From 10%, NPF members get 5.3% interest this year
MEMBERS of the National Provident Fund (NPF) will receive 5.3% interest payments to their savings this year.
Finance minister Snyder Rini announced this yesterday.
This year’s rate was a reduction from last year’s 10% interest payment.
Some NPF members received the announcement yesterday with disappointment and scepticism.
“Why the big reduction?” one NPF member asked.
“Is NPF still making profits from its many investment portfolios?” he continued.
Mr Rini said NPF’s profit margin for this year declined by 5% from last year.
He explained the 5.3% interest rate was determined on the back of NPF’s expected profit of more than $231 million, which he said was a decline of 5%.
Mr Rini said although NPF faced economic challenges with its offshore and domestic investment markets, the fund’s performance was “satisfactory”.
He said the 5.3% interest rate represents more than $124 million, which will be paid on to members’ accounts as of today.
The finance minister said $15 million of profits made this year will be ploughed back into the fund’s general reserve – bringing the total reserve to $345 million from last year’s $329 million.
This latest interest rate payout to members will bring their total contribution balance to about $2.75 billion from $2.506 billion in the last financial year.
Chairman of NPF board Peter Boyers said the fund’s reduced profit margin this year was due to a number of factors.
The main factor being a reduction in dividends from Solomon Telekom, NPF’s key domestic investment.
Mr Boyers also said income from rentals has gone down due to the vacation of five residential properties at Tasahe and Town Ground commercial property.
Under the NPF Act, the lowest interest rate the NPF board can pay its members is 2.5 per cent.
The highest interest rate NPF ever paid to its members was 20%. This was in 2013.
In 2014, the rate was reduced to 15%.
In 2015 and last year, members received 10%.
By JOHN AATAI