Superannuation body demands urgent action on long-awaited sector reforms
The Association of Superannuation Funds of Papua New Guinea [ASFPNG] has called on the Government to urgently act on long-standing superannuation reforms to protect workers' savings and safeguard the financial system.
ASFPNG in a media statement, said despite extensive consultations and reviews over the years, key policy, legislative, and taxation issues affecting superannuation members remain unresolved.
The association raised concerns over the delay of the Superannuation and Life Insurance Review Report, which was commissioned to address key issues such as compulsory super coverage, contribution adequacy, preservation ages, and taxation.
The report is currently before Treasurer Ian Ling-Stuckey.
ASFPNG president and Nasfund chief executive officer Rajeev Sharma said the focus must shift to immediate implementation.
“The priority now must be implementation,” Sharma said. “Further delay will continue to reduce the retirement outcomes of members and weaken confidence in the reform process.”
ASFPNG outlined several priority areas needing government action, including:
Super for all: Extending compulsory superannuation coverage to all eligible workers, including those in businesses with fewer than 15 employees, and removing waiting periods.
Contribution rates: Reviewing and gradually increasing the statutory employer contribution rate, which has remained fixed at 8.4 per cent for years.
Preserving savings: Restricting early unemployment withdrawals to employee contributions while preserving employer funds to maintain long-term compound growth.
Tax reduction: Lowering the 25 per cent tax on superannuation investment income to regional standards to improve real growth for members.
Unpaid entitlements: Giving unpaid employer superannuation contributions higher priority status under law during business insolvencies and enforcement proceedings.
ASFPNG also expressed serious concern regarding proposed tax amendments that would grant the Internal Revenue Commission [IRC] expanded powers to garnish money directly from customer bank accounts.
The association says allowing state garnishee powers to override existing bank mortgages or secured creditor rights could destabilise the banking sector.
“Where statutory garnishee rights take priority over a bank’s mortgage or security interests, the potential consequences include increased loan-loss provisioning, stricter lending, higher interest rates, and reduced access to credit,” ASFPNG stated.
Because superannuation funds hold major investments in PNG’s commercial banks, any negative impact on bank profitability directly harms investment returns meant for members.
ASFPNG urged structured engagement between the Department of Treasury, Bank of Papua New Guinea, the IRC, commercial banks, and super funds to ensure a fair and safe outcome for all stakeholders.