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UPDATE ON FNPF REFORMS & FY12 PERFORMANCE FIJI INSTITUTE OF BANKERS 6 MARCH, 2012

UPDATE ON FNPF REFORMS & FY12 PERFORMANCE FIJI INSTITUTE OF BANKERS 6 MARCH, 2012. Agenda. Welcome Introduction Major Activities FY2012 Financial Performance FY2012 Future Outlook FY2013 General discussions. Historical Background. FNPF was established 1966

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UPDATE ON FNPF REFORMS & FY12 PERFORMANCE FIJI INSTITUTE OF BANKERS 6 MARCH, 2012

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  1. UPDATE ON FNPF REFORMS & FY12 PERFORMANCE FIJI INSTITUTE OF BANKERS 6 MARCH, 2012

  2. Agenda • Welcome • Introduction • Major Activities FY2012 • Financial Performance FY2012 • Future Outlook FY2013 • General discussions

  3. Historical Background • FNPF was established 1966 • Life Pension was introduced in 1975 • Board decided to reform the Pension scheme in November, 2010, to ensure the sustainability of FNPF into the future

  4. Operating environment • Local – high liquidity (excess cash circulating in the financial system) • Lack of investment opportunities • FNPF started to implement Reforms to ensure sustainability & delivery of better services to our members

  5. Major activities for 2012 • Implementation of the FNPF Decree Pension Reform • Introduced 1 March, 2012 • About 70% of pensioners joined the new scheme, reinvesting $168 million into the scheme • 3000 pensioners were paid a lump sum of $127 million

  6. Major activities for 2012 Separation of Business (international best practice) • Separated Pension business from Contribution business by setting up the Retirement Income Fund (RIF) • $252 million transferred to RIF to support pension business; including $84 million for top up pension & solvency • Each business has its own solvency requirements (surplus assets to meet obligations)

  7. Major activities for 2012 Solvency Requirement • FNPF Decree requires FNPF to provide a solvency & funding certificate to RBF • This has been met, indicating: • FNPF has enough assets to meet its liabilities, even under negative circumstances • FNPF would not declare a negative interest to members

  8. Member Assets vs Member Balances

  9. FINANCIAL PERFOMANCE FY2012

  10. Financial Performance

  11. Financial Performance

  12. Return on Investment

  13. Investment Performance • Why do we invest in Government securities? • Safe Investment • High returns to members • Timely payments & never defaulted

  14. Financial Performance Total Withdrawals & Expenses increased by $153 million • Increase in member withdrawals by $135 million • $127 million lump sum payment to pensioners who withdrew from the pension scheme • Increase in housing, migration & two flood assistance to members • Net surplus - $115.6 million

  15. Income vs Expenses

  16. Contribution vs Withdrawals

  17. Other highlights • Interest to Members – 5% ($133m distributed to members) • Total membership grew by 4,645 to 372,831 • Employer numbers increased by 340 to 7,840 • Commencement of the re-development of the Grand Pacific Hotel • Opening of new Namaka agency

  18. Strengthened Governance • Board appointment • Merit based, Relevant skills and experience • Code of Conduct • Governs ethics and business dealings for Board & Management • Supervisory Role of RBF • RBF role strengthened with new regulatory standards • Appointment of Actuary • Actuary to value liabilities, assess solvency requirements & issue financial condition reports • Improved Disclosure to Members • New opportunity for members to interact directly with Board

  19. FUTURE OUTLOOK & KEY ACTIVITIES 2013

  20. Outlook 2013 Focus on Creating Value for Members • Improved Service Quality • Improved & Sustained Return to Members

  21. 2013 - Investment Investment • Grand Pacific Hotel construction to be completed by end of 2013 • Momi construction work will start next year • Natadola subdivide & sell residential lots to recover our investment

  22. 2013 - Members FNPF Decree Awareness Establishment of Two accounts for members • Preserved – 70% of balance • General – 30% of balance • 1st time property buyers to can access the Preserved Account, in addition to the General Account, to purchase/build their land/home

  23. 2013 - Members For example If your current balance is $50,000 when the two accounts are established, then the following will apply. • General Account -       $15,000     (30% of $50,000) • Preserved Account -   $35,000     (70% of $50,000) • If you will be purchasing your first property (land/house) then you will be eligible to access $25,500 ($15,000 + $10,500). $10,500 is 30% of $35,000). 

  24. 2013 - Members Voluntary • Reduction in Age for Voluntary members from 16 to 6 year old • Additional contribution to members accounts is now allowed to supplement the current 8% from members

  25. Conclusion We will continue to build a strong foundation for the future of the Fund to:- • FNPF’s in a stronger financial position after the Reform • A surplus of $116 million was achieved even after a payout of $127 million to pensioners • Create Value for our Members & Build Confidence in FNPF

  26. Discussions

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