VNPF Act Amendments 2025: What Businesses Must Know and Do

By Jennifer La’au and Damian Kelly

The Vanuatu National Provident Fund (VNPF) (Amendment) Act 2025 (Amendment) introduces major reforms aimed at strengthening retirement savings, improving fund governance, and enhancing compliance enforcement by amending the VNPF Act (Act). For businesses operating in Vanuatu, understanding and preparing for these changes is essential to avoid penalties and support employee welfare.

The Act has been passed by parliament and is set to commence on 1 January 2026. Businesses and employers should now prepare for the forthcoming reforms and be ready for the new obligations that come into force at the start of 2026.

Increased Contribution Rates

The mandatory contribution rate has risen from 8% to 12%, split disparately between employers and employees (8% and 4%, respectively). This increase is designed to improve the long-term financial health of the VNPF and ensure better retirement outcomes for members.

In order to be ready for the Act’s commencement, employers must update payroll systems to reflect the new 8% employer contribution rate. Employers should also communicate the change clearly to employees, including its impact on take-home pay and future benefits.

Needless to say, employers must continue to ensure timely and accurate remittance of contributions to VNPF to avoid penalties.

Voluntary Contributions

The Act introduces a new provision for “Additional Voluntary Contributions.” Employees and employers may now contribute beyond the mandatory rate, offering greater flexibility in retirement planning.

Like the increase in the mandatory contribution rate employers need to provide employees with information about voluntary contribution options. Employers will also need to facilitate payroll deductions for those opting in, and maintain records of voluntary contributions and ensure they are correctly reported to VNPF.

Partial Withdrawals at Age 47

Members aged 47 and above may now make a one-time partial withdrawal of up to 50% of their accrued credit. This change supports mid-life financial needs while preserving retirement savings.

Businesses and employers must be prepared to assist employees with documentation or verification if requested. Employers can also encourage financial literacy and planning to help employees make informed decisions about withdrawals by providing training and information about the new changes.

Enhanced Compliance Enforcement

Employer non-compliance has been an issue that has plagued the VNPF since its establishment. To address employer non-compliance, the Act empowers police officers to apply for search warrants to investigate suspected breaches of the Act. This includes entering premises and seizing documents related to VNPF obligations.

Now it is more important than ever for employers to be aware of their VNPF obligations. Businesses are likely to face more scrutiny and even penalties in cases where they have not complied with obligations under the Act. Employers must now:

• ensure all employee records, contribution reports, and payment receipts are up-to-date and accessible;

• cooperate fully with VNPF inspectors and law enforcement if approached; and

• conduct internal audits to verify compliance with VNPF requirements.

Next Steps

These amendments reflect a broader effort to modernise VNPF operations and align with international best practices. For businesses, the changes present both a compliance obligation and an opportunity to support employee financial wellbeing. Despite the aims of the Amendments the realities for the workers of Vanuatu and businesses in operating in Vanuatu include likely less take home pay, tighter budgets and lost finances in order to comply with the obligations.

Non-compliance can result in legal action, reputational damage, and financial penalties. Therefore, proactive engagement is essential. Employers are encouraged to consult with legal or financial advisors to ensure full understanding of the new provisions and to implement necessary changes ahead of enforcement.