Fiji National Provident Fund Reforms

FIJI NATIONAL PROVIDENT FUND: THE CASE OF REFORMS
Submitted by Rovarovaivalu Vesikula
Submitted to: Professor James Grant
Course: Public Economics

Rovarovaivalu Vesikula
Public Finance ECON 365
James H. Grant
2
INTRODUCTION
The Fiji National Provident Fund, which is also known as the FNPF, is Fiji’s largest
financial institution and the only workers’ retirement social security program. It was established
in 1966 with the objective to set up a retirement savings fund that members (contributors) could
access upon retirement (national retirement age is set at 55). The Government of Fiji works with
the FNPF and currently mandates that working individuals and their employers make monthly
contributions of 8 percent and 10 percent respectively. The 10 percent contribution made by
employers for their employees was made effective as of January 1st
, 2015. Prior to this, the
FNPF-mandated-employer contribution was also at 8 percent. FNPF has undergone various
reforms in the recent decade to provide better returns on its members’ pensions without
sacrificing the immediate financial needs of its members in times of economic hardship. One of
the most recent reforms includes the splitting of all members’ retirement savings into two
accounts: Preserved and General Account. The member’s Preserved Account comprises of 70
percent of his or her savings and is allowed to withdraw up to 30 percent of this to either
purchase vacant land, an existing home or to fund the building of a new one. The General
Account which constitutes the remaining 30 percent of the member’s savings is used for pre-
retirement or early withdrawals to supplement financial needs such as paying for medical,
education and funeral expenses as well as for providing unemployment benefits (Fiji National
Provident Fund 2013).
These reforms have arisen out of a need to address the FNPF’s solvency problems. On
November 25th
, 2011 FNPF decrees 051 and 052 were promulgated to implement drastic and
unprecedented changes to the pension benefits payable under the Fund. Following the decrees,

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3
Actuaries from Singapore and consultants from Promontory Group Consultants were hired by the
FNPF to carry out the pension reform; and on June 30th
, 2011, the consultants found and
announced that The FNPF’s total liabilities for the 11,000 pensioners amounted to $565 million
compared with $312 million set aside for pension payments (Fiji National Provident Fund 2013).
This meant that the shortfalls in pension income against pension payment would have to rely on
heavy subsidization from current workers’/members’ retirement savings to pay the difference.
More critical than just the cross-subsidization of pension payments was the fact that by the year
2050, the FNPF would have no more money to give out as pensions and thus fail its first
obligation, which is to be a workers’ retirement fund.
One of the most crucial and most criticized reforms was the transforming of the fixed
conversion rate of 25 percent for individual pensioners and 16.7 percent for joint pensioners to a
conversion rate system based on age. As will be explained later in this paper, the pension
conversion rates range from as low as 8.7 percent if the pensioner is 55 years old, to 23.3 percent
if the pensioner is 100 years old (Rashbrooke 2012). The reform not only changed the conversion
rate system but also lowered the rates. For those previously receiving 25 percent would
experience as much as a drop in monthly pension payments of 50 percent average. This paper
examines and evaluates the effectiveness of the current reforms aimed at tightening the future
security of pensioners’ funds. As such, the paper is structured in the following manner: Section I
will provide a background of the FNPF including the services it provides. Section II will provide
a brief chronology of the various problems the FNPF and its members had experienced over the
past two decades, along with the implemented reforms and will discuss and evaluate their

