Smare slams call to make superannuation funds pay for health insurance


THE chairman of Nambawan Super Limited has called as “dangerous” a suggestion that a person’s health insurance should be funded through the person’s superannuation contributions.
Anthony Smare said should that happen, then it should not be compulsory on members of superannuation schemes.
“It is dangerous when you talk about changing laws to take members’ money to put it into this sort of insurance,” he said.
While medical insurance was a good idea, Smare said that members who want it should sign up for it themselves as individuals and not as part of a superannuation scheme.
Smare was responding to recent media reports in which it was suggested that health insurance be funded through superannuation contributions.
During last month’s launch of the Department of Personnel Management’s corporate plan, Public Service Minister Elias Kapavore said he had asked Chief Secretary Isaac Lupari to investigate the possibility of a health insurance scheme for public servants.
“For far too long, issues such as health insurance and pension scheme have been lip service,” Kapavore said. “We need to have a system where public servants who are still working fulltime in the public service are covered by some kind of health insurance cover.
“It’s time we need to review the existing laws of the Nambawan Super Act and the National Superannuation Fund Act.”
He said he would be meetings officials of the superfunds and invited Lupari to join him.
Hill warned of the dangers of using superannuation contributions to fund health insurance.
“If, for example, you take K10 a week out a young employee’s superannuation contribution for over 30 years, that will work out to be a K15,000 payment made over that period,” he said.
“What it does, though, because of compound interest and how the fund is growing, it reduces your final benefit payment by K62,000.
“It’s very dangerous. You have to understand the numbers involved and the long-term consequences.”
He said things have to be well thought out, structured and modelled before looking at changing the law. “For members in rural areas, for instance Papindo staff in Maprik, a teacher in Ambunti, or a Correctional Services officer in Baisu – where do you go to?
“Which private practitioner do you go to in that area to avail yourself a private medical insurance?
“There’s really no benefit for you but you’ve been paying all these money and then lose K62,000 when you retire.
“It’s a great idea, but if you want to participate, you should elect to participate and not imposed.
“And when people want to make a change, they need to explain what it does to your superannuation.
“You also have to reflect on whether you are able to use that service when you need it, given where you’re located.”