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Mandated contributions

Fiji National Provident Fund
Saturday, March 03, 2018

FIJI National Provident Fund's compulsory members' contributions to their retirement savings is known as "Mandated Contributions".

As the term implies, these contributions are stipulated by law under the FNPF Act 2011.

Mandated contributions are sourced from members' wages and employers' contributions. Employers deduct 8 per cent of their employees' gross wages for this purpose.

They also contribute 10 per cent of the same to their employees' FNPF savings.

So, a total of 18 per cent of the members' wages is paid to FNPF at the end of each month.

For example, a member who earns an annual salary of $20,000, should have $3600 annual contributions deposited into his FNPF account.

Of these, his/ her own contribution would be $1600 per year (8 per cent of $20,000) or $133.33 per month and his/her employer would have contributed $2000 (10 per cent of $20,000) or $166.67 per month.

Apart from accumulating their retirement funds, FNPF allows members to access a portion or all of their savings under approved withdrawal grounds.

But sometimes, employers don't pay the contributions on time and this affects members' accounts.

The flow-on effect is that members' balances are unchanged, leading to a lower interest gain which ultimately reduces their eligibility and access to withdrawal assistance.

At the beginning of the 2017 financial year, total contributions owed was $6.2 million.

FNPF managed to recover $3.4m, leaving a balance of $2.8m. For the 2018 financial year, a total of $4m in contributions is outstanding, taking the total contribution debt to $6.8m ($4m + $2.8m).

This means, that there are members whose balances are lower because their employers have yet to pay their contributions.

This is a breach of the FNPF Act which clearly states that members' contributions must be paid to FNPF within 14 days after the end of each month.

Legally, FNPF has the powers to charge the employer the $100 penalty for each employee or member whose contribution they've failed to pay on time.

In recent years, FNPF has offered penalty waivers to enable employers to submit members' contribution payments.

This is part of our process to recover unpaid contributions and it also includes the following:

* Order to third parties (those that owe money to the employer),

* Time payment arrangements,

* Prosecution.

While these are very effective ways to recover members' contributions, FNPF continues to stress to employers the importance of fulfilling their responsibilities as stipulated in the FNPF Act.

Since 2010, FNPF has prosecuted 1694 employers for non- payment of FNPF contributions and failure to submit necessary remittances for their employees to FNPF.

The law prescribes harsh penalties for non- payment of FNPF contributions and for the deduction of contributions from workers without payment to FNPF.

The offence of failing to pay contributions for employees carries a maximum penalty of $5000 for the defaulting employer.

An employer who deducts FNPF contributions from their employees but fails to pay the funds to FNPF, faces a maximum penalty of $25,000 plus an imprisonment term of three years for the directors and authorised officers, if convicted by the court.

Most recently, an employer was ordered by the court to pay $3000.

In the previous legislation, the maximum penalty was $500 and employers who were prosecuted would pay fines ranging from $50-$500.

Challenges employers face

There are varying reasons given by employers for their inability to pay contributions on time.

A key factor is cash flow problems or their debtors do not pay up on time.

Others claim that they did not know about the payment deadline or the penalties, and then there are those employers who have been classified as habitual offenders.

FNPF is aware of these challenges and has made all efforts to ensure employers resolve their issues.

Our teams have carried out extensive awareness with employers all over the country and we also engage the media for important announcements.

The introduction of the employers self services portal in 2015 was also aimed at making things easier for employers as well as give them autonomy.

Employers and their representatives have been trained on using the portal and FNPF has set up direct telephone lines and created exclusive email addresses to enable employers to link up with our teams when they face difficulties.

While there are ongoing challenges with the portal, FNPF has been able to resolve these by providing employers a direct channel to our teams allowing them to resolve their issues.

The way forward

FNPF knows the importance of maintaining good relationships and has formed strategic alliances with our stakeholders, including employers.

And as we continue to address non-compliance issues, we have put measures in place to resolve these obstacles which ultimately affect members.

We have a debt management policy in place which outlines steps for enforcing debt recovery strategies.

FNPF will continue to highlight to Employers the importance of paying members contributions on time and we also encourage members to check their accounts to ensure their funds are deposited on time.

Members and employers have a role to play and FNPF as custodians of members' funds has a responsibility to ensure their funds are paid on a timely basis.

For compliance issues, please email For Employers E-Services Portal email and for any other issues email

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