As the Fiji National Provident Fund credits 5% interest to its member’s accounts, Vanuatu stands amazed as, after so many decades, the interest rate for Vanuatu National Provident Fund members still sits at 1.2%, which is the lowest in the South Pacific.
When it was announced that Tanna MP. Johnny Koanapo will be Minister for finance, a sigh of relief went through VNPF members as most do know this is a schooled person who does not hesitate to address issues concerning the people of this country.
Minister Koanapo though will need all the help he can get if he is the one to fix VNPF through an amendment.
URGENT VNPF ACT AMENDMENT
One urgent matter MP Koanapo must seriously consider is an amendment to the VNPF Act.
This amendment should set further limitations to investments that do not pay dividends and also address the composition of the VNPF Board Members which at the moment clearly operates outside of members interest.
An amendment to the VNPF Act will ensure the VNPF Board composition has no favour nor political affiliation which can undermine its decisions on matters to do with members savings.
FOUR MEMBER REPRESENTATIVE
To fully protect VNPF members savings from being invested outside the spectrum of a normal retirement scheme, the adjusted composition should be a 4 members Voice representative (Rep) who will make up the VNPF Board of Directors.
The Reps should be from the (1) Vanuatu National Workers Union – VNWU,
(2) the Vanuatu Teachers Union – VTU (3) a Joint rep from the Public Servants Commission – PSC and the Police Service Commission (4) the Private Sector.
All these 4 representatives are fully registered functional entities and they are the rightful owners of members Funds.
Since VNPF is 100% owned by VNPF Members, the VNPF Board Chairmanship and Vice-Chairman must come out of the 4 mentioned members.
The VNPF issues stem from a very politically motivated board and this must stop immediately.
Additional stakeholders should come from the Vanuatu Government and also an Employers rep from VCCI.
Election of VNPF Board members
Any VNPF Board member must be elected through an Annual General Meeting based on certain criteria.
(1) VNPF Board members must not be politically affiliated to any political party.
(2) Must be qualified with experience in business
(3) Must not have any court conviction under courts of Republic of Vanuatu
4. Must not own business with lawsuits in the courts of Republic of Vanuatu
VNPF members concerns
- VNPF Members own 100% shares at VNPF but for the past decade have no voice or say in how their savings are being spent
- Members concerns are not being heard and it takes quite an effort to listen to members request even though members own 100% of VNPF
- Politics has been eating away too much of members savings through political decisions taken by board members who are politically appointed
- All investment by VNPF is not in favour of members interest for the past decades. There are too many failed Investments which the VNPF has ventured into and to date, there is no paid dividend from some of these investments which are now dormant and have not helped increase the interest returns in members accounts
- The VNPF Act, Investment policy guideline, and stakeholders interest such as annual interest plus other benefits have become too difficult to change in keeping to current standards of living and welfare.
- VNPF goals and strategic vision and business operations cannot operate well as there is too much interference from the politically appointed board of directors who come on with their own wrong interest.
OUTCOMES VNPF SHOULD BE PROJECTING
- Save VNPF from wrong investments that do not pay dividends nor increase members interest in savings
- VNPF needs to be more profitable and make VNPF more beneficial to members and their savings
- VNPF needs to match the interest returns like Karem higher interest returns like the Solomon Islands, Samoa and Fiji.
The Interest Rate
The rate of interest increased to 2% for the 2018 financial year. For the 2019 Financial year, it dropped back to 1%.
There has been no annual report for the last 4 years. There is hope that the current Minister of Finance will address the matter as VNPF has now become a bailout source for most businesses inside and outside of Vanuatu.
A Commission of Inquiry report was never made public however the Minister of Finance can himself release this report as members need to know whats happening with their savings.
The problems of investment can be retold over and over again concerning VNPF, however, the issue with so many failed investments rests with a politically motivated board of directors and like any public institution, control measures must be set in place.
Will Minister Koanapo be the one to fix VNPF? That remains to be seen.