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From the CEO s Desk Ian Tarutia, OBE Chief Executive Officer Dear Members and Employers, Welcome to the bi monthly edition of the NASFUND newsletter (March - April). With the benefits of using technology to lift service standards, NASFUND is driving some impactful programs over 2018: Firstly, is to have close to 100% of members to enroll for and actively use the online member portals. Members no longer need to visit a branch or make contact with the Call Centre to get their account information when they have the alternative of using online services to get this information 24/7 at their convenience. Secondly, is to enroll 100% of employer payrolls and HRs to be using the employer online portal to load contributions. This process automation speeds up allocations of funds into member accounts. I encourage all employers to provide limited internet access for relevant payroll processing officers to access the Employer Online portal (EOL). As a savings institution that grows and preserves member funds for the sole purpose of retirement, NASFUND urges employers to be diligent when screening employee requests and authorizing for NASFUND to make payments. Employers, remember you contribute an additional 8.4% towards your employees retirement. You deserve value back from your employees through retention and not supporting a short term savings live for today, forget tomorrow mindset. With more stringent processes and systems in place over 2017, NASFUND realized a reduction in payment transactions from 75,000 in 2016 to 61,000 in 2017. I encourage our members to consistently check the Fund s website and Facebook page for ongoing member updates. Enjoy reading this edition of NASTOK. Sincerely, Ian Tarutia, OBE Chief Executive Officer 2017 Highlights K242m net profit 8% crediting rate K4.5b net asset value K493m in contribution receipts K431m in member payments K62m in organic balance growth 75,000 payment transactions in 2016 61,000 payment transactions in 2017
FINANCIAL ACCOUNTS FOR THE 2017 FINANCIAL YEAR ANNOUNCED The NASFUND Board considered and accepted its audited financial accounts for the 2017 financial year. Chairman Hulala Tokome, on behalf of the Board stated that the results were positive in yet another challenging year. Chairman Tokome sated that Fund had demonstrated a strong resilience in attaining a positive outcome with an over budgeted performance in cash returns from its investments and controlled expenses. The highlights of 2017 are as follows: Vincent Lialu - HOHC, Ian Tarutia OBE - CEO, Hulala Tokome - Chairman, Charlie Gilichibi - COMS, Rajeev Sharma - CFO during the annoucement of financial accounts for the 2017 financial year. 1. Net profit of K 242.4 million. 2. 8 % interest credited to members accounts from 7.25 % paid for 2016 financial year. 3. Gross Asset Value of K4.62 billion representing a growth of 6.8 % from K 4.32 billion recorded in 2016. 4. Net Asset Value of K 4.51 billion representing a growth of 7.0 % from K 4.219 billion recorded in 2016. 5. 14.89 % increase in Cash Income of K 322 million compared to K 282 million in 2016. 6. Operating expenses of K 56.1 million against budget of K 56.9 million resulting in 1.42 % savings. 7. 3.5 % increase in total membership to 556,459 from, 537,520 members recorded in 2016. 8. 3.3 % increase in active employer base to 2,626 establishments. 9. 9.5 % increase of contribution receipts of K 493 million from K 450 million received in 2016. This is the highest ever recorded over the last 5 years. 10. Appointment of Kina as Fund Administrator. 11. 588 educational and public awareness shop floor presentations to employer & members throughout the country. 12. Payment of over K 431 million in superannuation entitlements to members including housing advances representing 61,358 transactions. This compares to K 456 million paid in 2016 which is a 5.48 % reduction in payment outflows to exiting members. 13. Roll out of digitized services including introduction of online Employer and Member Portals to facilitate convenient contribution processing and receipt of real time member balances. 14. Introduction of a moblie phone App to access member Account details. 15. Introduction of electronic customer queing system in Boroko Branch with further roll outs throughout the country. 16. Refurbishment of the iconic Tower (now Kina Haus) commenced. 17. Continued focus on upholding core values of prudence and governance in serving members and employers best interest. Whilst we believe members will be pleased with these results under the current circumstances, it is also prudent to caution members not to expect these type of results year on year. Mr Tokome reminded members that their NASFUND savings were for the long term which was to provide a comfrotable life after active employment. While annual returns from the investment portfolio are subject to market forces and vary from year to year, real returns after inflation to member accounts increase significantly over a longer period through the effect of compound interest and a dedication to investing in assets that provide secure long term returns. For this year, we will contunue the focus on enhancing our member services while actively seeking opportunities to grow membership and our investment portfolia. On this note I would like to sincerely thank our CEO Ian Tarutia, management and staff of NASFUND for their commitment and hard work over 2017 in delivering these results. Hulala Tokome Chairman.
