VNPF appeals for understanding over 2013 annual interest non-payment

The Management of the Vanuatu National Provident Fund (VNPF) continues to carry out awareness for its members throughout the country to explain to them why the Fund will not be paying out the annual interest for 2013 due to the members this year.

This awareness has been going on since early this year in the local media and through visits to workers and their employees to explain to them the reasons for the decision and asking for their understanding and continued support.

General Manager Santos Vatoko says teams from the Fund have been visiting Government departments and the private sector and speaking to employees and their employers to explain the challenges facing the fund and asking for their understanding.

He said they have just returned from such an awareness trip to Tanna and they have also been to Santo and they plan to visit Penama and Sanma provinces in the near future.

Even though the VNPF has been engaging in this exercise, misunderstandings as a result of misinformation continue to face the Fund.

Twice already there have been postings in the social media, particularly the Facebook group Yumi Toktok Stret telling members the VNPF will not be paying members the 2013 annual interest and posing questions as to the reasons of this decision.

The second such posting was seen just this week, which attracted nearly 200 reactions.

Many of the comments on the post were critical of the decision and asking more questions than giving answers over the management and operation of the country’s retirement fund.

This FB post and comments it attracted prompted the General Manager of the Fund to take the opportunity to further explain the reasons behind the decision.

His comments have been posted on FB post on the subject.

“Since 2008, the Fund had been declaring Annual Interest above the Funds actual net profit, resulting in accrual of a deficit balance in our General Reserve Account (GRA).

“The Act specifically states, we are only obliged to pay up to whatever net profit the fund achieves.

“Previous decisions have however been in favour of higher interest than what was achieved.

“Hence if you recall in 2012, our general reserve was in deficit of Vt156 million (Consolidated). In actual fact, VNPF on its own was at least over Vt200 million,” the GM’s comments read.

“In 2012, when the Ernest & Young Audit was undertaken along with repeated concerns raised by Reserve Bank of Vanuatu regarding our Accounting standards, it was recommended we revalued all our assets and rebalance our books in accordance with Market conditions to meet International Accounting Standards.

“In that process, 2 particular assets namely NBV Building and VNPF Santo Office with the additional conference facilities on top were valued below mark,” he explained.

“As a result, their values had to be written down resulting in our General Reserve accruing a deficit balance up to Vt642 million.”

“As such is the reason why we went out to explain to our members that we needed them to understand it was important that the fund must clear the General Reserve Deficit to allow it be able to actively look at introducing much needed benefits to our members such as Housing and Medical, that will add additional strain (to) the business, but it cannot move onto that phase until that General Reserve is cleared,” GM Vatoko adds.

“In hindsight, our members have also been technically over credited interest in the past years, hence in our explanations, we asked them to understand the need for all of us to sacrifice our annual interest for 2013, but starting from 2014, once the GRA has been recovered, we will start paying interest again.

“As at July 2014, our General Reserve Account is now technically back into the green with a credit balance, which now means, from here till December, we will work towards raising sufficient income to start paying interest to members again,” he stated.

“A big part of the work being undertaken too is the review of the Act to not allow the above situation happening again, as well as policy reviews, and restructuring of our Investment Portfolio to improve yields that will contribute towards an improved bottom line, hence better Annual Interest delivery in the next 12 – 24 months.”