NSL nets K526m profit

It has earned a net profit of K526 million that has been distributed to more than 208,000 members through applying a crediting rate of 6.5 percent to their accounts.

Dame Meg said the Nambawan Super Limited (NSL) board and management had worked tirelessly to overcome the challenges of the coronavirus pandemic to deliver good returns for their members and they were pleased with the overall performance of the Fund in 2021.

“It is pleasing that we will be kicking off 2022 with news of a good result from last year. As 2022 also marks Nambawan Super’s 60th Anniversary of service to our members, building better futures throughout PNG,” she said.

“As a profit-to-members fund, generating profits that we can return to members is our highest priority and we are proud to have been doing this for 60 years, cementing Nambawan Super as PNG’s best superannuation fund over the long-term.

“After a tumultuous year in 2020, we were determined to overcome the challenges of the pandemic and continue to deliver satisfactory results for our members.

“Over the past 10 years, our asset base has more than doubled. Our asset base is our members’ savings, which means the wealth of members has doubled over the past decade.

“Nambawan Super’s compound average returns over the past 10 years are 7 percent, almost a full 2 percent over the national CPI for the period, which means real returns to members,” Dame Meg continued.

“We hope that members will also be pleased by these results when they see the interest payments credited into their accounts over the next few days.”

Dame Meg explained that 2021 has not been without its challenges and the Fund had to work hard to achieve these results.

“The pandemic is still here and we expect these tough global economic conditions to continue, however, we have been working hard to adapt our approach to investments and operations to ensure that we are continuing to deliver for our members regardless of the challenges faced.

“The positive results of 2021 can be attributed to our continued efforts to diversify our investment portfolio to improve on our risk/return ratio. This means that we are spreading our investments over several local and international bonds and equities, as well as in properties and domestic cash to ensure that we continue to generate returns even when some investments are not performing as well as expected.”

Dame Meg pointed out that NSL uses an effective investment strategy, aligned to the prudential standards of the Superannuation (General Provisions) Act 2000, to manage the risk of adverse outcomes for individual investments.

“Compared to 2020, our investment performance was stronger across all asset classes. Fifty million kina increases in both interest and dividend payments have provided cash for the fund to reinvest,” she added.

“BSP performed very well – returning 80 million kina for our members. Part payment of rental arrears owed by the State in 2021 also has had a positive impact on 2021 results. In particular – compared to 2020 – valuation has rebounded, from a 225.4 loss last year, to 61.5 million kina gain in 2021.”

Dame Taylor stated that outside of financial returns for members, the Fund has also delivered several achievements for members in 2021. These achievements include:

• The Fund received K50 million from the State in December 2021, in partial payment of their outstanding rental arrears. NSL continues to work with the State and has again called on the State in early 2022 to meet its obligations before entering the election period.
• New branch opened in Maprik to provide better access to services for this growing East Sepik township.
• The Fund retained 5,584 members through Retirement Savings Accounts (RSA) with K192 million in funds, which is a rise of 12 percent in membership and a 17.5 percent increase in RSA Funds Under Management.
• NSL’s Financial Literacy Training was built and rolled out to 351 members in 2021, with more members already being trained in 2022.
• There was a notable improvement in State share payments, including the State pre-paying some members' contributions, which enabled them to seamlessly exit the fund.
• NSL appointed two very capable Papua New Guineans in Mr. David Kitchnoge and Mr. Pochon Lili to the positions of Chief Investment Officer and Chief Financial Officer, respectively.

Dame Taylor also spoke about the Funds outlook for 2022 and outlined some of the challenges it expects to encounter.

A key challenge that the Fund is mindful of is the intention of the State to impose unfavourable tax reforms which will diminish returns to members, including a possible Capital Gains Tax (CGT) and the already legislated Market Concentration Levy.

Dame Meg explained: “The CGT would be unfavourable for Superannuation contributors if special concessions aren’t applied for Super Funds.

“We have already called on the Government to repeal the Market Concentration Levy to be imposed on the banking and telecommunications sectors, as it would lead to all super fund members losing over K317 million in asset values and reduced dividends, in just the first year.

“After considering the immediate impact on BSP’s price to earnings ratio and the resulting value erosion, it is estimated that in the first year alone, the members’ crediting rate may be reduced by as much as 2 percent, which translates to about a K160 million loss of members’ returns.

“Nambawan Super already pays substantial taxes and many of our investment business are also already highly taxed. We are not looking for special treatment, we are simply asking for fairness in protecting our members’ retirement savings.”