Super review needed:CEO

By Malum Nalu
The country’s multi-billion kina superannuation industry is due for a review, Nasfund chief executive Ian Tarutia says.
Tarutia, a veteran of the superannuation industry who has worked with Nasfund for the past 30 years, told The National on Saturday that it was “timely now for a review” of the superannuation industry.
This is particularly due to the very small number of superfund contributors and to cut down on early withdrawals of life savings due to unemployment
Tarutia said that at the end of 2016, Nasfund paid out more than what it received, which was a serious concern.
“That’s a worry because if we’re going to be continuously paying out, new money for investments will be relatively less,” he said.
“We’ll only be dealing with existing money and not new money.
“The reason for this is that the Superannuation Act allows for early withdrawals.
“If you’re out of work, you can withdraw every three months until 12 months is up, and if you’re not employed by then you can withdraw the balance of your super.
“We’ve become like a de facto bank, an unemployment benefit fund, which we’re not.
“Our mandate is for the long term.
“These are the things that we need to review.
“The fundamental weakness in our system is the allowance for early withdrawals.”
Tarutia said the industry had grown from a point in 2002 when there was a financial sector reform introduced by Sir Mekere Morauta’s government which included reforms in superannuation, banking and finance institutions and the central bank.
“The size of the industry today is just under K11 billion if you combine Nambawan Super (public service), Nasfund (private sector), Comrade Trustee (PNG Defence Force) and another smaller fund for expats,” he said. “In terms of putting that into context, K11 billion represents 16 per cent of GDP, so we’re a significant player in PNG’s economy.
“Membership has grown: The current size of membership of the industry is just under 700,000 people.
“Assuming that the size of our population is about 8.5 million, you will see that less than 10 per cent of PNG workers are contributing for their retirement.
“There’s a big gap, a big disparity. What we should be looking at is getting a larger sector of our Papua New Guineans under superannuation, so that they can take care of themselves and their families.”
Tarutia said this was because there was a “filter”, whereby companies which contributed to Nasfund had to have 15 or more workers, and this had to be removed.
“This is the issue at the moment – less than 10 per cent subsiding the rest of the people of PNG,” he said.