Media Statement-Mr. Reg Monagi
All comments can be attributed to NSL Chairman Reg Monagi
Overview
On behalf of the Nambawan Super Limited Board and Management, I am pleased to announce Nambawan Super’s results for 2022.
Last year, despite facing several tough economic challenges, the Fund worked tirelessly to deliver the following results for our Members:
- Nambawan Super’s Net Asset Value now totals K8.99 billion (an increase of K170million)
- Net profit for the year 2022 is K144 million
- Interest credited to member accounts is 1.6%
- Total contributions of K1.03 billion (an increase from K935 million)
- Total member payouts were K1 billion to 30,000 Members (highest ever)
- Fund membership grew to 220,410 from 214,540 Members in 2021(an increase of 5000)
- 19% increase in Retirement Savings Account Members
- 5.3% increase in Choice Super Members
2022 challenges
In terms of our investment performance in 2022, NSL saw several of our investments come under pressure due to a combination of:
- High global and local inflation;
- Continued supply chain disruptions;
- Rising fuel and energy prices;
- The introduction of the Additional Company Tax on BSP Financial Group Limited;
- Late payments of State rental arrears, unfunded State Shares and Vested benefits;
- Rising interest rates from Central Banks globally but falling yields on local fixed-income investments; and (7% to 3%)
- the slowed economic growth of the World’s major economies.
NSL’s reduced profits for 2022, can be attributed primarily to the valuation losses of our off-shore and local investments which totaled K248 million. That is nearly a 3% reduction in crediting rate terms.
The total valuation losses for 2022 represent a K274 million unrealized loss from our offshore valuations, and a K27 million unrealized loss from our investment property valuations.
These losses were slightly cushioned by a K39 million unrealized gain from our unlisted equities, and a K14 million unrealized gain from our shares listed on the PNGX.
Even as we experienced challenges, NSL has continued to strategically deploy Funds into investments that we expect will continue to bear fruit for our Members long into the future.
Two good examples of this are our investments in the Rangeview Precinct, and soon to be opened Moki Business Park. Combined, these two investments represent a K400 million investment which has created nearly 2,000 jobs at a time when the PNG economy was struggling.
While both these investments may currently be experiencing lows in terms of valuations, we are confident that as the economy recovers, they will be key assets in generating returns for our Members over the long term.
Internationally, NSL’s offshore investments, which make up about 18% of our investment portfolio, saw the biggest drop in performance as many of the World’s leading economies face the prospect of recession.
This has caused many of the businesses operating in those Countries, which are usually seen as stable investments with consistent growth, to now struggle in generating returns for shareholders including NSL.
It is important to note that we use the term unrealized losses, this is because these losses can be reversed when the global markets recover. This means that these are paper losses and the Fund would only lose real cash if we decided to sell off these shares at the low values seen in 2022.
However, NSL is a long-term investor utilising a strong diversified investment strategy that aims to de-risk the Fund and produce good returns over a number of years.
In the investment space, it is normal for some years to yield great returns while other years don’t, despite this, NSL has worked hard to ensure that Members’ Funds are protected against any losses and continue to grow with good average returns over the long-term.
Our Members
In 2022, NSL continued to deliver positive outcomes for our Members.
Throughout last year, NSL had supported Members through the following:
- Total of K167 million State Share Benefits paid out to Members
- Total of K99 million Housing Advance paid out to support 5,375 Members purchase, build, improve their home
- Total member payouts of K1 billion through Exits, Normal & Death Benefit Payments, Transfers and Monthly Unemployment Benefits to over 30,000 Members and beneficiaries.
This historical high in benefit payments can be attributed primarily to the State’s ongoing retirement program, through which many of our Members exited the Fund.
This is quite a significant achievement for Nambawan Super, as it shows clearly that regardless of economic conditions or social factors, our Members’ funds will always remain safe with us and will be available to them as soon as they are ready to retire.
NSL Financial Literacy Training
Alongside our mandated services, NSL has also continued our efforts to build up our Members’ basic financial knowledge and capability through the NSL Financial Literacy Training, or FLT for short.
In 2022, NSL delivered the FLT to 3,771 Members from over 40 employers in all four Regions of PNG.
This increase in the number of Members trained came as a result of relaxed Covid-19 restrictions in 2022, which had initially halted the roll-out of this program the previous year.
NSL aims to continue the rollout of our FLT program with the goal of training 5,000 Members in 2023 and the majority of our Membership base in the future, for the benefit of all our Members.
Building Better Futures
Looking to the future, we are expecting 2023 to be another tough year for the Fund’s off-shore and local investments due to the continued unfavourable state of the global economy.
Inflation is expected to remain high both locally and globally affecting households directly as well as businesses. NSL is also expecting to have returns from our investments in the Banking Sector reduced as all Banks now have to contend with the recently increased 45% Corporate Banking Tax.
Additionally, the Fund continues to experience ongoing challenges in retrieving outstanding payments from the State for its outstanding rental arrears and unfunded State Shares.
In 2022, the State made a payment of K102 million towards their outstanding rental arrears and a further K167 million to fund the State Share benefits of Members. In the best interest of our Members, we aim to continue working with the State to ensure these outstanding funds are retrieved.
We also remain cautiously optimistic that as projects in PNG’s Oil and Gas Sector like the Papua LNG, Wafi Golpu and P’nyang progress, we expect that the economic growth experienced by the Country more than a decade ago could return. For now, we need to weather the storm.
So far in 2023, the Fund has seen valuations recover after recent improved global developments. Our first Quarter results for 2023 have seen a much better performance compared to Quarter One in 2022 which is promising, however, these initial figures could continue to rise or fall before the end of this year depending on global market trends.
In the meantime, NSL will continue to manage the short-term market volatility and make investments that create jobs, support PNG’s economic growth and deliver strong returns for our Members and their families over the long-term.
Two such investments currently in the pipeline are our Port Moresby 9-mile and Lae Waterfront development projects. Quite a few of you would have already seen communications from Nambawan Super around these two exciting projects, and we aim to continue keeping you informed as these progress in 2023.
We expect that, once these two projects are completed, they will be an excellent source of returns for our Members whilst also boosting the economy and creating jobs for many Papua New Guineans.
We also intend to continue to deliver on our primary goal of growing and protecting our Members’ retirement savings whilst also using our position as an industry leader to influence Policy changes for the benefit of all Papua New Guineans.
We aim to continue advocating for Policy reforms in the superannuation and life insurance industry, as well as reforms to tax on superannuation including the repealing of harmful levies on the Banking Sector that adversely affect the investments that we rely on to deliver stronger returns for our Members.
As part of the Superannuation and Life Insurance Review Committee, Nambawan Super aims to continue pushing for changes that ensure superannuation is more accessible; Member savings are better protected for the purpose of retirement; and taxes on superannuation are fair and not disadvantaging PNG citizens during retirement.
In closing, I would like to reassure and remind our Members that superannuation is long-term, and despite the current tough economic conditions, Members shouldn’t be disheartened.
Most of our Members will be with the Fund for up to 40 years, throughout which, there will always be highs and lows, but over the long-term Namabwan Super remains PNG’s largest, longest serving and most trusted Fund.
I encourage all Members to continue prioritising their savings and developing their financial management skills to place themselves in a position where they are financially independent and can also lead their communities on a path to building better futures.
On behalf of the Board, Management, and staff of Nambawan Super, I thank all our Members and Stakeholders for your support throughout 2022 and I look forward to serving you further in 2023.