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4
effectiveness; And finally the Conclusion which will summarize the paper and highlight a few
recommendations.
I. FNPF BACKGROUND AND SERVICES
The FNPF offers a number of products for its members to ensure financial security during
their working years, their retirement and for their survivors. The most important product offered
of course if the Pension Scheme. However due to the growing financial needs of the FNPF’s
members as a consequence of Fiji’s slow lagging economy over the years, the Fund introduced
reforms that developed the retirement savings fund into a comprehensive scheme which provides
a number of pre-retirement withdrawals to members for Housing, Early Withdrawals (for
Education, Medical, Funeral and Unemployment needs) and Full Withdrawals (for Retirement at
age 55, Funeral assistance in the event of Death of the member, Physical and Mental Incapacity,
Migration for both local and non-Fiji citizens and Small Account Balances).
I.a Housing Assistance
Housing assistance includes funding for purchasing, building or renovating a home. The
assistance scheme provides full funding priority to non-retired members living in rural dwellings
such as settlements and villages on the outskirts of the urban periphery under the Village
Housing Scheme. For Urban Housing assistance, there is a little more constraint placed on
members to withdraw their funds and usually requires that the non-retired member only uses
their retirement savings as a supplemental source of funding; however, this is not to say that the
Fund will not provide the member full funding if need be, but this will all be dependent on their
current financial state. Non-retired members, both urban and rural residents, are allowed to

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5
withdraw up to 30 percent of their Preserved Account and their entire General retirement savings
account as long as they submit the appropriate documents (Fiji National Provident Fund 2013).
I.b Early Withdrawals
As aforementioned, the Early Withdrawal portion of the Fund’s comprehensive scheme
allows non-retired members to withdraw from their General retirement savings to fund
education, medical, funeral assistance and unemployment needs.
(a) Education
For the education provision, any non-retired member can use their retirement savings to
fund themselves, their spouse, their children and their siblings for both local and overseas
education. For local education, members are allowed to withdraw the full funding of tuition costs
but are however restricted to only $2,500 and $200 per student per semester for accommodation
and textbooks, respectively. In addition, the Fund provides the member with a list of pre-
approved educational institutions and will only provide assistance for attendance to those
schools. For overseas education, the Fund conditions are that (i) students receiving assistance fall
in either category: Year 13 (Final Year of High School), Tertiary Foundation (Pre-University)
and Tertiary Level Education (University) and (ii) the withdrawing member can only receive up
to $10,000 FJD per student for the duration of study for incidentals (minor costs). Other
requirements include proof of acceptance, evidence of relationship to FNPF member, student’s
valid passport and visa and member’s bank statement.

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Tuition Accommodation Textbooks Incidentals
Local Full cost covered Max. $2,500 Max. $200 -
Overseas Cost covered by
Sponsor/scholarship
Dependent on
available General
Account funds
Included in
Incidentals
Max $10,000
Table 1: Maximum Withdrawals (Education), Source: (Fiji National Provident Fund 2013)
(b) Medical
Similar to Education assistance, Medical assistance is provided to the member, their
parents, spouse, children and siblings and is categorized into either Local and/or Overseas
treatment. The total amount withdrawn will depend on the level of savings in the member’s
General Account. The involvement of the FNPF provision for medical assistance requires that
the medical treatment be of an “urgent nature”, i.e. that the medical condition and the pain it
inflicts must be severe that it demands immediate medical attention from either local or overseas
medical doctors (Fiji National Provident Fund 2013). Additionally, the Fund may also extend
assistance to pay for incidentals of up to $10,000 FJD without health insurance coverage and
$5,000 FJD with health insurance coverage. Lastly and more importantly, the methods of
payment for both Overseas and Local treatment are made directly to the medical
institute/insurance companies depending on the urgency.
Medical Treatment Cost Incidentals with
Insurance
Incidentals without
Insurance
Local Dependent on available
General Account funds
- -
Overseas Dependent on available
General Account funds
$5000 $10,000
Table 2: Maximum Withdrawals (Medical), Source: (Fiji National Provident Fund 2013)

