ONE in three pensioners have opted out of the pension scheme, which means millions of dollars is expected to enter our financial system when the first payment under the new age based scheme is made today.
While the Fiji National Provident Fund did not reveal to The Fiji Times Business what was the total withdrawal by the pensioners, it had however revealed that it would spend about $410million to support future pension pay outs. Of this amount $310m would be in refunds while $100m would be in top up payments.
Under the new scheme, the FNPF will refund all savings but the pensioners would have to choose their pension option, which includes lump sum withdrawal.
The government announced the issue of the Fiji Government Viti Bond, worth about $20m, which it hopes some pensioners would invest in.
"The concern that we have is if the pensioner spends all the savings within a short period and will now have nothing to fall back on in terms of supporting their livelihood," Finance permanent secretary Filimone Waqabaca said.
"If the pensioners spend all their money, we may see more people included in the social safety net or support programs of government.
"Such a situation can be avoided if the pensioners invest their fund, and the Viti Bond is a choice in this regard since it can provide them quarterly returns on their investment."
However, the withdrawn pension could also push our already high liquidity balance higher.
"Liquidity or surplus funds with the banks is already high. When there is high liquidity, the expectation is that both the deposit and lending rates of banks should fall.
"The pensioners may spend their cash on upgrading of their property or maintenance work. This and similar expenses by the pensioner will support businesses and growth," Mr Waqabaca said.