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By FRANK ASAELIs
THE Nasfund Contributors Savings and Loans Society was set up by the National
Superannuation Fund (Nasfund) Ltd to protect its members from taking out loan
advances that are unaffordable.
Nasfund joint chief executive officer Rod Mitchell told The National NCSLS was
set up to provide Nasfund members and private sector workers a complementary
savings vehicle besides superannuation benefits.
The facility allows members to save money on a regular basis to cater for the
every day financial commitments that are always confronting the average Papua
New Guinean worker.
The fact that the savings and loan vehicle has grown from K5 million to K29
million in three years was testimony to the success of that strategy.
Mr Mitchell said the long term structure to tackle the issue was to improve the
savings structure.
This could be done by introducing financial savings programmes in schools.
He said the idea was simple in that members could have salary deductions for
savings which could then be accessed for loans at the rate of 1% interest per
month.
He said all 93,000 members had the ability to have an account and access the
facility.
Nasfund also recognised from its staff problems with finance companies and the
need to do something to stop the over extended borrowings by staff.
“Our approach was fairly holistic; we recognised that there were three areas
where staff had problems.
“They were rental housing, savings and education,” Mr Mitchell said.
“These measures were introduced because we value our staff and wanted to ensure
that they are not unduly burdened with debt,” Mr Mitchell said.
Firstly, Nasfund gave all staff as part of their salary package a K100 per
fortnight housing allowance payable to the landlord.
Secondly, they lifted the employer contribution to 10% on superannuation to
cater for longer term savings so they had a reasonable retirement payout and had
something to fall back on.
And thirdly, Nasfund issued interest free loans to staff to cover education for
immediate children on the basis that it had to be paid out in full over the year
through salary deduction so at the end of each year, the education balance of
every staff member was zero and then they could apply again.
Mr Mitchell said the issue with loans was not so much the principal repayment
but the interest, by issuing interest-free loans to staff; the pressure was
taken off them.
As a final measure Nasfund allowed salary deductions to finance companies but
capped the loan repayments at 20% of the staff member’s salary.
The measures had successfully brought down the indebtness of staff to finance
companies and for the small outlay in terms of overall salaries bill had
improved staff morale, increased productivity and reduced staff stress.
Mr Mitchell, however, said: “I am not advocating this approach as a universal
model, but for some companies that can afford temporary education advances
(interest free) with salary deduction repayments, increased super contributions
and small housing allowances, the benefits as seen from Nasfund's internal
programme definitely outweighs the costs.”
 
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