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(c) Funeral Assistance
The Funeral assistance, similar to both Education and Medical assistance is drawn from
the FNPF member’s General Account. The member is allowed to use the funds to pay for funeral
expenses for the deceased spouse, parents, siblings and children. The maximum amount that can
be withdrawn under the assistance scheme is to $1,500 FJD for each funeral. However, if the
deceased relative is covered under the Special Death Benefit scheme (SDB), which entitles them
$2,000 FJD, the withdrawing member cannot use his or her General Account funds to fund any
funeral expenses. The SDB is a scheme under which the FNPF charges the member a premium
of $35 a year to the member’s account so that in the event of their death, the member’s next of
kin, nominee or funeral administrator can withdraw funds of up to $2000 FJD to pay for funeral
expenses. (Fiji National Provident Fund 2013).
(d) Unemployment Benefits
An FNPF member who has resigned, been terminated, not received a contract renewal or
made redundant from work is eligible for Unemployment Benefits which can be withdrawn from
the member’s General Account. The maximum amount to be withdrawn is $2000 FJD, but this
depends on the amount of savings available in the member’s General Account (Fiji National
Provident Fund 2013).
I.c Full Withdrawals
FNPF members who have reached the retirement age of 55 are eligible for the Pension
Scheme in which they receive the full amount of their retirement savings, ie, funds from their
Preserved Account. However, there are other instances in which the member, retired or not, can

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receive their funds from their Preserved Account, and these include (i) Funeral Assistance in the
event of death of the member (also known as the Special Death Benefit), (ii) Physical and Mental
Incapacity, (iii) Migration for both local and non-Fiji citizens and (iv) Small Account Balances.
For the purpose of this subsection, we will focus on just the Pension Scheme. The FNPF’s
pension scheme is divided into three retirement options: Life Pension, Term Annuity and Lump
Sum. The Lump sum is self-explanatory as it entails the pensioner converting their retirement
savings to a lump sum amount that basically cleans their Preserved and General Account. For
this option, the FNPF is no longer held to any obligation whatsoever to the pensioner.
(a) Life Pension
The Life pension is a regular monthly payment made to the retiree as soon as they reach
the age of retirement at 55. The recipient, who is also called the pensioner, chooses to convert
either the entirety or just a portion of his/her life savings for the life pension option. This life
pension is offered as either a single or joint pension (but the option of taking on both – one for
the pensioner and one for both the pensioner and spouse - is available). The joint pension, as
mentioned previously, is taken out by pensioners for themselves and their spouses. The spouse
will only start receiving pension payments in the event of the original pensioner’s death provided
the spouse outlives him/her. More importantly, the spouse recipient should be the original spouse
registered on the start date of the pension, and not any later spouse. Furthermore, if it so happens
that within the entire joint pension’s 5 year guaranteed time period (total of 60 payments) both
the recipient and the spouse pass away, the remainder of payments shall go to a pre-nominated
nominee of the pensioner’s choosing for the remainder of the 5 year period. The guaranteed time
period of 5 years does not mean that payments will cease upon the 6th
year. It basically means

James H. Grant
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that if both the pensioner and their spouse were to become deceased, the payments will continue
to the nominee. Upon the pensioner and spouse’s death this nominee will have the option of
either continuing the monthly payments or converting the remainder of the life pension to a lump
sum at the FNPF actuarial rate. Failure by the living pensioner to nominate a future nominee will
result in the remaining funds being transferred to the Fiji High Court who will then decide its
future recipients (Fiji National Provident Fund 2013).
PENSION CALCULATION AND CONVERSION RATES
Pension conversion rates depend on age, therefore an older retiree will receive a higher
pension than a younger retiree on the same pensionable amount. The current pension conversion
rates for ages 55 to 100 are shown in Table 3 below.
Age Single Joint Age Single Joint Age Single Joint
55 8.7% 7.5% 70 12.3% 9.8% 85 19.5% 16.4%
56 8.9% 7.6% 71 12.7% 10.0% 86 20.0% 17.0%
57 9.0% 7.7% 72 13.1% 10.3% 87 20.4% 17.6%
58 9.2% 7.8% 73 13.5% 10.6% 88 20.9% 18.2%
59 9.4% 7.9% 74 13.9% 11.0% 89 21.3% 18.7%
60 9.6% 8.0% 75 14.4% 11.4% 90 21.6% 19.2%
61 9.8% 8.1% 76 14.9% 11.7% 91 21.9% 19.8%
62 10.0% 8.3% 77 15.3% 12.1% 92 22.2% 20.3%
63 10.3% 8.4% 78 15.8% 12.6% 93 22.5% 20.8%
64 10.5% 8.6% 79 16.3% 13.1% 94 22.8% 21.2%
65 10.8% 8.8% 80 16.9% 13.6% 95 23.1% 21.7%
66 11.1% 9.0% 81 17.4% 14.1% 96 23.3% 22.1%
67 11.4% 9.2% 82 17.9% 14.6% 97 23.3% 22.4%
68 11.7% 9.4% 83 18.5% 15.2% 98 23.3% 22.7%
69 12.1% 9.7% 84 19.0% 15.8% 99 23.3% 23.1%
100 23.2% 23.3%
Table 3: Pension Conversion Rates, Source: (Fiji National Provident Fund 2013)

