Cut to retirement funds

Fijian workers will give up part of their monthly contribution to their retirement fund, for nine months in order to contribute to a $130 million relief to employers. 

Once the COVID19 budget is passed in parliament today, from April 1, employers only have to deduct five per cent, instead of the usual eight percent from workers wages to put in their account of the country’s superannuation fund, the Fiji National Provident Fund (FNPF).

“Employees will continue to pay contributions but at a reduced amount – to 5% from 8% effective from April 1 2020 till Dec 31. This will put around $80 million back in the pockets of Fijian employees for the next 9 months,” Attorney General and Minister for Economy Aiyaz Sayed-Khaiyum said while announcing the budget.

In addition, the usual 10 per cent employers themselves have had to pay towards their workers retirement fund is halved to five per cent.

“This will provide a $130 million relief to employers for the next 9 months.”

While theoretically, this measure should give employers more money to keep people in employment, there is no initiative in the budget to stop employers from reducing workers pay or working hours. 

Meanwhile, the government announced it would subsidize a $1000 payout to people whose incomes and jobs have already been lost or reduced as a result of the health crisis.

There is a current FNFP initiative that allows any employee who has lost their job to get $1000 from their retirement fund. This is already in existence.

What the this means is if there are some workers whose general account portion of their retirement fund doesnt reach $1000, government will pay the balance.

People affected by the lockdown and are either not able to reach their work place or not able to work from home can get $500 of their retirement fund. 

Again, those who have less than $500 in their general account will receive a government subsidy for the balance.

Those in the lockdown area and are without FNFP will get a relief payment of $150.

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