Not backdated interest but top up

I refer to the letter “Backdated interest” in The National (Oct 29) by a concerned member.
I wish to clarify the issue.
1. It is a requirement under section 90(4)(c) of the Superannuation Act for a member to repay a housing advance withdrawal by increasing his/her rate of contribution by a further 2% until the amount withdrawn is restored to the account.
2. The repayment by way of the increased contribution rate excludes any interest that the members’ account earns.
3. The repayments of housing advance transactions were assisted with the declaration of annual interest through compound effect. This is not explicitly stated in the act. What is withdrawn must be restored in full by additional payments from the member themselves and not through interest.
4. Our oversight was not clarifying this to members, especially those seeking second or subsequent housing advance payments. What the member saw on their statement was a restored balance that included interest. The member can confirm this by working out whether the additional contributions alone repaid the advance taken.
5. We have rectified this by changing the enquiry screens on our administration system so that the actual repayment transactions from the members are separated from the interest component. This will ensure going forward we are providing accurate information to members with respect to their housing advance repayments.
6. For the record, additional repayments are not interest paid to the fund. It is your own money returning to your own account. If and when you leave employment and are eligible for a withdrawal, your net benefit should be an amount as if you did not take a housing advance. That is intent of the additional minimum 2% repayment and in line with the spirit of enjoying a lump sum in retirement.
7. Again for the record, this situation only applies to a handful of people, those that have sought to apply for second advances. For us to process a second advance, a member must repay the first advance through additional contributions and not assisted with interest.
For further clarification, I can be contacted on email [email protected] or phone 323 5595.

Ian Tarutia
JCEO Nasfund