The wait gets too long

The National Weekender

By ALPHONSE BARIASI
CHRISTMAS must have come and gone without a cheer for a particular group of ex-public servants.
The exact number could not be ascertained but it is safe to say that there are a few too many former loyal civil servants out there who are suffering because of the failings of a system that promised them a retirement benefit but takes many long months to meet that promise.
The State is the guilty paymaster here. Despite doing its best legally and procedurally, it is still failing the waiting former civil servants.
The delay many not be intended but the workings of the State are such that as soon as the public servants exit the work force, a long agonising delay awaits them.
Their own compulsory savings accrued over the years are readily available to them (if the applications for payments are in order), but the employer contribution takes a long delay before it is available. Tragically, some waiting public servants pass on before the funds hit their accounts.
Stories from some languishing in settlements or leaving incomplete projects in their home villages are not uncommon.
For those who had lived hand-to-mouth or from pay check to pay check, the only ‘seed’ saved for for life after the public service is their fortnightly contributions to a super fund – their own and the employer’s. And the Superaanuation Act obliges the employer, the State to pay a certain percentage towards the employee’s retirement savings.
When the State defers payment to the super fund, the exiting public servants who choose not to return to their villages, live in urban centre expecting to be paid their dues.
One such retired public servant who was fortunate to have been paid all his entitlements recently told of the pain of others. He accuses the Government of letting its former servants down.
Human rights violations
“The Government talks about human rights violations, and gender-based violence, yet its own actions directly and indirectly cause such violations and diminishes the dignity of man and women affected,” he argued.
“There are many sad stories of public servants who had suffered so much because the Government is not honouring its commitment to pay them off on time.”
When one fails to save for the future, or squanders what has been saved, the consequences can be terrible. It is bad enough if the resultant suffering and indignity is wholly the fruit of one’s own folly.
That much can be acceptable but when the former employer fails to pay in time what is legally required of it, that only makes matters a lot worse.
The unnamed former public servant referred to above recounted specific cases of families affected by the delayed payments of their superannuation benefits from the former employer.
Case 1
Former public servant gets paid part of his super funds and returns to his village and builds a family home but leaves it partly done because funds had run out.
He returns to join his family who had by now used up whatever has been shared among them. Teenage son, frustrated and feeling helpless by the family’s financial struggles, goes drinking with peers one day and when night falls, walks timidly home, fearing the certain tongue-lashing awaiting him at home.
From a distance he spots his own mother walking down the road. Thinking that she was out looking for him, the teen dives into a dark corner and stands watching. Mother walks right past where he was and, from further down the road a man signals her. She walks to him and gets something from him and they both disappear.
The youth waits for his mother to get home, and starts arguing with her over some petty matter and proceeds to bash her up. Upon seeing this the elder sons and father gang up on the teenager and beat him up badly.
Case 2
Former public servant’s grown daughter goes out with a married man and the wife finds out and causes a scene. The husband mercilessly beats up his own wife.
Case 3
While waiting for his super funds, a former public servant dies and the body is placed in the provincial hospital morgue. Days and weeks go by but the family could not shore up enough money to pay for a coffin, the mortuary fees and take the body home for a decent burial. Power disruptions affect the morgue freezer and the body decomposes. Morgue attendants notify the family who manage to build a plywood coffin to place the partly decomposed body in and take him away for burial.
There are likely many more sad tales of former public servants and their families who have been forced to go through such unfortunate situations that lower their human dignity.

What Nambawan Super is doing
We asked the management of Nambawan Super to shed some light on the situation with the State’s contributions into member accounts. Here is what Nambawan Super had to say in response to questions posed:
How much does the State owe Nambawan Super (and therefore its members) in unpaid employer contributions?
The full unpaid employer contributions, for all public servants, are approximately K2 billion. The State currently owes approximately K85 million in unpaid employer contributions due to public servants that have retired between October and December 2021.
The State has been meeting its obligation to pay previously Unpaid Employer Contributions with regular payments since 2019. From January to September 2021, the instalments amounted to just over K150 million.
The State has included in the 2022 national budget, provisions of another K150 million for this purpose. We are continuing to work with the State to ensure all our exiting members receive the benefits due to them.
How long has such an amount been outstanding?
Prior to 2002 the State (government departments and agencies) was not required by law to remit employer contributions to an authorised superannuation fund. It was the legal practice to calculate superannuation entitlements as public servants retired.
Legislative changes that commenced on 1 January 2003 directed that State departments and agencies pay super contributions to an Approved Superannuation Fund during the term of a public servant’s employment.
The Bank of Papua New Guinea allowed the State six years to gradually increase from paying no employer contributions to paying the 8.4 per cent required under the Superannuation General Provisions Act.

