MICROCAPITAL BRIEF: Solomon Islands’ National Provident Fund Launches youSave Retirement Savings Plan for Self-employed With Support from UN’s PFIP

The National Provident Fund, a government-backed retirement trust in the Solomon Islands, recently launched youSave, a savings plan designed to help self-employed islanders establish and contribute to retirement accounts as do “formally employed” citizens. The United Nations’ Pacific Financial Inclusion Programme (PFIP) is subsidizing the implementation of the plan with USD 177,000 as well as technical assistance and a donation of 20 tablet computers.

Under the Solomon Islands National Provident Fund Act, “every employer is required to pay to the Fund a sum equivalent to 12.5 percent of each employee’s total gross salary each month. This pay or contribution comprises 5 percent deducted from a member’s gross salary and a further 7.5 percent contributed by the employer on behalf of the employee/member” [2]. Contributors to the savings plan have enjoyed an average annual interest rate of 8 percent since 2007. As of 2014, the Fund has USD 2.4 billion in assets under management, and it has 170,000 members as of June 2015. More recent data is not available.

Based in Fiji, PFIP was established in 2014 with a 5-year budget of USD 20 million. Its goal is to increase by 1 million the number of Pacific Islanders who have ongoing access to “affordable” financial services and related education. Its main zones of operation are Fiji, Papua New Guinea, Samoa, Solomon Islands, Timor Leste, Tonga and Vanuatu.

By Christian Chartier, Research Associate

Sources and Additional Resources:

[1] “NPF Pilots New Retirement Savings Scheme for Self-Employed”, PFIP.org, http://www.pfip.org/newsroom/press-releases/2017-2/npf-pilots-new-retirement-savings-scheme/

[2] “Solomon Islands’ National Provident Fund – Contribution Rate”, SINPF.org.sb,
http://sinpf.org.sb/index.php/employers-services/about-contribution-rates.html

PFIP
http://www.pfip.org/

MicroCapital coverage of The Pacific Financial Inclusion Programme (PFIP), June 6, 2015 https://www.microcapital.org/microcapital-brief-pacific-financial-inclusion-programme-pfip-bima-partner-to-offer-microinsurance-in-rural-papua-new-guinea/

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