Nambawan Super Clarifies Unfunded State Liability

The State’s total unfunded superannuation liability is K2.070 billion from when the State was not making full payments of employer’s contributions for all public servants from the year 1991 to 2008.

We confirm that Nambawan Super Limited continues to pay exit entitlements of NSL members. NSL will continue to pay to exiting NSL members the balance of their paid-up contributions and interest earnt, but as of 1 December 2015, will not pay to affected exiting members the unfunded superannuation that is owed to them by the State. Unfortunately, for many exiting public servants, the unfunded superannuation is a significant part of their superannuation entitlements. This decision was made by the NSL board, effective 1 December 2015, in the interests of all continuing members because 155,000 continuing members of the Fund are exposed if their money is used to pay out exiting members the State’s unfunded superannuation on behalf of the State, and the State does not reimburse those monies to NSL in a timely manner.

In 2015, the State made its 8.4% employer superannuation contributions to members’ accounts as part of fortnightly payroll of public servants, a figure of around K185 million. However, the State did not pay its share of unfunded superannuation for public servants that exited the public service between November 2014 and 1 December 2015, an amount of around K135 million which is now owed to NSL.

Since 1 December 2015, a further 190 affected public servants have exited the public service to 31 December 2015. NSL has paid to them all their paid-up contributions and applicable interest but NSL has not paid the State’s unfunded share. Accordingly, a total of K 6.7 million is owed to these 190 public servants by the State for unfunded employer contributions. NSL has invoiced the State and is waiting payment.

In the last 4 weeks, NSL has had positive discussions with the Prime Minister, the Treasurer, and Prime Minister’s Chief of Staff regarding various options to settle both the K 135 million arrears and also the K2.07 billion unfunded liability before it grows to an unmanageable level for the State given NSL’s continued strong investment performance.

NSL’s board and management will continue discussions with the State to seek a positive and timely resolution of this issue in the best interests of its members. 

I believe that the Prime Minister, the Treasurer, and the senior members of government are concerned about this issue, cognisant of the legal responsibility of the State to ensure that the superannuation benefits of its public servants are made whole under the Superannuation Act, and are keen to reach a positive resolution. 

It should be noted that NSL’s assets (members funds under management) not including the K2.07 billion owed by the State, totals approximately K5 billion and is well managed by NSL, as evidenced by the average growth of 13% per annum over the last 10 years.