Flu Hits Fiji National Provident Fund
June 28 2009
The Fiji National Provident Fund has recently been making headlines again – this time because government feels that, despite the myriad flu epidemics, retiree members have been benefiting disproportionately by living longer than expected and qualifying for monthly stipends from their pension funds. Of particular concern is the fact that at the present rate of 15%, discrepancies between FNPF’s pension income and pension payments has escalated from $4.5million in 2003 to $20.4m in 2008.
Clearly if this is allowed to continue, the fund would have to join the ever-increasing list of post-subprime mortgage crisis casualties. That is the dilemma faced by FNPF management as they attempt to balance the demanded outflow against its dwindling inflow of funds.
In a ceteris paribus world, a provident fund would have two main sources of inflows: member contributions and investment returns. Member contributions increase over time through the inevitable career progress of members and the inclusion of new subscribees who also inevitably continue to join the workforce.
On the other hand, investment returns arise from the expectations and demands that members place on the fund to manage their finances in such a way that it grows and continues to provide healthy dividends annually over time.
In other words, the provident fund must work like an investment bank at some stage. It must collect monies from member salaries and employer contributions as a matter of right and manage this, so that the member is assured of a safety net upon retirement. This is particularly important in countries like Fiji that do not have welfare benefit schemes.
Recent experience with the management of investment funds however has left much to be desired and a beleaguered public has increasingly questioned the motivations and intentions of fund managers. The collapse of Bridge Corp and subsequent death throes of Hanover Finance totally shook public confidence in financial institutions in Australasia.
Eric Watson’s $1.1m Istanbul gig with his glitzy entourage for his 50th b’day less than a year after his cohort Mark Hotchin’s 50th bash in Fiji after having bellied up Hanover Finance to the tune of $500m have fueled skepticism to the extent that some economists have even begun to rethink the role of banks in the revival of the global economy.
When the “remove regulations” flu hit Margaret Thatcher and Ronald Reagan, the world turned to business for answers to development and progress. It took a while to realize that by removing the “hand of government” through deregulation too much faith was being placed in the “hand of the market”. And the market had strange idiosyncrasies that were linked too closely to the “hand of management”.
Harvard Business School has already made an ethics oath a requirement for its MBA graduates in recognition of the fact that the “business is the business of business” edict has led to some of the most damaging economic, social and political outcomes imaginable. The hands-off model of the West has lost traction and forced US government involvement in private business has made China-enthusiasts drool at the prospect of a new model for economic growth.
Coming back to Fiji, it is no secret that FNPF has long tantalized fund managers, politicians and power brokers in the country. In the wake of awakened appetites after the plunder of the National Bank of Fiji (NBF), a number of highly ambitious projects were discussed in the latter half of the 1990s with funding from FNPF very much considered as necessary fuel.
“We must mobilize that money” declared an inebriated bureaucrat in the murky confines of Suva’s Traps Bar. “That money is lying idle” complained another enterprising aspirant with no business experience. It came to a stage where the rhetoric snowballed into an ever-increasing need to release pension funds for the good of the country. Some of this money did go into shoring up one of the public enterprises and presenting a veneer of acceptability in the 1998 budget.
Later on, the once-glamorous Grand Pacific Hotel was bought by FNPF at a price that assumed that it was still a favourite of British Royalty. That white elephant has long lost its white through the degradations of nature, and nobody knows if it will ever shake out of its stupor to once-again become the Grand Dame of the South Seas.
Momi Bay, Matapo and Bridgecorp are just some of the more dodgy names associated with FNPF. It doesn’t take much imagination or kava-induced hallucination to expect the big blight at the fund any time soon.
FNPF management has a fiduciary relationship to ensure that members’ funds are managed prudently and with reasonable enterprise to ensure that the monies continue to grow and enrich the lives of members. It is even more important for management to ensure that good money is not thrown after bad money.
--
The opinions contained here are Subhash Appana’s own and not necessarily shared by any organizations that he may be affiliated with, both here and overseas.
Email: subhasha@ais.ac.nz
Clearly if this is allowed to continue, the fund would have to join the ever-increasing list of post-subprime mortgage crisis casualties. That is the dilemma faced by FNPF management as they attempt to balance the demanded outflow against its dwindling inflow of funds.
In a ceteris paribus world, a provident fund would have two main sources of inflows: member contributions and investment returns. Member contributions increase over time through the inevitable career progress of members and the inclusion of new subscribees who also inevitably continue to join the workforce.
On the other hand, investment returns arise from the expectations and demands that members place on the fund to manage their finances in such a way that it grows and continues to provide healthy dividends annually over time.
In other words, the provident fund must work like an investment bank at some stage. It must collect monies from member salaries and employer contributions as a matter of right and manage this, so that the member is assured of a safety net upon retirement. This is particularly important in countries like Fiji that do not have welfare benefit schemes.
Recent experience with the management of investment funds however has left much to be desired and a beleaguered public has increasingly questioned the motivations and intentions of fund managers. The collapse of Bridge Corp and subsequent death throes of Hanover Finance totally shook public confidence in financial institutions in Australasia.
