The new FNPF Act will become effective on March 1, 2012 and FNPF will introduce a number of changes that will give all our members the opportunity to take control of their pension and build an even better retirement for themselves, their children and their children’s children.

The Key Changes

• The new FNPF Decree will become effective on 1 March, 2012, with a transitional decree to cover the period from the current Act to the new decree.
• A new age-based, actuarially sound pension rate will be implemented on 1 March, 2012 for all our members.
• Current pensioners will be given the option to receive a refund of the initial amount they had converted to pension and take it as a lump sum, or choose one of FNPF’s new pension options - Life Pension or Term Annuity.
• If a Life Pension is chosen by one of FNPF’s current pensioners, they will also have access to a top-up option that ensures that they are supported in retirement.

How a refund works

David Sigavou converted $5,000 for his pension at a rate of 25 per cent when he retired in 1985. Sigavou will be refunded $5,000. His neighbor Rajend Lal converted $15,000 at a rate of 15 per cent in 2006, FNPF will refund Lal $15,000.

The new FNPF options
Upon receiving their refund, current pensioners will be able to choose one, or a combination of the following options:

OPTION	HOW IT WORKS	BENEFITS
Lump Sum	The pensioner receives his/her pensionable amount in one sum, from March 1, 2012	Able to choose how this money is used.
Life Pension	Regular monthly payment until death	All pension payments are tax free
	Two Types: Sole Pension - stops upon the death of the pensioner and/or Joint Pension - payment continues after the death of the pensioner to the spouse of the pensioner at the start date (NOT a subsequent spouse)	Top-up applies
	5 year guarantee
Term Annuity	This is a regular monthly payment for a fixed term of 5, 10 or 15 years	Flexibility
	Different rates for each term	All payments are tax free
	Payments guaranteed for the end of the fixed term.  Nominee can apply to have remaining installments exchanged for a lump sum, at a rate set by FNPF after taking actuarial advice.

The new Life Pension rates

As you would see from these rates, the later one decides to take a Life pension, the higher the rates. Rates are outlined in the tables below:

Age	Single	Joint	Age	Single	Joint	Age	Single	Joint
55	8.7%	7.5%	60	9.6%	8.0%	65	10.8%	8.8%
56	8.9%	7.6%	61	9.8%	8.1%	66	11.1%	9.0%
57	9.0%	7.7%	62	10.0%	8.3%	67	11.4%	9.2%
58	9.2%	7.8%	63	10.3%	8.4%	68	11.7%	9.4%
59	9.4%	7.9%	64	10.5%	8.6%	69	12.1%	9.7%

*Rates up to age 100 are also available*

How a Life Pension works

 John Saike turns 55 and will retire on 23 March, 2012. His initial pension amount is $30,000. Based on the above, John’s pension rate will be 8.7%. Therefore, he will receive $2,610 per year ($217.50 per month). The Fund will guarantee this pension for the first five years, meaning that if John passes away in that period, the Fund will pay out the remaining installments to his nominee.

 The Term Annuity rates

 For a Term Annuity, the lesser time one decides to stay with the FNPF, the higher the rates. Below are sample rates; actual rates depend on market conditions. Rates for 1st March 2012 will be calculated and announced mid-February 2012.

Term	Rate
5 yrs	21%
10 yrs	12%
15 yrs	9%

How a Term Annuity works

John Saike turns 55 and had retired in 2000. His initial pensionable amount was $30,000 and come 1st March 2012 decides to convert this full amount to a 10 year Term Annuity.
Based on the above (which are likely to change), John’s pension rate will be 12%. Therefore, he will receive $3,600 per year for 10 years only ($300 per month). The Fund will guarantee this pension for the duration of the Term, meaning that should John pass away 4 years into the 10 year term, the Fund will pay out the remaining installments to his nominee.

How will the top-up work?

The top-up will be applied to those who convert their full lump sum refund to a Life Pension. The categories are as follows:

• Category 1: Pensioners who receive a monthly pension of below $100 will be brought up to receive $100 a month under the new rates. Some of these pensioners currently receive as low as $5 a month.
• Category 2: Pensioners whose income is between $100 to $300 per month will have their pension income protected and will continue to receive the same amount as they are currently.
• Category 3: Those who receive over $300 per month will be offered the best of two options – that is to choose a new pension of $300 per month or a top-up of 25 per cent of their refund capped at $10,000 to be applied on the purchase of new life pension.