VNPF contribution rate increase effective next year
November 6, 2025 10:11 pm | Posted in Business News | Share now TwitterFacebook
By Anita Roberts.
Starting next year, the Vanuatu National Provident Fund (VNPF) contribution rate for employers and employees will rise by 2%, as approved by Parliament.
Currently, all members of the Fund are having 4% of their salary deducted by their employers for their contributions every month, while employers contribute another 4%, making a total contribution of 8%.
Parliament has approved the increase to 6%, bringing the total contribution to 12%. This will take effective once the Bill for the VNPF (Amendment) Act is gazetted.
General Manager (GM) of the Fund, Paul Kaun, has clarified public confusion about the increase, with some believing it will be used to pay off the VT1 billion Air Vanuatu loan owed by the government or to revive non-performing assets.
He said the contributions will not be used for operations, as some people think.
The contributions will be pooled and invested to generate interest, which will be added to members’ balance over time and can be withdrawn upon retirement, he said.
The main purpose of the increase is to build members retirement savings, and while it may seem significant to some members, it will benefit them in the long term, said the GM.
He mentioned that increasing the contribution rate is the first step in amending the VNPF Act, with another review expected in the coming years, as the Act no longer aligns with current developments and market changes.
GM Kaun said the next legislative change will focus on introducing a pension scheme that allows members to make withdrawals throughout their working career, up to retirement.
Regarding non-performing investments, the GM said they aim to revive all of them by end 2027, as part of the Fund’s strategic plan.
One of these investments is the Air Vanuatu loan, which an agreement has been signed for the government to make the first installment.
The GM said part of increasing the contribution rate is to strengthen VNPF’s investment base, enabling it to invest in projects that can generate higher yields for members.
“If VNPF wants to invest in good projects, it needs to have sufficient fund to invest…Currently, the cash balance is over VT2 billion, but with we want to grow by exploring other opportunities. We want to see VNPF offer a double-digit or better interest rates for its members by 2029,” he said.
The GM assured that the reserve account is at VT1.6 billion. He said while it means that VNPF is financially sound, it needs to tighten expenses and focus on achieving better returns.
Mr. Kaun also said that they will set establish an Investment Committee by the end of this year to review investment proposals before reaching the board.
Other areas of improvement include customer care, introducing a complaint mechanism for members to provide feedback directly to the Fund, and speeding up the withdrawal process, as members complain it takes too long.