Eric Watson’s $1.1m Istanbul gig with his glitzy entourage for his 50th b’day less than a year after his cohort Mark Hotchin’s 50th bash in Fiji after having bellied up Hanover Finance to the tune of $500m have fueled skepticism to the extent that some economists have even begun to rethink the role of banks in the revival of the global economy.
When the “remove regulations” flu hit Margaret Thatcher and Ronald Reagan, the world turned to business for answers to development and progress. It took a while to realize that by removing the “hand of government” through deregulation too much faith was being placed in the “hand of the market”. And the market had strange idiosyncrasies that were linked too closely to the “hand of management”.
Harvard Business School has already made an ethics oath a requirement for its MBA graduates in recognition of the fact that the “business is the business of business” edict has led to some of the most damaging economic, social and political outcomes imaginable. The hands-off model of the West has lost traction and forced US government involvement in private business has made China-enthusiasts drool at the prospect of a new model for economic growth.
Coming back to Fiji, it is no secret that FNPF has long tantalized fund managers, politicians and power brokers in the country. In the wake of awakened appetites after the plunder of the National Bank of Fiji (NBF), a number of highly ambitious projects were discussed in the latter half of the 1990s with funding from FNPF very much considered as necessary fuel.
“We must mobilize that money” declared an inebriated bureaucrat in the murky confines of Suva’s Traps Bar. “That money is lying idle” complained another enterprising aspirant with no business experience. It came to a stage where the rhetoric snowballed into an ever-increasing need to release pension funds for the good of the country. Some of this money did go into shoring up one of the public enterprises and presenting a veneer of acceptability in the 1998 budget.
Later on, the once-glamorous Grand Pacific Hotel was bought by FNPF at a price that assumed that it was still a favourite of British Royalty. That white elephant has long lost its white through the degradations of nature, and nobody knows if it will ever shake out of its stupor to once-again become the Grand Dame of the South Seas.
Momi Bay, Matapo and Bridgecorp are just some of the more dodgy names associated with FNPF. It doesn’t take much imagination or kava-induced hallucination to expect the big blight at the fund any time soon.
FNPF management has a fiduciary relationship to ensure that members’ funds are managed prudently and with reasonable enterprise to ensure that the monies continue to grow and enrich the lives of members. It is even more important for management to ensure that good money is not thrown after bad money.
--
The opinions contained here are Subhash Appana’s own and not necessarily shared by any organizations that he may be affiliated with, both here and overseas.
Email: subhasha@ais.ac.nz
The Fiji National Provident Fund has recently been making headlines again – this time because government feels that, despite the myriad flu epidemics, retiree members have been benefiting disproportionately by living longer than expected and qualifying for monthly stipends from their pension funds....
The Fiji National Provident Fund has recently been making headlines again – this time because government feels that, despite the myriad flu epidemics, retiree members have been benefiting disproportionately by living longer than expected and qualifying for monthly stipends from their pension funds. Of particular concern is the fact that at the present rate of 15%, discrepancies between FNPF’s pension income and pension payments has escalated from $4.5million in 2003 to $20.4m in 2008.
Clearly if this is allowed to continue, the fund would have to join the ever-increasing list of post-subprime mortgage crisis casualties. That is the dilemma faced by FNPF management as they attempt to balance the demanded outflow against its dwindling inflow of funds.
In a ceteris paribus world, a provident fund would have two main sources of inflows: member contributions and investment returns. Member contributions increase over time through the inevitable career progress of members and the inclusion of new subscribees who also inevitably continue to join the workforce.
On the other hand, investment returns arise from the expectations and demands that members place on the fund to manage their finances in such a way that it grows and continues to provide healthy dividends annually over time.
In other words, the provident fund must work like an investment bank at some stage. It must collect monies from member salaries and employer contributions as a matter of right and manage this, so that the member is assured of a safety net upon retirement. This is particularly important in countries like Fiji that do not have welfare benefit schemes.
Recent experience with the management of investment funds however has left much to be desired and a beleaguered public has increasingly questioned the motivations and intentions of fund managers. The collapse of Bridge Corp and subsequent death throes of Hanover Finance totally shook public confidence in financial institutions in Australasia.
Eric Watson’s $1.1m Istanbul gig with his glitzy entourage for his 50th b’day less than a year after his cohort Mark Hotchin’s 50th bash in Fiji after having bellied up Hanover Finance to the tune of $500m have fueled skepticism to the extent that some economists have even begun to rethink the role of banks in the revival of the global economy.
When the “remove regulations” flu hit Margaret Thatcher and Ronald Reagan, the world turned to business for answers to development and progress. It took a while to realize that by removing the “hand of government” through deregulation too much faith was being placed in the “hand of the market”. And the market had strange idiosyncrasies that were linked too closely to the “hand of management”.
Harvard Business School has already made an ethics oath a requirement for its MBA graduates in recognition of the fact that the “business is the business of business” edict has led to some of the most damaging economic, social and political outcomes imaginable. The hands-off model of the West has lost traction and forced US government involvement in private business has made China-enthusiasts drool at the prospect of a new model for economic growth.
