Government Rules Out Backdated FNPF Pension Payments

The Government has confirmed that pensioners whose Fiji National Provident Fund (FNPF) payments were reduced in 2012 will not receive backdated pension money, saying the country cannot afford it and the law does not allow it.

Minister for Finance Hon. Esrom Immanuel said Cabinet made the decision after reviewing legal advice, financial reports, and constitutional requirements. Government says the matter is now final.

The Minister explained the situation in simple terms, saying the pension payments before 2012 were higher than what some members had actually saved in their accounts.

This meant the pension fund was paying out more money than it had, and younger workers were effectively helping to pay for retirees’ pensions.

Government says restoring the old payments from 2012 would cost around $582 million, which the country cannot afford without affecting other FNPF members or placing a heavy burden on taxpayers.

The Minister also said the Constitution does not allow Government to go back and undo the 2012 reforms.

The issue goes back to 2012 when FNPF reduced pension payments for many retirees after financial assessments found the pension system was not sustainable.

Some pensioners had been receiving payments that exceeded their actual savings, raising concerns about the long-term survival of the fund. Many affected pensioners were unhappy with the reductions and have been calling for their original pension rates to be restored and for the money lost since 2012 to be paid back.

The issue has remained a major public concern for years, with pensioners arguing they were unfairly treated.

Before making its decision, Cabinet considered legal advice from the Office of the Solicitor-General, the financial impact on the pension fund and national budget, constitutional limits under the 2013 Constitution, and the fairness of any decision to current FNPF contributors.

Government says it carefully examined whether pensions could be fully restored from 2012 or whether compensation could be paid to affected pensioners.

Government maintains that paying backdated pensions is not possible because the Constitution prevents it.

Section 173(3) of the 2013 Constitution does not allow Government to reverse the legal effects of the 2012 reforms or provide compensation arising from those changes.

Government also says that using FNPF funds to pay backdated pensions would violate property rights protected under Section 26 of the Constitution, as retirement savings belong to individual members.

In addition, the financial cost of full reinstatement is estimated at about $582 million, which Government says FNPF cannot absorb without affecting member balances or future returns, while funding the amount through the national budget would place significant pressure on public finances.

While refusing to provide backdated payments, Government says it has taken steps to assist pensioners in another way. From 1 August 2024, pension payments for affected retirees were restored moving forward.

This measure cost approximately $57 million and was funded by taxpayers rather than FNPF members.

Government says this approach provides support to pensioners while protecting the long-term sustainability of the fund.

Minister Immanuel said the decision strikes a balance between showing compassion for affected pensioners and protecting the retirement savings of more than 430,000 active FNPF members.

Government says the decision provides clarity and closure to the long-running issue and has confirmed that there will be no retrospective reinstatement of FNPF pensions to 2012.