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The monthly pension formula is one-twelfth ( ) of the amount converted to pension by
the FNPF member multiplied by the pension conversion rate:
Monthly pension =
So even though a 60 year old and a 70 year old both converted their life savings of an equal
amount of $50,000 FJD, the 60 year old would receive a less monthly pension compared to the
70 year old. In this example the 60 year old would receive $400 (Single) or $333.33 (Joint) while
the 70 year old would receive $512.50 (Single) or $408.33 (Joint).
(b) Term Annuity
The Term Annuity option is a regular monthly payment to the pensioner (referred to as
the annuitant) for a fixed term of either 5, 10 or 15 years. Conversion rates differ by term, and
not by age of the pensioner like the Life Pension option. The fixed terms for the Term Annuity
are guaranteed as well, meaning that in the event of death the elected nominee will receive all
future payments. However, the disadvantage of this option is that all payments cease by the end
of the term. So a pensioner will not receive any more of their retirement savings at the
conclusion of the fixed term (it follows of course that by the end of the term the pensioner should
have exhausted his or her Preserved Account because the conversion rates are much higher than
in the Life Pension option) (Fiji National Provident Fund 2013).
II. ISSUES AND REFORMS
As stated before, the FNPF was established in 1966; however the pension scheme which
is widely used today was established 9 years later in 1975 and was an option for members aged

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55 to receive a pension. Geoff Rashbrooke (2012) mentions in his paper Reform of the Fiji
National Provident Fund that despite the introduction of the pension scheme, it was actually
operating on an unsustainable basis and not self-supporting and hence had to require significant
subsidy from active members as the number of pensioners grew. This section will highlight each
issue with its corresponding reform in chronological order beginning with the first and most
important issue: the initial conversion rate of members’ pension funds.
ISSUE I – Conversion Rates
In 1975 the conversion rate for individuals’ pensions was 25 percent whereas the rate for
the join pension (pension payments made to a member and their spouse, or two married
members) was 16.7 percent. These rates were unchanged with age and as such there was a clear
incentive for workers who reached age 55 to start receiving their pension. Pensioners could
receive the conversion rates every year for as long as they lived (and there is a discussion later in
the paper that will highlight how some pensioners accumulated over twice – and in some cases
three times - the savings they invested into FNPF). The rationale for the high conversion rate at
the time was to encourage members to take up the pension option and for the Fund to provide
meaningful pensions from low accumulations (due to the FNPF operating only for 9 years).
Since the pension scheme was considered to be generous, the FNPF and its members had no
issue with the imposition of a 2% Pension Buffer Reserve levy (PBR) on payroll wages that was
in addition to the employer-employee contribution. The PBR levy was initiated as a cross
subsidization scheme which took an additional 2 percent from worker wages and salaries and
placed it in the Pension Buffer Reserve which was used to pay the current pensioners at the time
(the FNPF was still fresh and had low accumulations at that point). From 1966 to 1975, the

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employer-employee contribution was 5 percent each. From 1975 to 1980, the employer-
employee contribution was still 10 percent in total but plus the 2 percent, to make a total of 12
percent deducted from the payroll. By 1980 the employer-employee contribution increased to 12
percent (6 percent each) whilst still maintaining the 2 percent PBR levy.
As the Chart 1 shows below, the PBR levy dominated in terms of incoming cash flow
from 1975 to 2000. This is due to the fact that pension payments and conversion amounts were
still picking up momentum. Rashbrooke (2012) suggests two factors as to why this was the case:
(i) Low pension take-up rates, plus matching of conversion sums and pension outgo through the
growth stage to the end of the century, allowed the PBR levy to dominate the financial reporting
and (ii) The trend appears to reveal some Ponzi scheme attributes however this was only because
the cash flow appears to have been monitored more heavily, coupled with a continuing absence
of any rise in the likely consequences was due to low actual take up of pensions, despite the
incentive.

