Governments have a debt to FNPF contributors

Professor Wadan Narsey has provided a useful article which has been posted on blogsite Coup Four and a Half. He says that past Governments have all borrowed heavily from the FNPF and received funds at cheaper rates than they’d have to pay banks.

If the Government paid a fully commercial rate of interest the FNPF would not have to restrict pensions so severely. What we need most of all is an FNPF Board that people can have confidence in and that requires an elected government that is accountable to the people.

The pension cuts are to pay for cheap loans to government.

Click on the link below to read Prof Narsey’s paper. It’s nonpolitical and all FNPF contributors should read it carefully.

http://www.coupfourandahalf.com/2011/07/end-fnpf-subsidy-to-fiji-governments.html

The source of much of the FNPF problem

In 2008, the FNPF under the management installed by the Interim Government credited 6.5 % to the accounts of contributors. They wanted to match the earnings that had been achieved under the previous government. They should never have done this. The Board of the FNPF should have known the earnings were false. They were continuing to pour their funds into property developments which had been hit badly by the coup. When they slashed the value of the investments they had sunk in Natadola, they should have taken the interest credited back. But they feared this would look very bad, and so it does. Now they’re being forced to cut pensions.