9 Nov 2004

Concern over Fiji's government using pension funds to fund budget deficits

9:12 am on 9 November 2004

There is increasing concern in Fiji that more than half of the pensions savings of the country's workers are being used to pay for the government's growing budget deficits.

The Fiji Times reports that by the end of June the government owed the Fiji National Provident Fund more than 950-million US dollars.

Statistics released by the ministry of finance show that over the past four years of the Qarase government, public debt levels have increased by more than 70%.

In the 2005 budget tabled last Friday, the government plans to borrow a further 220-million US dollars, more than 90% of it from the pension fund whose total assets now stand at 1-point-8 billion US dollars.

The Reserve Bank has banned further offshore investments by the Fiji National Provident Fund, leaving many hundreds of millions of dollars of pension money earning little or no interest.

Interest paid on members' funds has declined from 9% to 6% over the last 10 years and pensions have been falling while the age at which workers become eligible for a pension keeps rising.

In an editorial, The Fiji Times has raised concern about what would happen to the retirement funds if the government is unable to pay its debt or if there is another internal conflict.

The newspaper says given Fiji's governance record and political history, anything is possible and should be considered.

It says the government should ensure the safety of the pension funds and part of this responsibility should be to place a limit on how much it borrows from the National Provident Fund.