Nambawan Super Limited (NSL) says a proposed public servants health insurance scheme using superannuation funds must not be made compulsory and forced onto members.
NSL Board Chairman, Anthony Smare, says members must decide if they want to sign up for such a scheme, but warned it will have a significant impact on their savings.
He made the suggestion following a recent statement by Public Services Minister, Elias Kapavore, who called for a look into the proposed scheme.
During the announcement of NSL’s 2018 financial performance, Smare said the suggestion made recently to make it mandatory for public servants super contributions to pay for this health insurance was concerning.
He said such a scheme must be thought through and modelled well, and must be elective.
“If you take K10 a week out of your contributions for 30 years, it might end up costing you K15,000 in terms of the kina taken out, but it translates to K62,000 loss in wealth for you when you retire. That’s a massive change.
“If one of my members loses K62,000, you have to be sure that that member is able to use to that service when he needs that service.
“If he is in Ambunti, if he is in Maprik, if he is in all these places where you don’t have private health practitioners, what value or use to him is this form of cover?
“I can see why there would be value to public servants based in Port Moresby and that’s really the reason why I don’t say I’m against it. I think medical insurance is phenomenal in terms of helping you manage risks when those health issues come up, but it should be something that a person makes a conscious choice to sign up for and pay for. It’s not something that should be imposed on everybody,” said Smare.
NSL CEO Paul Sayer said whilst using the funds to improve one’s health was beneficial, the downside was the reduction to their retirement funds. He said other options can be pursued.
“The other important thing to think about is that as you improve the health of that person, the idea is that they are actually going to live longer. And when you get to retirement what you have actually done to the retirement benefits, you actually made them smaller. You actually have a smaller amount but you’re going to live longer.
“So it’s very important to say look, let’s keep super here, and let’s look at insurance and health insurance as an additional benefit that the unions and the employers can talk about as the future direction of salary increases. Or to have it voluntary paid,” said Sayer.
Last month Minister Kapavore called on the Government to explore the possibility of a health insurance scheme for public servants and called for a review of the Superannuation Act.