Report on pension rate review soon

October 12, 2009 10:16:57 AM

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The Fiji National Provident Fund will soon know whether or not it can sustain its current pension rate, as it is expecting the results of an actuarial study undertaken by Mercer (Australia) Pty Ltd. 

FNPF had announced Mercer’s appointment in June, when the then board chairman Parmesh Chand said the review was part of reforms to ensure that FNPF’s major product, which is pension, remained viable and sustainable in future.

“Mercer is conducting an actuarial study in terms of the sustainability of the pension fund. So hopefully we will be getting that report very soon - hopefully by end of this month,” said FNPF chief executive officer Aisake Taito. 

Actuarial reviews on FNPF were conducted by the International Labour Organisation in 1997 and 2006, and had recommended the reduction FNPF’s pension rates.

In 1999, the Fund regressively reduced this by one percent every year from 25 percent to 15 percent last year.

A similar assessment held by the World Bank in 2008 suggested that the 15 percent rate was still not sustainable for the Fund in the long term, and that it had to be reduced further. 

Taito said Mercer’s review will look at relevant information, such as demography, and the decision on whether or not to reduce the pension rate would be based on information collected.

Mercer’s recommendation will be forwarded to the FNPF Board, who will then hold nation-wide consultations with all stakeholders.