8.5% for NPF members - Solomon Star News

8.5% for NPF members

01 October 2019
From left, SINPF CEO Mike Wate, Minister of Finance & Treasury Harry Kuma and SINPF Vice Chairperson Dr Aarron Oritaimae. [Photo: Lachlan Eddie]

THE Solomon Islands National Provident Fund (SINPF) on Monday awarded an 8.5 per cent interest rate for its members for the 2019 financial years. 

SINPF deputy board chairman Dr Aaron Oritaimae said the 8.5 per cent interest rate represents $225.8 million, which would be paid out to members as of Monday.

 “Adjusting for the expected annual inflation rate to 30 June 2019, the 2019 real crediting rate is expected to no less than 7% (the official 30 June 2019 inflation figures are not available yet),” he said.

Dr Oritaimae said consistently over the last 6 years, members have enjoyed an average real return of 6% per annum on their contributions.

“Over the same period a total of $1.3 billion in interest were credited to members’ accounts,” he added.

He said the announced rate is a historic one as after 40 years; the Board is performing this very important function for the very first time based on audited accounts for the year end.   

He said prior to the announcement, the Board had been informing its members through the media the amended sections of the SINPF Act by the 10th Solomon Islands National Parliament in November 2018.

“One of the minor changes include an amendment to the timing of the annual crediting rate from 30th June to 3 months after the annual accounts are audited but no later than 30th September,” he said.

Dr Oritaimae said the change of rate has significantly reduced the risk associated with considering an interest rate based on 11 months of the current year unaudited financial data and information.

“In terms of reserving requirements, the balance of $89.8 million after distributing $225.8 million to members will be retained in the general reserves, increasing the general reserves to $386,825,788: and lifting total reserves including the asset revaluation reserves to $487,092,276,” he said.

Dr Oritaimae said another change made is the Special Death Benefit (SDB) Benefit premium to $30.

“The $5 premium in place since the inception of the Fund was assessed to be inadequate for a reasonable level of benefit.

“The Board in its deliberations this morning (yesterday) also approved a Special Death Benefit (SDB) of $6,000 for the current 2020 financial year,” he added.

He said the financial transactions related to the crediting and reserving rate and amounts announced yesterday, as a result of the amendments discussed will be reflected in the 2020 audited financial statements.