Nambawan Super takes initiative to amend super act

A Task Force Committee is likely to be established to review the Superannuation General Provisions Act 2000, the umbrella legislation covering the operations of all super funds in Papua New Guinea.

The SGPA legislation was introduced by the Mekere Government over 10 years ago resulting in major reforms in the superannuation industry and other financial institutions.

Nambawan Super is in the forefront of lobbying to enact key changes to the Act to improve operational arrangements aiming to achieve more benefits for members especially in light of the economic boom expected from the PNG LNG projects.

The Bank of PNG has already indicated its support for the Nambawan Super proposal to set up a Task Force Committee to review the Act.

The changes proposed by Nambawan Super include:

Contribution rates
Expanding superannuation is a sensible way to preserve value from our growing economy, relieve inflationary pressure and boost members’ wealth in retirement. Nambawan Super is proposing increasing the compulsory contribution rates by 2% which would move the current employee portion of 6% to 8% and the employer portion from 8.4% to 10.4%.
The Australian superannuation industry is also considering an increase to their contribution rates, in a similar bid to achieve long term benefits from favourable economic conditions.

Life & Medical insurance
Under current legislation super funds cannot fund members’ life insurance premiums from its profits. It can do so, however at the election by each member and with extra contributions by them. If the compulsory contribution rates are increased, we recommend reconsidering this position.

Payments on compassionate grounds
Nambawan Super advocates amending the legislation to allow the Trustee to be able to make payments to a member on compassionate grounds, such as where the member’s immediate family is critically ill and life can be prolonged with medical treatment.
‘Family’ super
Nambawan Super is in favour of introducing a new product to allow fund members to have sub-accounts for their family members. The sub accounts will be set up on Voluntary contributions. A culture of savings in our society will also be promoted here. 

Housing withdrawals
Under current law members can only make withdrawals from employee contributions for housing.  We recommend the review consider putting in place a formula that allows the member to use part of his/her employer contributions for this important purpose.

Extending the Super net
We recommend taking steps to give all PNG employees access to superannuation by removing the minimum number of employees contributions threshold. Currently, superannuation contribution is compulsory for employers with 15 or more staff.
Further, so smaller companies are able to manage the increased cost of providing super for their employees; we propose a lower contribution rate for companies employing less than 15 employees. This also provides a scope for self-employed people to contribute to superannuation. There are 30,000 registered companies in PNG but less than 4,000 companies contribute towards their workers retirement.

RSA limit increase
The RSA has proven very popular with members reaching retirement age and preferring to keep part of their benefit payout growing in the super environment. While the 2011 Budget has increased the maximum account balance to K250,000, which is a very positive step, Nambawan Super believes that as member balances continue to increase, it make sense for the RSA maximum to increase as well.  We recommend consideration of K500, 000 as the revised maximum that can be held in the RSA product.

Managing Director of Nambawan Super, Mr Leon Buskens said; “Nambawan Super’s Board and management are in regular contact with the industry Regulator – the Bank of PNG, as well as the Government and other industry participants.  Last year, we wrote to the Regulator, proposing a comprehensive review of the Superannuation Act.  We are pleased to report that the Bank has been receptive to this and will present the proposal to the Minister for Finance and Treasury”.

“The Act was introduced in 2000 and brought with it a number of very important reforms to improve the ability of Papua New Guineans to provide for their retirements. Members have greatly benefited from the significant transformation that was brought about by the introduction of this legislation. Time has since marched on, bringing with it changing needs and a more sophisticated market.”

“As an organisation dedicated to looking after the long term financial futures of our members, Nambawan Super is confident that the proposed measures will encourage long term savings and enable people to build a financially secure lifestyle, whilst tapping into the expected economic boom. One day all the natural resources we are blessed with will run out. Let’s learn from the lessons of many countries that have misapplied the opportunities we have now. It’s how we save now and our collective spending disciplines that will determine our future and that of the generations behind us.” Mr Buskens added.



Design in CSS by TemplateWorld and sponsored by SmashingMagazine
Blogger Template created by Deluxe Templates