Nambawan Super in focus

Nambawan Super Ltd is a defined contribution fund (accumulation fund) approved under the Superannuation
General Provisions Act 2000. The fund is governed by the board of directors of Nambawan Super Ltd, the fund’s
corporate trustee. Nambawan Super exists to invest amounts contributed by or on behalf of members for their
retirement. Business Editor SHIRLEY MAULUDU discusses with the fund’s chief executive officer
PAUL SAYER its investments, achievements and plans.

Q: What would be some of the Fund’s achievements/ highlights in 2019?
Sayer: Throughout 2019, Nambawan Super celebrated the opening of Port Moresby’s newest mixed-use development precinct, the Nambawan Super Plaza.
It includes Deloitte Haus, The Crowne Plaza residences with 54 long-stay and short-stay serviced apartments, the Penthouse apartments featuring 14 luxury residences and a new retail and commercial plaza.
The Fund enjoyed strong underlying earnings, in particular interest and dividend income.
We increased our client facing staff in branches and created a new employer relations department to ensure members and employers receive a high standard of service.
We also opened a new stand-alone branch in Kimbe, offering an improved service to members in West New Britain.
We undertook a broad range of new customer research, to better understand our members’ needs that will in form the basis for several 2020 initiatives.
We achieved an excellent overall result in our new, independent customer satisfaction study, indicating we are on track with our work to offer the best Superannuation service in PNG.
Our membership numbers continue to grow with more than 16,500 new members joining Nambawan Super in 2019.
More private sector employers joined Nambawan Super than any previous years, with 40 employers choosing Nambawan Super for their employees.
We have also continued our growth in supporting the informal sector. In 2020 we expect to surpass the 200,000 mark for membership.

Q: What is one benefit of voluntary contribution?
A happier retirement. Voluntary contributions help members grow their retirement savings. And small amounts can add up.
The key is time. If you were to pay just K10 per week into retirement savings, over 30 years, that results in approximately K60,000 in retirement savings.
If you do the calculation, you will see the K10 per week over 30 years is just K15,600. But in a superannuation account, those savings are multiplied thanks to the effect of compound interest (that’s when the interest your savings earn, earns interest).
Based on the average past performance of the Fund, over 30 years members savings can earn three times more in interest than they contribute.
Voluntary contribution also helps build members’ housing allowance eligibility, which is helpful if planning to buy or build a principal place of residence.

Q: Does Nambawan Super have plans to introduce new products/services this year?
The fund is very excited to launch our own tailored Member Financial Literacy programme in 2020 – and look forward to helping members improve their financial wellbeing both now and for the future.
We are investing more in digital tools to improve services and are planning to upgrade many of the existing digital tools to provide more efficient service and support for both members and employers online and via our call centre.
We are refurbishing the branches in Mt Hagen and Wewak and are considering new branch locations to meet the needs of our growing membership.

Q: What is the fund’s current investment portfolio like?

(See graph)

Q: I understand the fund has several investments in the property sector. Does the fund have any in other sectors as well?
Broadly, we describe our investments in the following categories:

• PNG Properties – this include all our local properties, such as Nambawan Super Plaza and Morobe Haus;
• PNG Cash – cash in PNG bank accounts and term deposits;
• PNG Fixed interest – generally Government issued Treasury bills/bonds;
• PNG Listed Equities –public-owned PNG companies such as Bank South Pacific and Credit Corporation;
• PNG Unlisted Equities – Privately-owned PNG companies such as Paradise Food and SP Brewery; and,
• International – a mix of global equities (listed) and international cash.

Here are a few examples of companies we invested in:

• Nambawan Super members own 12.3 per cent of BSP. So every time BSP announces a great profit, that is good news for members;
• Nambawan Super has invested in SP Brewery for more than 40 years and our members own close to 20 per cent of SP Brewery; and,
• Nambawan Super owns 11.8 per cent of City Pharmacy, which includes Stop and Shop, Jacks, Hardware Haus – all important retailers around PNG.

Through our international investments, members even own a very small part of large global companies such as Facebook, Apple, Microsoft, Exxon and Total.
Through their superannuation savings, members are not only taking back PNG by owning part of many of PNG’s successful businesses, but are also making profits from the global economy from many big international brands they use day-to-day in PNG.

Q: What were some of the challenges for the Fund in 2019?
Like many other organisations, Nambawan Super experienced significant delays in payments from the State, in particular, rental payments.
We are pleased with recent announcements from the Treasurer ensuring the State is committed to paying these in full.
These delays ultimately hurt all members, as the Fund’s investment team cannot direct those funds into proper investments that would grow their savings and deliver stronger returns. Nambawan Super has made significant progress with the State on the issue of unpaid public sector employer contributions for exiting members, with service from prior to 2009.
K235 million was received during 2019.
This has enabled Nambawan Super to pay final benefits to members who have retired and exited the fund up to June 2019.
However, the issue is not resolved in full and the fund continues to liaise with representatives of the State to ensure payments continue to be prioritised.
The State is making regular payments, and have caught up significantly in 2019. They have also budgeted for payments in 2020.
However we note that they did not meet their budgeted obligation for payments in 2019.

Q: What is Nambawan Super’s outlook for 2020?
Our thinking is that 2020 will be a tough year for the fund.
The Government is implementing a range of measures to improve fiscal management and rein in national debt.
Some ideas, such as considering the transformation of its SOEs could provide good opportunities for superannuation funds to further support the State to keep these assets in PNG ownership.
It is expected that with the tough economic climate, people will have less discretionary income.
It means they have to tighten their own spending, which in turn impacts some of our investments, especially FMCG companies.
The Government is reviewing taxation, and have indicated they will possibly target the banking sector with a super profits tax.
Changes to tax on companies could have an impact on major shareholders – which mean Nambawan Super members get lower returns as major companies pay more tax.
Ultimately, resulting in our members receiving lower returns.

Q: In terms of credit rating (note should be crediting rate) for the 2019 financial year, what can members expect?
Underlying earnings have been good, however some investments haven’t performed as well as we would have liked.
In particular, Fast Moving Consumer Goods (FMCG) companies have had a tough year.
We believe the returns from our two major PNG FMCG companies – Paradise Foods and SP Brewery – won’t be as strong as previous years.
Over the coming few months we will complete formal valuations of the companies and buildings in which we are invested.
Given the general level of economic activity, we do not expect major changes in values of the companies or properties in which we invest.
We take a portfolio approach to investment. We are long-term investors but we build, buy and even sell our assets for the benefit of members.

Q: What is Nambawan Super’s general outlook for the country’s economy in 2020?
There was an expectation that during 2019 many new major projects would be approved. But this has not been the case.
If Wafi and the two LNG projects were fully approved, it would provide certainty and help boost confidence that would flow onto greater economic activity, especially small to medium businesses that would gear up in preparation to support the large scale projects.