Economist backs S.N.P.F. increase
Former Samoa National Provident Fund Auditor and Senior manager, Peniamina Muliaina, says he supports the increase of mandatory fund contributions to 10 per cent in three years, but added that it still doesn’t go far enough to ensure comfortable retirement.
This July will be the first of three annual 1 per cent increases to mandatory contributions towards employee S.N.P.F funds. The plan has been approved by Cabinet and will come before Parliament in their next sitting.
Mr. Muliaina, who today is an economics lecturer in the National University of Samoa, said S.N.P.F is right to increase contributions to boost their member’s retirement funds.
“It is a great thing, and in fact it should have been done ages ago,” he said.
“But even if they go to 10 per cent, that is still not enough to guarantee a happy retirement life.”
Before he became a lecturer at N.U.S, Mr Muliaina worked at S.N.P.F for 10 years. He said he saw thousands of records of member’s withdrawing their full funds at retirement age (55), which on average was just WST$40,000.
That small fund is why most members opt to withdraw their entire savings, as opposed to a retirement pension, he said.
“Will that $40,000 be enough to support you in retirement? No. You end up with less than 50 dollars a fortnight.”
The lecturer said instead while increasing mandatory contributions will help improve the average worker’s retirement funds, more attention should be paid to improving awareness of the benefits and strategies of saving money, and encouraging people to add more to their fund than required.
Compound savings work best, and voluntary contributions above and beyond the mandatory deposits will help too, he said.
“And let people know – you don’t have to wait until you have a job to save at S.N.P.F, you can start saving now for your children.
What’s more, contributions for employers should not go beyond 10 per cent, he said. With a justifiably unhappy business community balancing wage increases and now S.N.P.F increases, the fund needs to consider its options.
“That will hurt the business community, obviously, so they should be encouraging voluntary contributions.”
Ultimately, the more money invested in the S.N.P.F the better, Mr Muliaina said. He said with the realities of Samoan life, borrowing is inevitable, and it should be done through the S.N.P.F's financing opportunities to reap greater benefits in returned dividends.