Members who choose the current 8.7 percent FNPF pension rate will receive that rate for the rest of their lives, with no annual increases or cost-of-living adjustments.
This was clarified during the Fiji National Provident Fund Annual Member Forum, where questions were raised about whether pension rates could improve next year and whether there should be a cost-of-living adjustment for the pension rates every year.
FNPF General Manager Development and Research Millie Low says pension rates are actuarially tested and once selected, the rate remains fixed for the duration of the pensioner’s lifetime.
She says there are no cost-of-living or inflationary adjustments applied to pension conversion rates.
FNPF Chief Investment Officer Naibuke Saune explains that the pension portfolio is primarily backed by government bonds, which is low risk and stable.
He says the pension portfolio is very risk-averse, adding that at the pension stage, there is no room for risk-taking activity.
He says a typical 10-year or 20-year government bond is currently yielding about 6 percent, meaning if someone purchases a government bond, they would receive around a 6 percent return.
Saune says the bonds backing pensions were purchased previously and are locked in for periods ranging from 10 to 30 years, with fixed coupon payments made over time.