensioners

their original conversion amounts, i.e. the conversion rate system of 15 percent (Rashbrooke

2012). A total of $224 million was successfully refunded and the remaining $31 million was

transferred into an ad hoc pension solvency account which similar to the solvency reserve for

member accounts would be 10 percent of total pension liability. The surplus of $111 million, as

shown in Table 5, was to be used as an incentive to those pensioners who received a refund. This

would be done in the form of top-ups to mitigate the effect for those on lower pension levels and

provide some minor incentive to those on higher pension levels; however the requirement for this


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to occur was if the pensioners reinvested all their individual pension conversion amounts into the

new life pension schemes on offer (Singh 2013).

IMPLICATIONS OF THE 2011 REFORM

The new aged-based conversion rate system was to be met with disappointment and

opposition due to the reductions in pensions that many pensioners would be experiencing. In

excess of 360,000 FNPF members were going to be affected, and of this amount about 11,300

were on the line to have their pension reduced by as much as 50 percent on average. In response

to the pension conversion rate reduction, one pensioner filed a lawsuit against the FNPF on

grounds of discrimination and unlawful breach of contract.

To truly understand the impact pension reduction rates have on the consumption behavior

one only had to observe the socio-cultural and economic factors at play within a pacific island

nation such as Fiji. Indigenous Fijians for instance make up about half the national population,

own about 70 percent of the land but are still economically disadvantaged compared to other

races. It is a common occurrence for there to be very poor savings behavior in pacific island

nations and in particular for Fiji, indigenous Fijians are obligated to their tribe and land. Strong

familial ties and the requirement of grand gestures in family events drive consumption spending

up but reduces the average savings of Fijians. Indeed this is in part one of the reasons the FNPF

retirement fund has evolved into something of a welfare giver, i.e. it is providing funds as

assistance to recipients for medical services, education and the like – services that the

government normally would provide at affordable costs. The PowerPoint graph below explains

the partial-withdrawal phenomenon and makes three assumptions. The first assumption is that

for simplicity sake, the main groups of households that will seek FNPF assistance in early


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withdrawals are low-income households. The second assumption is that low-income households

prioritize their socio-cultural obligations to the point where they are unable to save or save very

little. The third assumption is that of the wealth substitution effect, i.e. if low income-households

are presented with the opportunity to save up for retirement, they will choose that over private

saving. Furthermore, for assumption three to hold, the additional assumption is made that the

private savings rate is lower than the FNPF social security tax rate. The graph shows that the

household maximizes its utility at point E where it consumes Co* in the present and C1* in the

future. This is the level of combination of consumption after the household has made an attempt

to save through private saving. However with the FNPF tax rate of 8 percent and 10 percent

employer-contribution, this reduces the low-income household’s present income and

consumption even further. Therefore since the low-income household is pushed back to a point

where it cannot maximize its utility, it will seek other ways to return to that consumption level by

either borrowing (but this is undesirable since interest rates from commercial banks are high) or

approach the FNPF for partial withdrawals.


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Graph 1: General Life Cycle Model of Fijian Savings behavior, Source: (Vesikula 2015)

CONCLUSION

The Fiji National Provident Fund through is reforms was able to contain the pension

scheme problem that was affecting the longevity of the business and the future security of

pensioners’ funds. The reforms appear to be working successfully and the FNPF is recording

yearly increases in its membership as well as annual contributions. In both the years 2012 and

2013, the FNPF received best practice awards from the International Social Security Association

(which operates under the International Labor Organization) in recognition of the successful

pension reform and financial literacy initiatives it undertook in 2012.


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BIBLIOGRAPHY

Association, International Security. "Reforming the FNPF pension scheme: A Case of the Fiji National

Provident Fund." International Security Association, 2011: 1-4.

Consumer Council of Fiji. A Submission on the Review of the Fiji National Provident Fund. Review, Suva:

Consumer Council of Fiji, 2010.

Fiji National Provident Fund. 2014 Annual Report. Financial Report, Suva: Fiji National Provident Fund,

2014.

—. Education. January 13, 2013. http://www.myfnpf.com.fj/withdrawals-services/education (accessed

December 12, 2015).

—. Funeral Assistance. January 13, 2013. http://www.myfnpf.com.fj/withdrawals-services/funeral-

assistance (accessed December 12, 2015).

—. Medical. January 13, 2013. http://www.myfnpf.com.fj/withdrawals-services/2-fnpf/129-medical

(accessed December 12, 2015).

—. What is a Life Pension? January 13, 2013. http://www.myfnpf.com.fj/pensioners/apply-for-your-

pension/life-pension (accessed December 12, 2015).

Rashbrooke, Geoff. "Reform of the Fiji National Provident Fund." Actuaries . January 13, 2012.

http://www.actuaries.org/HongKong2012/Papers/MBR12_Rashbrooke.pdf (accessed December

13, 2015).

Rosen, Harvey, and Ted Gayer. Public Finance. New York: McGraw-Hill Education, 2014.

Singh, Rajeshwar. Fiji National Provident Fund. Presentation, Singapore: Forum on Pension Fund and

Social Security, 2013.

Vesikula, Rovarovaivalu. Fiji National Provident Fund: A Case of Reforms. Power Point Presentation,

Portland: Rovarovaivalu Vesikula, 2015.

Fiji National Provident Fund Reforms

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