Super dilemma for NHC, PPL

 REVELATIONS that two state-owned entities owe almost K15 million in unpaid superannuation in cause for grave concern.

Two weeks ago, the National Housing Corporation (NHC) confirmed that legal action was being taken against them by Nambawan Super for non-payment of superannuation which had accumulated to almost K10 million over the past 14 years.

And this week Nambawan Super revealed it was in the process of taking legal action against PNG Power Ltd (PPL) which owes its 2,700 employees nationwide K4.6 million in unpaid superannuation since April this year.

Both NHC and PPL are clearly in breach of the Superannuation (General) Provisions Act 2000, which stipulates under Section 78 that failure to comply with the requirements in remitting both employer and employee contributions carries a fine not exceeding K500,000 or imprisonment for 10 years or both.

Moreover, Nambawan Super has the authority under Section 79 of the Superannuation (General) Provisions Act 2000 to act on behalf of the employees or contributing members of NHC and PPL to recover the outstanding contributions together with interest and penalty fees at the rate prescribed in the regulation from the date on which payment was due to the date of actual payment.

The Government sees superannuation as an important means of saving by the Papua New Guinean work force for their financial wealth in retirement. Therefore, for the benefit of the people, the Government has made superannuation compulsory through the legislation.

The Superannuation (General) Provisions Act 2002 requires every employer to contribute for and on behalf of its employees at the rate prescribed by the regulation, which is 6% for employees and 8.4% for employers.

Under the Act, an employer is required to contribute on behalf of each employee; it is also required to deduct employee contributions from employees’ salaries. 

These contributions are then remitted to an Authorised Superannuation Fund, such as Nambawan Super, at the end of each month and each fortnight respectively. 

While the NHC and PPL managements will have to face legal action over their failure to pay superannuation, they could conveniently shift the blame to the Government for their financial hiccups.

Both organisations have been struggling for years to make ends meet and are considered as liabilities to the state.

NHC is neither a fully-fledged state-owned enterprise (SOE) nor a government department and has barely survived in this grey area since its establishment.

As current NHC managing director John Dege says, the superannuation arrears “go back to 2000 and have reached a critical point where we felt that every effort must be made to ensure it is settled immediately”. 

His dilemma is understandable because for every month that there is no remittance, NHC’s liability increases in interests, unearned interests, legal costs and time.

Dege says the arrears was caused by several factors, including the non-payment of public servant housing rentals amounting to K36 million that has been held by the Department of Finance for years. 

He blames “wrong code” deductions for this anomaly that has been a thorn in the NHC’s side for years.

Moreover, the NHC has been struggling without success to recover the K36 million and the Finance Department will not part with the funds because it has been directed by the Parliamentary Public Accounts Committee not to pay NHC.

PPL is classified as a SOE but has not made any profits or paid dividends to the Government since its incorporation. To make matters worse, PPL has been embroiled in all sorts of management, operational and financial issues since the beginning of the year.

As Nambawan Super indicated, PPL has defaulted on its superannuation payment because of a likely cash flow problem. In fact, the power utility had in previous years been up-to-date with its payments.

With financial woes up to their necks, both NHC and PPL need some kind of miracle to rescue them. And that can only come from the Government in the form of financial assistance packages.

Nambawan Super is determined to recover the outstanding superannuation payments and the Government has little or no choice but to throw the life lines to both organisations.

To do so will win the hearts of thousands of NHC and PPL workers throughout the country.