FUND ADMIN TRANSITION TO DRIVE EFFICIENCY IN OPERATIONS NASFUND is pleased to announce to members that fund admin transition has been completed. The following milestones were reached during the transition process: 22 August 2017 15 October 2017 15 March 2018 payments and member maintenance rolled into production. contribution allocations rolled into production. fund accounting, reconciliations and reporting passed the annual auditing process. NASFUND s Chairman, Hulala Tokome said overall the process of change to a new Fund Administrator has been challenging but rewarding. Not only for NASFUND, but the application of knowledge gained will be for the benefit of the superannuation industry. Chairman Tokome said, Complacency can be an enemy of innovation and progress in an age where member expectations about best practice and better service standards has risen. With the benefit of hindsight, I can say that such change in the magnitude NASFUND has undergone can be daunting, but shakes up the core and fabric of an organization inside out to force meaningful and lasting change every 15 years or so. The last time NASFUND went through a major change was in around 2002/2003 following Government reforms to the super industry. Change can be positive and rewarding if managed and executed well. On this note I d like to thank my Board of Directors for the foresight and strategic intent to pit NASFUND among the best, not only in PNG but globally through this project. I also extend the Board s gratitude to CEO Ian Tarutia, management and staff of both NASFUND and Kina for the sacrifices made and milestones achieved over the 8 months of transition in bringing us to where we are today. With automation of internal processes for payments and contribution allocations, NASFUND members and employers stand to benefit from the following five global best practices: speed and accuracy while reducing operational costs; auto-adjudication and settlement of process tasks without requiring some manual work; efficiently manage claim exceptions, identifying bottlenecks and moving cases for expedient resolutions; effectively manage claim interactions between head office and branches, and head office and fund administrator; flexibility and scalability to accommodate changes in customer expectations, regulatory and technological environments. CEO Ian Tarutia said, inventory of cases are captured by NASFUND in electronic format from members and employers, thus, providing a default systematic solution instead of moving around paper from process owner to process owner. Routines and processes are now well embedded in our technology platforms, truly institutionalizing a lot of the things we do internally for payments processing, contribution allocations, member maintenance and fund accounting. Externally facing, NASFUND also has an online site and smartphone apps for members to access their accounts in real time. 12,000 members have registered for these services as at 15th March 2018, with 4,000 members using these services on a weekly basis. Members no longer need to visit a branch or contact the Call Centre to access basic account information including Statements or Transaction Histories if they have access to the internet from a desktop/laptop computer or a smartphone or tablet. Hulala Tokome Chairman
NASFUND KEEPING EMPLOYERS INFORMED NASFUND ended its regional conference in Mt Hagen with 125 employer representatives in attendance. The regional conference is an annual event that is hosted in four (4) regional centres mainly in Port Moresby, Lae, Kokopo and Mt Hagen. The conference provides an avenue for employer representatives who are mostly payroll and human resource officers to be kept updated about the FUND s financial performance and to be informed about any new developments that have taken place within the year. The conference kicked off its Attendees at the Regional Employer Conference in Port Moresby recording the highest number totalling 1365 compared to past years. first regional conference in Port Moresby with over 800 attendees hosted at the Sir John Guise Indoor complex in March that was followed by the Lae conference with over 300 attendees, while Kokopo recorded 140 attendees and Mt Hagen with 125 attending. This year s conference recorded the highest number of attendees totalling 1365 compared to past years. Employer representatives at the Regional Employer Conference in Lae. The regional conferences are a significant event that the FUND looks forward to annually. The face-to-face interaction with employer representatives and the FUND s management is paramount in understanding the concerns raised to continue improving in areas for the benefit of members. The regional conferences highlighted the FUND s 2017 financial performance, Finance and Investment update, Member Services Initiatives and NASFUND Contributor s Savings and Loans Society financial update. Chief Officer Member Services, Charlie Gilichibi responding to questions raised by employer representatives during the Regional Employer Conference in Mt Hagen.
