Good Practices in Social Security Good practice in operation since: 2010
Promoting external financial literacy A case of the Fiji National Provident Fund
Fiji National Provident Fund Fiji
Published 2012
www.issa.int
Summary The Fiji National Provident Fund (FNPF) embarked on its reform programme in 2010 when the effects of its unsustainable operation showed continuous mismanagement. The increase in early withdrawals in contrast to contributions received was a red flag for it to review its policies and enhance member education efforts. The reform schedule initiated internal and external savings programmes. With regard to internal savings, it was identified that Fund staff was accessing benefits excessively (as personal, housing and car loans). Before staff could promote financial literacy to Fund members, it was critical that they practice a savings culture themselves. Staff was encouraged to start saving with at least one financial institution or initiate a savings club amongst themselves. With regard to the external savings programme, a curriculum was developed in partnership with the Ministry of Education. Initially, there was a programme driven by the Fiji Development Bank for 3rd formers to save throughout the year and benefit at the conclusion of the year. As this programme did not continue with older schoolchildren, FNPF undertook to continue the promotion of saving through investment.
CRITERIA 1 What was the issue/problem/challenge addressed by your good practice? Evidenced by the exploitation of non-stringent early withdrawal policies, there was an alarming trend of discouraging a culture of saving among Fund members. There was an overwhelming lack of appreciation amongst most members of the importance of superannuation benefits and the investment in these. There was a need to instill an appreciation of saving but given the available opportunity presented with 4th formers, the proposal was taken to the Ministry of Education to engage students in learning about the benefits of investment and understanding social assistance provided by the superannuation fund. The intention to ensure superannuation coverage of as much of the Fiji population as possible was also targeted by the reform programme. Initially, citizens age 16 years and above were eligible for membership in the FNPF voluntary scheme. Whilst the FNPF Quick Response Team was effective in the various awareness campaigns carried out in schools, membership was voluntary. It was critical, therefore, that an initiative be developed to clinch the market niche with youngsters.
CRITERIA 2 What were the main objectives and the expected outcomes? It was important to align the FNPF vision (Securing members’ future) to that of the Ministry of Education. Also critical was the need to promote financial literacy on the benefits of a super saving scheme and ensuring this is aligned with investing in the nation’s future generation. The programme was also intended to implement the FNPF reform strategy on
2 Financial Literacy - impressing this idea early on students rather than targeting the older generation who have an ingrained non-savings culture. The initiative was also implemented as a critical Corporate Social Responsibility strategy, one that also addresses the reform objective of increasing member coverage. Through this programme, a definite market of voluntary members was established, whilst at the same time, financial literacy and an appreciation of superannuation benefits from an early age was promoted.
CRITERIA 3 What is the innovative approach/strategy followed to achieve the objectives? The programme involved a mandatory commercial studies subject undertaken by 4th formers nationwide where assessments of students’ understanding of the various activities were developed entailing research and expository evaluations of the various savings organizations and also the actual savings activities in FNPF. Parental involvement was mandated as well, communicated through the scheduled workshops FNPF staff held with the Parent and Teacher Associations and school correspondence with them. As much as possible, a practical and student-learning based curriculum was developed with end of year assessments on sums allocated to accomplish savings.
CRITERIA 4 Have the resources and inputs been used in an optimal way to achieve the set objectives and the expected outcomes? Please specify what internal or external evaluations of the practice have taken place and what impact/results have been identified/achieved so far. For the duration of the project, the partnership involved full funding and financing by the Fund. Professional development workshops were scheduled over the school year for teachers and some held with the Parents and Teachers Association. Besides the main project team, the FNPF Quick Response Team carried on their various school visits, giving presentations to students and registering voluntary members. Survey forms had been distributed to the schools to gauge the level of awareness with respect to savings and investment and feedback had been positive. The voluntary member base has seen an increase and with the Decree provision to reduce voluntary membership to as low as six years old, this has opened up more avenues for the Fund to capitalize on.
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CRITERIA 5 What lessons have been learned? To what extent would your good practice be appropriate for replication by other social security institutions? It is important that programmes and initiatives be developed to highlight the importance of instilling a savings culture, appreciation of financial literacy and planning as well as an awareness of superannuation benefits. The initiative to target the young through a learningbased curriculum is one that has enabled FNPF address its reform objective of promoting financial literacy externally. This is also a way of ensuring social coverage of a wider population and registering the nation’s future workers. In Fiji’s case, it was important that the Fund take a proactive role in involving the younger generation in interactive programmes that teach them it is never too early to think of retirement benefits.