Members of the Fiji National Provident Fund (FNPF) choosing a life pension at age 55 will not receive any Cost-of-Living Adjustments (COLA) on their pension rates, even if the fund experiences financial gains or improved investment performance. This important clarification was announced during the FNPF Members Forum held in Suva, where the financial results for the fiscal year ending June 30, 2025, were unveiled.
At the forum, FNPF member Nimesh Raniga raised concerns regarding the potential for pension rate increases based on enhanced fund performance, stressing the necessity for annual increases to manage inflation. In response, Millie Low, FNPF’s General Manager for Business Development and Strategy, explained that pension rates, which currently stand at 8.7 percent for single life pensions and 7.5 percent for joint life pensions, are fixed for the entire duration of the pension as determined by actuaries.
Low emphasized that these rates are firmly established and will not change over the recipient’s life. She confirmed that no adjustments related to inflation or COLA are made to the pension converting rates.
Additionally, FNPF’s Chief Executive Officer, Viliame Vodonaivalu, provided insight into significant reforms made in 2011, which transformed the fund from a single entity into three separate funds. This strategic reorganization aims to strengthen the financial protection of members’ savings, ensuring long-term support for FNPF members.
In a follow-up to Raniga’s inquiry about offering minimal returns to pensioners from safer investments like government bonds, Mr. Saune clarified that pensions are primarily rooted in government bonds, which carry fixed maturity periods of 10, 15, or up to 30 years. He pointed out that the current yield on a 20-year government bond is about six percent, a stark decrease from previous rates that peaked at 14 percent.
Another noteworthy trend is the declining pension take-up rate among FNPF members, with more individuals opting for full withdrawals or newer pension products such as Pension Draw Down or Term Annuity. This shift reflects changing preferences among members.
While the lack of COLA adjustments may raise concerns among current pensioners, it is essential to appreciate the robust structures and safety mechanisms designed to protect long-term savings. As the FNPF continues to address these challenges, the emphasis remains on creating a balance between financial security and sustainability for its members. The FNPF is navigating its complexities with a commitment to ensuring that its members are supported over the long haul.