The Coalition Government has definitively ruled out the possibility of reinstating Fiji National Provident Fund (FNPF) pensions to levels prior to 2012, deeming such a measure unconstitutional and financially unfeasible. This decision, made by the Cabinet after thorough consultations with the Ministry of Finance, the FNPF, and the Office of the Solicitor-General, hinges on the legal and fiscal implications of reversing the pension cuts introduced during the 2011 reforms.
Analysis from independent assessments indicated that pension payouts were previously exceeding members’ actual contributions, leading to the classification of the scheme as unsustainable. As a result, younger members and current contributors were, in effect, subsidizing the higher payouts received by older pensioners. The government has expressed that any attempt to revert pensions to pre-2012 levels would not only jeopardize the integrity of the Fund but also threaten the savings of over 430,000 active members. The estimated total cost for full reinstatement is a staggering $582 million, which includes $372 million for back payments and $210 million in future obligations, a burden the Fund cannot shoulder without negatively impacting member balances.
Moreover, financial implications extend to taxpayers, as financing this initiative through the National Budget would strain public resources. Emphasizing the legal framework, the government referenced Section 173(3) of the 2013 Constitution, which restricts Parliament or the government from altering the consequences of the 2012 reforms. Additionally, Section 26 protects the property rights of FNPF members, affirming that their savings are private and cannot be utilized without their consent.
On a more positive note, the government has announced that pension rates will be restored moving forward. Beginning August 1, 2024, affected pensioners will start receiving reinstated payments, a measure funded by taxpayers amounting to approximately $57 million. Minister for Finance, Commerce and Business Development, Esrom Immanuel, asserted that the government’s primary duty is to ensure that pensions remain actuarially sound and sustainable, and he views this decision as one that provides clarity and finality regarding the pension system.