What the members need to be told is why wasn’t the Buffer Fund, collected since 1975, added to the $289million. If the Buffer Fund and its earnings were added, the total amount available for pension payment would have been much higher than the payout of $423million, resulting in a surplus. Why is the General Reserve being downplayed? After all the funds in the General Reserve belongs to the pensioners as well.
The amount in the General Reserve currently stands at around $700million, which would have been around $1billion if the write-down of over $300million was not taken out of there. The General Reserve is healthy and will continue to be so as in 2010 a surplus was recorded which was transferred to the General Reserve.
The continued long-term (after 35 years) sustainability can be assured by ensuring that the General Reserve remains healthy and there is more ways of doing this other than taking the current pensioners’ money and putting it into the General Reserve, as the present management seems bent on doing.
Here is another statement made by Mr. Taito that is not entirely correct – ” .. it was recognised way back in 1992 that the fund was not viable and yet past leaders, management and board did not take the necessary steps to fix it”.
Action was taken by the then board and management which resulted in the reduction of the Pension Annuity from 25 per cent to 15 per cent. The only significant difference between then and now is that the then board chose to consult directly with stakeholders, i.e. employers, employees and Government representatives to find a solution which would recognise and uphold the primary objective for which the FNPF was established, that is, to provide financial security to workers in the old age at the same time addressing the dangers of continued viability pointed out by the consultants in their report.
After extensive and exhaustive consultations with the stakeholders and after studying the consultants’ report and giving it the fullest consideration the board arrived at the decision to reduce the annuity from 25 per cent to 15 per cent but not all at once as the board wanted to ensure that the pension option remains attractive to the members as it was a concern of the board at that time that the number of members opting for pension was very low.
I must point out and members should be reminded that the FNPF originally started as a Compulsory Saving Scheme only with members withdrawing their entire balance upon reaching 55 years of age. Such a scheme fell outside the ambit of being Social Security Scheme. It was upon the constant’s insistence of the International Social Security Association (ISSA) – an arm of the International Labour Organisation (ILO) to which the FNPF is affiliated that the board decided to introduce the Pension Scheme.
Introducing the Pension Scheme gave the FNPF some semblance of being a Social Security Organisation thus gaining greater respectability with ISSA.
While addressing the sustainability of the Fund in the long term in the manner detailed above the then board also decided that another actuarial study be made in ten years to monitor the impact of the action taken to address the sustainability concerns raised in the 1992 Report. This further study was done in 2002 and there should be a report with the FNPF. I have not seen any reference made to this 2002 Report.
From memory this report also expressed concerns about the long term sustainability and recommended another study in five years, i.e. 2007.
What is significant and most relevant to the undergoing discussions is the fact that no report that I can recall made any recommendation (or even suggestion) that the pensions of the existing pensioners be adjusted in any way. I stand to be corrected. However, if what I say is not correct I will greatly appreciate if what was or is the recommendation in the reports regarding payments to existing pensioners be revealed to the members.
What I want to finally say is that during my time the board at all times made sure that whatever decisions taken were in compliance with our obligations as trustees and in accordance with the laws. Hence, I was satisfied that the manner in which the concerns highlighted in the Acturial Report was addressed was compatible with what was expected of me as a trustee. Furthermore, the question of the annuity paid to existing pensioners did not arise as it was a non-issue since pensions were paid under a legally binding contract entered between the FNPF and the pensioner. To do otherwise would have been illegal. The present board should take note of this.
Whatever I have alluded to in this statement are a reflection based on my recollection of how the board that I was a part of addressed the issues currently under discussion. Further, whatever was brought to the board and its deliberations would have been properly documented and minuted. This should be available to the present board and management
In case the continuous finger-pointing at the previous board members by present FNPF management has managed to convince some current members, it must be pointed out that from its inception in 1966 up to December 2006, all board members who were appointed represented the principle stakeholders of FNPF, i.e. employers, employees and Government. And this was in compliance with the FNPF Act. All individuals so appointed representing the three stakeholders were leaders of their respective sectors with established credentials and capabilities.
It is therefore grossly unfair to discredit them today as if they did not know what they were doing. After all, one has to acknowledge that it was under their leadership and guidance that the FNPF grew to what it is today. I am sure there are other previous board members still around and perhaps they might want to break their silence as well, including Mr Lionel Yee, the previous long serving general manager.
* James Raman is a former long-serving member on the FNPF board. Mr Raman was a FNPF board member from 1971 to December 2006, with only one year break in 2000. He served the board in his capacity as the national secretary of Fiji Trades Union Congress and the general secretary of National Union of Factory & Commercial Workers as a representative of the workers of Fiji.