SALARY PACKAGING TO SUPER What is Salary Packaging? Salary Packaging is also referred to as Salary Sacrifice. You give up part of your gross salary and, in return, your employer gives you a non-cash benefit (before tax), such as voluntary super contributions, school fees, leave fares or housing. Once you enter into salary packaging with your employer, your overall pay is lower, so you pay less tax but gain a great TAX BENEFIT for the items salary packaged. TAX BRIEF ON CONTRIBUTIONS & PAYMENTS Calculation and Remittance of Super Contributions. Both employer and member contributions are calculated from gross basic salary. o Employer contributions are paid to Super TAX FREE o Member contributions are paid from net AFTER TAX salary. Payment of Savings: o Member contributions are paid out TAX FREE as they were already taxed on the way into Super. o Employer contributions and Accumulated Interest attract a concessional tax depending on the longevity of savings in a Superannuation plan. Tax is applied on these two components as follows: Are Voluntary Contributions under Salary Packaging Tax Free? Yes contributions are effectively tax free. However taxes apply to voluntary contributions made under Salary Packaging when member EXITS or WITHDRAWS his savings from the Fund. Year of Membership Less than 5 years Greater than 5 years, Less than 9 years Greater than 9 years, Less than 15 years Greater than 15 years Withdrawal Tax Applicable Marginal rate of tax on employer contributions and accumulated interest The lesser of 15% or the marginal tax rate on employer contributions and accumulated interest The lesser of 8% or the marginal tax rate on employer contributions and accumulated interest 2% tax on employer contributions and accumulated interest A residual tax of 2% apply as follows: member having contributed for 15+ years; or, member having contributed for 7+ years and is 50+ years old; or, death benefit payout to beneficiaries. Outside of the above conditions, the tax regime above which is in favour of long-term savers applies to withdrawals. Note as described under Withdrawal Tax Applicable, employer contributions also include voluntary contributions under salary packaging. What are the benefits of voluntary contributions under Salary Packaging? TAX FREE contribution benefit Greater than 7 years and over 50 years of age On Death and minimal withdrawal tax in favour of long-term savers for retirement; Salary Packaging, could also be seen as an alternative to life insurance. With the benefit of TAX FREE contributions (premiums) and 2% tax on savings withdraw in the event of death. It helps to grow member savings faster with the compounding effect. Well governed, well managed and well secured in a well regulated environment. 2% tax on employer contributions and accumulated interest 2% tax on employer contributions and accumulated interest How and when can I make voluntary contributions under Salary Packaging? NASFUND will roll-out the Salary Packaging Program to employers and members in April 2018. All will be informed accordingly through media and conferences. The program will entail awareness and education around tax benefits for employees and employers; template employer policy; template irrevocable deduction authority and guidelines on how to administer a salary packaging policy by the employer.
EMPLOYER ONLINE PORTAL www.nasfund.com.pg Employer Benefits: Employer automates contribution allocations. Employer monitors contributions history. Employer creates new member accounts to speed up payroll processing. Timely allocation of contributions. Error notifications on payroll file uploads. To register: Username employer-email@png.com.pg Password... Forgotten your password? LOGIN Download the registration form from www.nasfund.com.pg, visit a branch or email online@nasfund.com.pg. Maximum of three (3) payroll officers / supervisors are required to be registered. Submit completed forms to online@nasfund.com.pg or drop off at your nearest branch. If you are already a member of NASFUND but don t have a login yet, register now. Processing takes 24 hours.