VNPF consults on contribution rate increase proposal

September 23, 2025 9:41 pm | Posted in Business News | Share now TwitterFacebook

By Anita Roberts.

The Vanuatu National Provident Fund (VNPF) is consulting the public on a proposal to increase the employer and employee contribution rates.

Currently, all members of the Fund are having 4% of their salary deducted by their employers for their contributions every month. Employers are also contributing a 4% of their workers’ salary to the Fund.

General Manager (GM) of VNPF Paul Kaun said the proposed figures will be finalised after the consultation process is complete. Consultations are underway to get feedbacks before making a final decision.

GM Kaun said the proposal is part of a wider amendment to the VNPF Act, covering governance, benefits, and contributions, and is expected to be presented to Parliament in the next sitting.

He said the main objective of this proposal is to increase retirement savings for members. 

“Today, many people do not save enough for retirement. Most of the salary we receive is spent on family obligations, leaving us with only a small portion of retirement money. In the past, we had to turn to our retirement savings to recover from disasters. This proposal is one way to increase members’ savings,” he said.

The GM said the Fund’s growth has also been affected by the implementation of the age-47 partial withdrawal policy, which members are allow to withdraw up to 50% of their savings.

The proposal to increase employer and employee contribution rate was first raised by the former Prime Minister Charlot Salwai during the opening of the new PENAMA Branch on Ambae in April last year. He pointed out that the current rate is too low for low-income earners, who depend entirely on their contributions after retirement. He urged the VNPF board and management that time to review the rates.

The Deputy Prime Minister (DPM) and Minister of Finance, Johnny Koanapo, initially has advised the board not to proceed with the proposal, as the investments have not been providing sufficient returns for members and he cannot justify it in Parliament.

However, during the declaration of the 2024 2.5% interest rate for members, the DPM said there should be no complaints if the opportunity to increase contribution rates arises.

He thanked all employers for fulfilling their statutory obligations to contribute to members’ funds, and also urged them to remain committed.

“Today, many of us (employers) do not pay income tax, corporate tax, remittance tax, and others, but there is also reluctance to recognise the value of a Ni-Vanuatu worker who helps ensure your business survives…

“I will be making some amendments in Parliament and I want to give some recognition. I urge everyone to show the utmost respect to the members who have helped build what we have today.

“The time has now come for us to make some adjustments and I will favourably consider our workers when it comes to the amendments to ensure we give some recognition through the contributions,” said the DPM.