Regulatory Changes as Is_ RBF Deputy Governor

8/6/2019 Regulatory Changes as Is_ RBF Deputy Governor

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REGULATORYREGULATORYCHALLENGESCHALLENGES AS ISAS IS

SYMPOSIUM ON REVIEW OF FNPF ACT ANDSYMPOSIUM ON REVIEW OF FNPF ACT AND

PENSION SCHEMEPENSION SCHEME

Panel Discussion PresentationPanel Discussion Presentation

13 May 201113 May 2011

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Outline of PresentationOutline of Presentation

A. Background

B. Supervisory Concerns

Reserve Bank of Fiji 2

C. Regulatory Challenges

D. Way Forward


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BackgroundBackground HistoryHistory2003

Insurance Amendment Act became effective from June 2003

Provided powers for the RBF to supervise the FNPF

2004 - 2005

Initial set of prudential returns finalised


Issued Policy Statement #1 on Pension Fund Governance inJune 2005

On-going consultation and dialogue

2006, 2007 , 2008, 2009 & 2010 4 Onsite Visits, 7 TAs from IMF

FSAP review by IMF/World Bank in 2006

Issued Policy Statement #2 on Asset Investment Management

(2007) and #3 on Complaints Management(2009)


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BackgroundBackground Why Supervise?Why Supervise?

Systemic Importance of FNPF

Reliance of the members on

savin s/contributions


Safety and soundness of FNPF as the largest

financial institution

Ensure public confidence


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Supervisory ConcernsSupervisory Concerns

i) Governance

ii) Safety and soundness of investments

iii) Long-term Sustainability



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i. GovernanceBoard size commensurate with FNPFs operations,ensure relevant competency, and independence at

board level


Issues:

Board directors obligation to FNPF

Need for relevant technical expertise at Board

level Consider independent directors

Development of an effective corporate governance

framework


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ii. Safety & Soundness of InvestmentsNeed for more prudent investments and

strengthening of Asset Liability Management (ALM)


Issues:

Prudent investment guidelines to be legislated

Continue to strengthen technical expertise for

investment staff

Develop ALM risk appetite and policies


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iii. Long Term Sustainability

Long term sustainability of the FNPF as a pensionfund and also as a systemically important financial

institutions


Issues:

Regular actuarial assessment/valuation of pension

liabilities

Pension conversion factors to be on sustainablelevels

Legislated minimum guaranteed crediting rate

Reduce withdrawal grounds


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Regulatory ChallengesRegulatory Challenges

A. On- going consultation and dialogue

B. Robust Reporting Framework

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Regulatory ChallengesRegulatory Challenges

B. Robust Reporting Framework Current reporting framework to be reviewed to

enable in-de th rudential assessment.

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Current reforms expected to improve reporting to

the RBF


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Way ForwardWay Forward

Ensure new legislation addresses supervisory

concerns

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Improve supervision framework/techniques tofurther strengthen the effectiveness of

supervision of the FNPF

Continue to monitor progress of the reforms


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THANK YOUTHANK YOUTHANK YOUTHANK YOU



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FNPF Size Relative to FinancialFNPF Size Relative to Financial

SystemSystem December 2010December 2010

Other FI's

Total financial system $10.6 bn

FNPF $3.9 bn

Banks $4.5 bn

66% of GDP


Back

Banks

FNPF

37% of financial system Almost as big as all the banks

combined in asset size

Largest depositor in the

domestic banking System

Regulatory Changes as Is_ RBF Deputy Governor

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