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Chart 1, Source: (Rashbrooke 2012)
Reform mid-1990’s
The unsustainable nature of the pension conversion rate was only realized in 1990 - about
15 years later from its inception in 1975. An actuary for the International Labor Organization
(ILO) by the name of Giovanna Ferrara wrote a report in 1993 stating that the conversion rate to
be brought down from 25 percent to 10 percent and proposed that it be carried out over a
transition period of 10 years (reduction of 1 percent each year) and be financed by the PBR
balance. An additional report in 1994 reviewed the ILO findings and while it was agreed that the
conversion rate should be brought down, the phase in period should take 15 years and not 10 as
previously proposed; in addition, when the conversion rate reached 15 percent that the pension
scheme be placed under another lengthy review. Another important decision made during this
period was to have the PBR levy cease immediately due to the “poor value” it represented.
In 1998 the reforms were implemented to reduce the 25 percent to 15 percent over 10
years beginning in 1999 as well as the halting of the PBR levy in 2000. There is no clear
explanation for why the phase-in had to take 10 years to reach 15 percent. In fact, many
established academics argued that the conversion rate be reduced immediately to 15 percent.
Rashbrooke (2012) points out that despite the good intentions of the reform, it simply did not
work because it did not address the real issue which was the increasing number of retirees
seeking pension payouts. As shown in Chart 1 earlier, the take-up rates began picking up even
before 1982 which if being observed carefully was clear sign of a growing liability. Indeed, the
high take up rates in the mid-2000’s were most probably from people taking out their pensions as
they reached age 55 rather than continuing to accumulate. The pension payments continue to
grow but from 1999 onwards they flatten out as the number of retirees stabilizes (the conversion

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14
rate was falling by 1 percent each year, which incentivized pensioners to withdraw their funds
quickly).
Table 4, Source: (Singh 2013)
As Table 4 shows, the pension conversion rates began falling every year after the 1998
reforms were implemented. Later articles write that despite the reduction in conversion rates
brought on by the reforms, they still were not enough to reduce the overall liability and shortfall
that the FNPF was facing with regards to its pension payments. This leads to the second issue:
solvency.
ISSUE 2 - Solvency
In 2007, the World Bank and IMF provided a technical note to the FNPF as part of their
2007 Financial Sector Assessment Program report on Fiji. Their evaluation stated that the
FNPF’s annuity business was highly unsound (Singh 2013). It observed that the financing of
pensions by transferring resources from active workers was a heavy cross-subsidization from
poorer and younger workers to older and richer ones. The principle policy recommendations
were: (i) Place the annuity business on a sound and actuarial basis (statistical method to

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determine periodic payments to a pension fund whereby the total contributions plus income
earned on them must equal the payment to made from the pension fund), (ii) Implement a
separation of accounts by major area of activity (As was seen earlier in the separation of the
members’ accounts into the Preserved and General Account) and (iii) Compile detailed records
on the mortality experience of pensioners. The third recommendation is carried out by requiring
pensioners to present pension renewal certificates every six months, however the FNPF does not
follow-up when no certificate is forthcoming. Therefore the record of pensioner deaths is
therefore patchy at best (Rashbrooke 2012).
The following year in 2008, after reviewing the modeling works done by the World
Banks and IMF, the FNPF hired Mercer Consulting to carry out actuarial valuation of the
pension liabilities. In the absence of scheme-specific data, the Actuary had to make general
assumptions as to mortality and longevity improvement founded on general considerations of
pensioner mortality, but still based on Fiji population mortality. For the June 30th
, 2008
valuation, life expectancy figures from 2001 were scaled to Australian data, and with mortality
improvement gave projected life expectancy at age 55 of 17.9 and 21.4 for males and females
respectively. By the last valuation, as at June 30th
2011, 5 year mortality rates based on the
experience from 2001 to 2008 had been published by the World Health Organization, showing
life expectancy at age 55 of 18.6 and 22.6 for males and females respectively. Continued
application of mortality improvement based on Australian experience resulted in projected life
expectancy of 24.9 and 27.9 respectively (Rashbrooke 2012).
Furthermore, the consulting firm evaluated the strength of its returns to assets,
specifically the returns to members’ pension funds based off government bonds that were valued

