Members of the Fiji National Provident Fund (FNPF) who choose a life pension upon reaching the age of 55 will not receive any Cost-of-Living Adjustment (COLA) on their pension rates, regardless of any enhancements in the fund’s financial performance or investment growth. This clarification was made during the FNPF Members Forum held in Suva, where the financial results for the year ending June 30, 2025, were discussed.
During the forum, FNPF member Nimesh Raniga inquired about the potential for pension rates to increase based on the fund’s improved performance. He emphasized the need for annual adjustments to the pension rates to account for inflation. In response, FNPF’s General Manager for Business Development and Strategy, Millie Low, explained that pension rates are determined by actuaries and remain fixed for the entire duration of the pension. Currently, the rates stand at 8.7 percent for single life pensions and 7.5 percent for joint life pensions.
Low reiterated that these rates are actuarially tested, meaning that once opted for, they do not change over time. She stated unequivocally that no COLA or inflation-related adjustments are made to pension conversion rates.
To provide additional context, FNPF Chief Executive Officer Viliame Vodonaivalu highlighted that the fund had undergone significant reforms in 2011, resulting in the separation of what was previously a single fund into three distinct funds. This reorganization aims to enhance financial protection for members’ savings and ensure ongoing support for FNPF members in the long term.
Mr. Raniga further pressed for a rationale behind not providing even a minimal return to pensioners from the earnings on safer investments like government bonds. Mr. Saune explained that there is no risk-taking involved with pension funds, as the pensions are primarily backed by government bonds, which come with fixed time frames such as 10, 15, or even 30 years. He noted the current yield on a 20-year government bond is approximately six percent, significantly down from rates that reached as high as 14 percent in the past.
Moreover, the trend indicates a steady decline in the pension take-up rate among FNPF members. More individuals are opting for full withdrawals or newer pension products, including Pension Draw Down or Term Annuity, reflecting a shift in member preferences.
While the absence of COLA adjustments may seem concerning to existing pensioners, it’s important to recognize the structure and safety mechanisms in place to protect members’ long-term savings. As the FNPF navigates these complexities, the focus remains on balancing financial security and sustainability for its members.