Superfund says K28mil taxed from members benefit payments

NAMBAWAN Super Ltd says about K28 million was taxed from members’ benefit payments between 2019 and 2020 after the fund had paid K930 million for exiting members.
Chief executive officer Paul Sayer told The National that the Fund “understands the importance of tax to fund essential services and infrastructure including those provided by many of our members”.
“However if superannuation had a lower tax burden, it would mean members would have higher retirement balances, and more money to support them when they are no longer working.
“It is a fine balance to set the right framework to grow superannuation that have long-term benefits to the country.
“Given there is no social security or welfare system in Papua New Guinea, this would truly benefit members.
“Having more funds retained in superannuation allows Super Funds to invest in the country and help grow the economy.”
He said the Fund believed that tax on members using retirement savings accounts must be addressed “as members can end up paying much more than if they took a lump sum payment”.
“This penalises members unfairly for trying to make their super savings last longer during retirement,” he said.
“Despite the Fund regularly counselling members on the tax rules for retirement savings accounts, this is the main product where complaints are made about tax. Generally, members who start an RSA could have opted to take a lump sum payout with a flat two per cent tax.
“If the member later has a medical emergency for example, and needs to access a lump sum from their retirement savings account, they are penalised and taxed 30 per cent on the withdrawal.”