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16
on a “hold to maturity” basis. They found that there was an initial net return of 7 percent pa after
expenses were accounted for. By 2011 the valuation fell to 6.5 percent pa. Thus the inclusion of
liability in the accounts began to show that existing pensions were worsening the FNPF’s
solvency situation, specifically by negatively affecting the solvency requirements set forth by the
Reserve Bank of Fiji. This also meant that all attempts at reducing the conversion rates would
still be insufficient to ensure the soundness of the FNPF. With the continued modeling work by
Mercer Consulting, it was decided that continued solvency would require continued diversion of
a part of the return on investments on members’ accounts to support existing pensions of about
0.5 to 1 percent.
2011 Reform
Pension reduction was a fundamental requirement of any reform if the unfair cross
subsidy from active members was to be brought to a halt. The FNPF hired Promontory
Consultants to develop new legislation with the levels of governance and separation of funds that
reports such as the World Banks and the IMF were recommending. What they developed were
age-based rates using the basis adopted by Mercer for liability valuation. So this meant that a 55
year old would be assigned a new conversion rate of 8.7 percent compared to the current 15
percent (Singh 2013).
In terms of addressing the on-going cross subsidy required for existing pensions, the
Consulting firm also covered a variety of “haircuts” in its reform proposals. Generally, monthly
pensions below $800 were unaffected however one particular proposal had 15 percent, 20
percent, 25 percent, 30 percent and 40 percent for each subsequent $800 per month tranche of
pension, with a 50 percent reduction for any pensions above any pension payments above

James H. Grant
17
$5,600. However, these reform proposals were met with strong opposition especially by those
pensioners who were “well-to-do” (Consumer Council of Fiji 2010).
Table 5: Revised Summary of FNPF Solvency, 30 June 2011 - $FJD million, Source: (Rashbrooke 2012)
In a September 2011 meeting of stakeholders, board members and consultants, the
following proposal was made by Shauna Tomkins, a consultant for Promontory (Association
2011). Her observation was that $310 million was what was currently owed in pension
conversion amounts, but the pension liability (as shown in table 5) was $565 million. She
proposed to reduce the pension liability by terminating entitlements and refunding to pensioners
their original conversion amounts, i.e. the conversion rate system of 15 percent (Rashbrooke
2012). A total of $224 million was successfully refunded and the remaining $31 million was
transferred into an ad hoc pension solvency account which similar to the solvency reserve for
member accounts would be 10 percent of total pension liability. The surplus of $111 million, as
shown in Table 5, was to be used as an incentive to those pensioners who received a refund. This
would be done in the form of top-ups to mitigate the effect for those on lower pension levels and
provide some minor incentive to those on higher pension levels; however the requirement for this

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18
to occur was if the pensioners reinvested all their individual pension conversion amounts into the
new life pension schemes on offer (Singh 2013).
IMPLICATIONS OF THE 2011 REFORM
The new aged-based conversion rate system was to be met with disappointment and
opposition due to the reductions in pensions that many pensioners would be experiencing. In
excess of 360,000 FNPF members were going to be affected, and of this amount about 11,300
were on the line to have their pension reduced by as much as 50 percent on average. In response
to the pension conversion rate reduction, one pensioner filed a lawsuit against the FNPF on
grounds of discrimination and unlawful breach of contract.
To truly understand the impact pension reduction rates have on the consumption behavior
one only had to observe the socio-cultural and economic factors at play within a pacific island
nation such as Fiji. Indigenous Fijians for instance make up about half the national population,
own about 70 percent of the land but are still economically disadvantaged compared to other
races. It is a common occurrence for there to be very poor savings behavior in pacific island
nations and in particular for Fiji, indigenous Fijians are obligated to their tribe and land. Strong
familial ties and the requirement of grand gestures in family events drive consumption spending
up but reduces the average savings of Fijians. Indeed this is in part one of the reasons the FNPF
retirement fund has evolved into something of a welfare giver, i.e. it is providing funds as
assistance to recipients for medical services, education and the like – services that the
government normally would provide at affordable costs. The PowerPoint graph below explains
the partial-withdrawal phenomenon and makes three assumptions. The first assumption is that
for simplicity sake, the main groups of households that will seek FNPF assistance in early