Coming back to Fiji, it is no secret that FNPF has long tantalized fund managers, politicians and power brokers in the country. In the wake of awakened appetites after the plunder of the National Bank of Fiji (NBF), a number of highly ambitious projects were discussed in the latter half of the 1990s with funding from FNPF very much considered as necessary fuel.
“We must mobilize that money” declared an inebriated bureaucrat in the murky confines of Suva’s Traps Bar. “That money is lying idle” complained another enterprising aspirant with no business experience. It came to a stage where the rhetoric snowballed into an ever-increasing need to release pension funds for the good of the country. Some of this money did go into shoring up one of the public enterprises and presenting a veneer of acceptability in the 1998 budget.
Later on, the once-glamorous Grand Pacific Hotel was bought by FNPF at a price that assumed that it was still a favourite of British Royalty. That white elephant has long lost its white through the degradations of nature, and nobody knows if it will ever shake out of its stupor to once-again become the Grand Dame of the South Seas.
Momi Bay, Matapo and Bridgecorp are just some of the more dodgy names associated with FNPF. It doesn’t take much imagination or kava-induced hallucination to expect the big blight at the fund any time soon.
FNPF management has a fiduciary relationship to ensure that members’ funds are managed prudently and with reasonable enterprise to ensure that the monies continue to grow and enrich the lives of members. It is even more important for management to ensure that good money is not thrown after bad money.
--
The opinions contained here are Subhash Appana’s own and not necessarily shared by any organizations that he may be affiliated with, both here and overseas.
Email: subhasha@ais.ac.nz
Clearly if this is allowed to continue, the fund would have to join the ever-increasing list of post-subprime mortgage crisis casualties. That is the dilemma faced by FNPF management as they attempt to balance the demanded outflow against its dwindling inflow of funds.
In a ceteris paribus world, a provident fund would have two main sources of inflows: member contributions and investment returns. Member contributions increase over time through the inevitable career progress of members and the inclusion of new subscribees who also inevitably continue to join the workforce.
On the other hand, investment returns arise from the expectations and demands that members place on the fund to manage their finances in such a way that it grows and continues to provide healthy dividends annually over time.
In other words, the provident fund must work like an investment bank at some stage. It must collect monies from member salaries and employer contributions as a matter of right and manage this, so that the member is assured of a safety net upon retirement. This is particularly important in countries like Fiji that do not have welfare benefit schemes.
Recent experience with the management of investment funds however has left much to be desired and a beleaguered public has increasingly questioned the motivations and intentions of fund managers. The collapse of Bridge Corp and subsequent death throes of Hanover Finance totally shook public confidence in financial institutions in Australasia.
Eric Watson’s $1.1m Istanbul gig with his glitzy entourage for his 50th b’day less than a year after his cohort Mark Hotchin’s 50th bash in Fiji after having bellied up Hanover Finance to the tune of $500m have fueled skepticism to the extent that some economists have even begun to rethink the role of banks in the revival of the global economy.
When the “remove regulations” flu hit Margaret Thatcher and Ronald Reagan, the world turned to business for answers to development and progress. It took a while to realize that by removing the “hand of government” through deregulation too much faith was being placed in the “hand of the market”. And the market had strange idiosyncrasies that were linked too closely to the “hand of management”.
Harvard Business School has already made an ethics oath a requirement for its MBA graduates in recognition of the fact that the “business is the business of business” edict has led to some of the most damaging economic, social and political outcomes imaginable. The hands-off model of the West has lost traction and forced US government involvement in private business has made China-enthusiasts drool at the prospect of a new model for economic growth.
Coming back to Fiji, it is no secret that FNPF has long tantalized fund managers, politicians and power brokers in the country. In the wake of awakened appetites after the plunder of the National Bank of Fiji (NBF), a number of highly ambitious projects were discussed in the latter half of the 1990s with funding from FNPF very much considered as necessary fuel.
“We must mobilize that money” declared an inebriated bureaucrat in the murky confines of Suva’s Traps Bar. “That money is lying idle” complained another enterprising aspirant with no business experience. It came to a stage where the rhetoric snowballed into an ever-increasing need to release pension funds for the good of the country. Some of this money did go into shoring up one of the public enterprises and presenting a veneer of acceptability in the 1998 budget.
Later on, the once-glamorous Grand Pacific Hotel was bought by FNPF at a price that assumed that it was still a favourite of British Royalty. That white elephant has long lost its white through the degradations of nature, and nobody knows if it will ever shake out of its stupor to once-again become the Grand Dame of the South Seas.
Momi Bay, Matapo and Bridgecorp are just some of the more dodgy names associated with FNPF. It doesn’t take much imagination or kava-induced hallucination to expect the big blight at the fund any time soon.
FNPF management has a fiduciary relationship to ensure that members’ funds are managed prudently and with reasonable enterprise to ensure that the monies continue to grow and enrich the lives of members. It is even more important for management to ensure that good money is not thrown after bad money.
--
The opinions contained here are Subhash Appana’s own and not necessarily shared by any organizations that he may be affiliated with, both here and overseas.
Email: subhasha@ais.ac.nz
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