HIGH yielding investments in domestic, offshore bonds and term deposits which were locked in 2011 contributed to the increase in income for the Fiji National Provident Fund by $3.39million.
In its 2012 annual report, the fund said income totalled $242.7m compared to $238.8m for 2011 while two major loan accounts, under Commercial Loans, commenced servicing their debts.
"The fund structured its current account rates to earn maximum returns on the cash balances. As a result, the return on investment was 7.2 per cent compared with 6.8 per cent in 2011," the report said.
"This enabled the fund to credit 5 per cent to members' accounts on June 30, 2012. The income from the Retirement Income Fund (RIF) totalled $7.2m, reflecting four months of operations, bringing the consolidated investment income to $249.9m.
"Government securities remained the dominant asset class, making up approximately 58 per cent of the investment portfolio.
"A total of $240m in government bonds was transferred to the RIF as part of the pension reforms."
The report said investments in government bonds for the 2012 financial year held a value of $77.6m compared to $237m for 2011. The total portfolio closed at $1.98 billion compared to $2.06b in 2011, the report said.
"In terms of quasi-government securities, this portfolio consists of government guaranteed securities in statutory bodies," it said.
"The portfolio closed at $231m compared to $331m in 2011. Total investments in quasi-government securities totalled $5m compared to $51m in 2011."
The report said the significant decline in the total floats by quasi-government securities was attributed to competitive lower rates offered by commercial banks.
Meanwhile, the report said local rates continued to decline during the financial year. The portfolio closed at $104m compared to $173m in 2011.
"The (FNPF) board continued dialogue with the Reserve Bank of Fiji for additional approval of offshore investments resulting in the approval of $40m for 2012," the report said.
"This was in addition to the $150m approved in the 2011 calendar year. A total of $90m was invested mainly in foreign equities, bonds and term deposits during the year."
A total of $20m was also invested in foreign term deposits. This portfolio closed at $86m compared to $59m for 2011.