James H. Grant
19
withdrawals are low-income households. The second assumption is that low-income households
prioritize their socio-cultural obligations to the point where they are unable to save or save very
little. The third assumption is that of the wealth substitution effect, i.e. if low income-households
are presented with the opportunity to save up for retirement, they will choose that over private
saving. Furthermore, for assumption three to hold, the additional assumption is made that the
private savings rate is lower than the FNPF social security tax rate. The graph shows that the
household maximizes its utility at point E where it consumes Co* in the present and C1* in the
future. This is the level of combination of consumption after the household has made an attempt
to save through private saving. However with the FNPF tax rate of 8 percent and 10 percent
employer-contribution, this reduces the low-income household’s present income and
consumption even further. Therefore since the low-income household is pushed back to a point
where it cannot maximize its utility, it will seek other ways to return to that consumption level by
either borrowing (but this is undesirable since interest rates from commercial banks are high) or
approach the FNPF for partial withdrawals.

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20
Graph 1: General Life Cycle Model of Fijian Savings behavior, Source: (Vesikula 2015)
CONCLUSION
The Fiji National Provident Fund through is reforms was able to contain the pension
scheme problem that was affecting the longevity of the business and the future security of
pensioners’ funds. The reforms appear to be working successfully and the FNPF is recording
yearly increases in its membership as well as annual contributions. In both the years 2012 and
2013, the FNPF received best practice awards from the International Social Security Association
(which operates under the International Labor Organization) in recognition of the successful
pension reform and financial literacy initiatives it undertook in 2012.

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21
BIBLIOGRAPHY
Association, International Security. "Reforming the FNPF pension scheme: A Case of the Fiji National
Provident Fund." International Security Association, 2011: 1-4.
Consumer Council of Fiji. A Submission on the Review of the Fiji National Provident Fund. Review, Suva:
Consumer Council of Fiji, 2010.
Fiji National Provident Fund. 2014 Annual Report. Financial Report, Suva: Fiji National Provident Fund,
2014.
—. Education. January 13, 2013. http://www.myfnpf.com.fj/withdrawals-services/education (accessed
December 12, 2015).
—. Funeral Assistance. January 13, 2013. http://www.myfnpf.com.fj/withdrawals-services/funeral-
assistance (accessed December 12, 2015).
—. Medical. January 13, 2013. http://www.myfnpf.com.fj/withdrawals-services/2-fnpf/129-medical
(accessed December 12, 2015).
—. What is a Life Pension? January 13, 2013. http://www.myfnpf.com.fj/pensioners/apply-for-your-
pension/life-pension (accessed December 12, 2015).
Rashbrooke, Geoff. "Reform of the Fiji National Provident Fund." Actuaries . January 13, 2012.
http://www.actuaries.org/HongKong2012/Papers/MBR12_Rashbrooke.pdf (accessed December
13, 2015).
Rosen, Harvey, and Ted Gayer. Public Finance. New York: McGraw-Hill Education, 2014.
Singh, Rajeshwar. Fiji National Provident Fund. Presentation, Singapore: Forum on Pension Fund and
Social Security, 2013.
Vesikula, Rovarovaivalu. Fiji National Provident Fund: A Case of Reforms. Power Point Presentation,
Portland: Rovarovaivalu Vesikula, 2015.

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Fiji National Provident Fund Reforms