The Cabinet has announced that it will not proceed with backdated reinstatement of pension payments for Fiji National Provident Fund (FNPF) pensioners who saw reductions in their benefits due to reforms implemented in 2012. The decision comes after careful review that estimated the cost of reinstating these benefits at approximately $582 million, while also highlighting constitutional constraints.
The ruling followed extensive analysis from the Ministry of Finance, FNPF, and the Office of the Solicitor-General, which assessed the legal and financial ramifications of reversing the 2012 reforms. Esrom Immanuel, the Minister for Finance, Commerce and Business Development, emphasized that the changes made under the FNPF Act 2011 were crucial for addressing serious actuarial risks that threatened the Fund’s viability. He noted that past pension rates were financially unsustainable, as they exceeded the members’ own accumulated savings, creating a risk for the Fund’s long-term health.
Reinstating pensions to their pre-2012 levels retroactively was deemed unsustainable. The estimated fiscal burden of full reinstatement includes $372 million in backdated payments and $210 million in future liabilities. Officials warned that the FNPF would struggle to absorb these costs without jeopardizing member balances. Additionally, if funded through national budget resources, it would significantly increase the financial strain on taxpayers.
Furthermore, the constitutional implications cannot be overlooked. The 2013 Constitution prohibits any law that would retrospectively change the legal effect of the 2012 reforms, protecting the property rights of FNPF members.
Despite this decision, the Government has expressed its commitment to addressing the challenges faced by affected pensioners sustainably. Starting August 1, 2024, pensioners who have been receiving reduced pensions will see their rates reinstated moving forward. This initiative, expected to cost taxpayers around $57 million, will not burden FNPF members and aims to provide clarity and resolution to this long-standing issue while ensuring constitutional compliance and the economic stability of the Fund.
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