Cook Islands National Superannuation Fund logo Photo: Cook Islands National Superannuation Fund
By Talaia Mika, Cook Islands News
The Cook Islands National Superannuation Fund (CINSF) is designed as a pension scheme, not a savings account, says its chief executive, following concerns over withdrawal limits on retirement.
The Fund has come under scrutiny following reports that members can only withdraw a 25 per cent lump sum on retirement at 60, with the remainder paid as a pension, a policy chief executive Damien Beddoes states has been in place since the Fund's inception in 2000.
Beddoes explained the legal framework of the Fund, clarifying that it was always established to be a pension scheme - not a savings account that allows full withdrawal upon retirement.
"We have the Hansard from the debate in Parliament when the Fund was being passed. The Fund was debated and always intended as a pension scheme. It was actually intended to replace the Cook Islands Government Pension when it was established. However, the CI Government Pension still remains today," Beddoes said.
He said the law clearly states that the Fund is to provide a pension and other benefits, not lump sum withdrawals, except under specific circumstances.
Cook Islands National Superannuation Fund logo Photo: Cook Islands National Superannuation Fund
Currently, members can withdraw up to 25 per cent of their compulsory balance at retirement. If a member's balance is below $45,000, they can apply for a full withdrawal. Otherwise, the remainder is converted into a monthly pension payment for life.
However, there are concerns that the pension amount is too little to support individuals, leading some to prefer a lump sum for investment elsewhere to generate better income.
A local pensioner, who did not want to be named, told Cook Islands News that he has returned to work in retirement because his current superannuation pension of $197 a fortnight is not enough to cover basic living costs.
"I get $400 a month without tax, which is like $197 a fortnight, and that's not enough to survive, especially with inflation and all. So now I'm working again at retirement to get enough money to survive," the pensioner said.
He also shared his frustration about not being able to access his full retirement savings when he chose to move overseas.
"I went to withdraw because I wanted to leave the Cook Islands, but when I moved overseas, the receptionist told me we won't get the whole amount," he said.
The pensioner claimed that when the National Superannuation Fund was first introduced and consulted in 2000, people were under the impression that they would be able to withdraw all their contributions upon retirement or when leaving the country permanently.
"There's three of us who applied when we retired but we were not allowed to withdraw our money, so we went to their office and complained," he said. "Now after I collected in 2020, it was a total waste of time."
He also questioned what happens to the remaining funds after a pensioner passes away, citing the example of his uncle who died in 2010.
"We don't know what happened to his remaining balance," he said.
Beddoes said for those moving overseas, the fund can be transferred - not withdrawn - to a registered superannuation scheme in the new country of residence. Short-term workers on contracts of three years or less can withdraw their full contributions after six months of permanently departing the country.
Addressing concerns about what happens to unclaimed funds after death, Beddoes explained that a member's contributions become part of their estate and can be distributed according to their will.
In cases where a will does not exist or next of kin is unclear, CINSF works to trace relatives.
"A member's money forms part of their Estate. If they have a will, their funds are distributed in accordance with it. In most instances, yes, the married spouse is the beneficiary. If they leave the country, they should provide their forwarding details to CINSF," Beddoes said.
Responding to criticism that the Fund did not do enough to educate members about how the scheme works, Beddoes defended their efforts, saying they conduct between 50 to 100 consultations each year and provide regular updates through various media.
He pointed to a broader issue of financial literacy in the Cook Islands as a major barrier to understanding superannuation and long-term saving.
According to Beddoes, the Fund could support $500 weekly pension payments in the future - but only under current contribution rates and with improved financial literacy.
"The biggest issue you are seeing in these questions and responses is because we do not have a financial literacy programme in the Cook Islands," he said. "Our people do not understand money and how to manage it and make it work for them."
Beddoes said many people still rely solely on the government pension, which is not enough to live on, and unless this changes, the cycle of poverty in retirement will continue.
"Sometimes reality hits and our people understand the real issue - not the emotional or ignorant responses - but the reality of poverty."
For more information on how the Cook Islands National Superannuation Fund works, Beddoes encourages the public to visit their website at www.cinsf.com, which provides detailed information on all benefits, claims, investments and announcements.
