Retirement Fund approves access to loans for retiring civil servants [1]
Thursday, January 19, 2012 - 20:19. Updated on Monday, September 9, 2013 - 18:40.
Tonga's retiring civil servants can access up to 50% of their retirement fund entitlements in the form of a loan from today 19 January, following a decision made by the Retirement Fund Board earlier this week.
The board on 16 January approved the access following a petition from members last year.
Saia Havili, the Chief Executive Officer of the Retirement Fund Board, said that as of today a civil servant at a retirement age, who is either still working or has retired, could borrow 50% of his or her full contribution to the retirement fund. The contributions comprised 5% of their salaries. He said that the 50% would not be just a hand-over in cash, but it would be in the form of a loan with 9% interest. Payments for school fees would go straight to the schools.
The 50% entitlements for all eligible member under the programme amounted to $14 million.
Saia said that members of the Public Service Association PSA petitioned the Board last year to allow them to have access to 50% of their entitlements (member's 5% contribution and voluntary contribution, if any).
He said that previously the Board had approved the High Debt Hardship Policy in June 2011, and a Short Term Loan program in July 2011. Under these programs members had access to 30% of their full retirement entitlement.
Meanwhile, the Civil Servants Retirement Fund continues to grow. At the end of June 2011 it stood at $88 million. Revenues from investments by the Board bring in an estimated $4 million to $5 million annually. Government is still paying back the millions that it owes the fund.
Saia said that the board aimed for Retirement Fund to reach $100 million in 2013.
Members of the Retirement Fund Board are made up of three representatives of the employer, government and three representatives of the civil servants. The members of the board are: The Prime Minister, Lord Tu'ivakano; the Deputy Prime Minister, Hon. Samiu Vaipulu; the Minister of Finance, Hon. Sunia Fili; Folau Lokotui, Paula Vivili and Manu 'Akau'ola.
The PSA, however, was not happy with how the fund is administered by the board, and in their letters of petition they called for the resignations of two of the three member's representatives in the board. They have also demanded for the board to petition Cabinet to amend the regulation that stipulated that civil servants who were dismissed from the service would not to be paid the government's 10% contribution to the entitlement.
They also petitioned for former civil servants who had left the service before their retirement age, to also have access to the High Debt Hardship Policy.
Saia said that the board's prime concern was to look after the affairs of the members and to make sure that they would receive their dues when they retired. and for the fund not to run into the kind of problems that had happened in other Pacific island countries, where in some cases they have tostart again.