  • FROM 2003 to 2004 the State was to pay 2.1 per cent;
  • FROM 2005 to 2006 the State was to pay 4.2 per cent;
  •  FROM 2007 to 2008 the State was to pay 6.3 per cent; and,
  •  FROM 2009 the State was to pay 8.4 per cent.

In 2009, the State had not yet introduced a payroll system to facilitate the correct employer contributions automatically. Whilst the State made some employer contributions throughout the period, it wasn’t until 2013 that the State’s systems were able to accurately remit the 8.4 per cent employer contributions each fortnight, which were then credited to individual member accounts.
The gradual increase and delay in automating accurate contributions did not absolve the State of its obligation to pay the full 8.4 per cent as well as the backdated employer contributions to the public servants. As such, the more than K2 billion debt was accrued.
This debt includes all funds that were unpaid prior to 2002 and the portion of superannuation that was unpaid from 2003 to 2012. The debt also incurs the annual crediting rate each year.
Unpaid employer contributions for public servants became an issue of public concern in December 2015 when NSL made the hard decision to no longer pay the unpaid employer contributions upfront on behalf of the State when public servants retired.
Prior to December 2015, Nambawan Super paid out all owed super benefits to public service employees, including the unpaid employer contributions, then invoiced the State for payment. However, during 2014 and 2015 the State failed to consistently pay its invoices.
NSL stopped paying out the unpaid employer contributions to protect the wider membership from an issue that is only relevant to a portion of the membership. It was and continues to be, a hard decision to make as Nambawan Super understands the impact it has for public servants with Unpaid Employer Contributions who have to wait to receive their full entitlements.
What seems to be the main reason for not paying on time or when expected?
Since 2019, the State has been regularly making payments for unpaid employer contributions for members who have retired and exited the fund. Throughout 2021, the State has endeavoured to pay the unpaid employer contributions as members have exited. So many members have experienced no, or very limited, delays in receiving their full exit benefits.
The reasons for falling behind are historical. In terms of paying on time, the State is regularly making payments, however, NSL now advises the State on how much is owed and they then seek to pay that amount. This means a small delay for exited members.
The State has been committed to meeting its obligation to retiring workers, including budgeting for payments.
NSL understands that the State has allocated K150 million for the payment of their unpaid employer contributions in the 2022 National Budget; as they have done in past years.
We expect that these funds would be paid to NSL in instalments of various amounts throughout 2022, as has been the case in past years.
However, it is important to note that since 2009 the State has been consistently remitting employer contributions for all public servants and since 2013, following the introduction of the new payroll system, the employer contributions have been the full 8.4 per cent obligations. Public servants employed after 2012 do not have any outstanding employer contributions from the State.
Any indication of when this will be settled?
If the State continues to make payments for exited members the debt will reduce incrementally. However, the full unpaid employer contributions won’t be settled until the last member, who started prior to 2013, exits and receives their payment.
Given the size of the debt, and as it incurs interest that is added to the liability owed to the members, despite member exits, there is little reduction in the size of the debt.
NSL and the State have had talks about an asset swap to resolve the debt. Any such asset swap would need to meet the fund’s rigorous investment process and prudential standards.
NSL is committed to ensuring that exiting public servants receive their full superannuation benefits as soon as funds from the State become available.
NSL has received funds from the State and is currently providing the outstanding employer contributions to former public servants that exited the Fund from July-September 2021.
All retiring public servants should lodge their withdrawal applications as normal and contact our NSL customer support team if they experience any issues or have concerns about withdrawing their superannuation.
Are there any other payments outstanding from the State, such a loans?
NSL has not lent any money to the State. The State owes NSL an additional K160 million for nearly three years’ worth of rental arrears.
The rental arrears are expected to grow to K170 million by the end of 2021 and, if left unpaid, will result in the reduction of property values and funds not being available to reinvest and grow, making this issue a double loss for Nambawan Super members.
NSL-owned properties occupied by State tenants include Revenue Haus (Internal Revenue Commission); Vulupindi Haus (Department of Finance and Department of National Planning); Eda Tano Haus (Department of Lands and Physical Planning); AopiCentre (Department of Health and Department of Higher Education); and NSL Haus in Lae (Ombudsman Commission, Independent Consumer and Competition Commission, and Auditor General’s Office).
Is there anything Nambawan Super can do to help the retired members while awaiting payments from the State?
Upon retirement, eligible public servants can claim their accumulated contributions and the interest earned on these contributions while waiting for their State Unpaid Employer Contributions.
NSL also provides an extensive retirement awareness programme and one-on-one financial counselling sessions to help our members make the most of their retirement benefits.
Through this programme, NSL has successfully provided awareness and financial counselling to members from several private and State employers across the Country.
NSL also encourages our exiting members to consider transferring their benefits to a Retirement Savings Account (RSA) to continue receiving an income from interest earned on their savings well into their retirement.
Nambawan Super RSA members are also entitled to receive our financial counselling, member discounts, and other valuable member services.