By Dionisia Tabureguci
Fiji’s national pension fund has broken with tradition by declaring the same interest payout to its members two years in a row.
In a statement, the Fiji National Provident Fund (FNPF) declared a 6.35 per cent interest on members’ accounts for its financial year ended June 30, 2018, the same rate as last year.
This translated to a total of F$289 million (US$137m) compared to $270m (US$128m) last year.
After providing for the fund’s solvency requirements, the flat rate was said to be still reflective of its “strong financial position.”
“The interest declared should be reassuring for the members as it continues to reflect the Fund’s strong financial position following the FNPF reforms. It is also very competitive under the current investment climate,” said FNPF CEO Jaoji Koroi.
The fund’s reform has been ongoing since 2010, where it sought to “address long term sustainability” and ensure that it “remain relevant, compatible and sustainable for its members.”
The exercise began with the new FNPF Act 2011 – which upgraded its governance framework and brought it up to par with international best practices – and culminated last year in an organisational restructure that saw it tweak its workforce.
But one of its key reforms was its investment rehabilitation programme, where it had to spend millions of dollars on capital works over the last few years to restore some of its non-performing assets, among them the Grand Pacific Hotel, Fiji Marriot Momi Bay Resort and the My FNPF Centre in Suva.
With the chronic limitations in available eligible investment opportunities locally, FNPF has had to push for changes over the years to allow it to produce consistent growth on overall returns, which in turn would spill over to members’ balances.
“Whilst the investment environment is an ongoing challenge, the Fund continues to pursue an active stance to optimise returns on members’ funds,” said Koroi.
Since 2012, FNPF has been paying an increasing interest rate to its members.
The last time the fund paid out a flat rate two years in a row was in 2009 and 2010, after it recorded a massive F$181 million (US$86m) loss in 2009 due largely to the investment flop in its Natadola Intercontinental hotel project.