Nasfund Announces 2023 Full Year Results

7 March 2024

National Superannuation Fund Limited (Nasfund) is pleased to announce its audited results for the year 2023.

The 2023 audited financial statements were approved by the Trustee Board at its meeting today, Thursday, March 7th, 2024. These statements reported a Net Asset Value (NAV) of K7 billion and a notable net profit after tax of K597 million for the year ending December 31, 2023.

Following these results, the Nasfund Board has approved an interest crediting rate of 9% for the 2023 financial year. This decision will result in the distribution of more than K584 million which will be allocated into over 680,000 member accounts this weekend. It’s also worth noting that an interim credit rate amounting to K9.4 million has been proactively allocated to members that have exited the Fund during the year.

Chairwoman, Tamzin Wardley, on behalf of the board expressed her pleasure with the Fund’s performance, highlighting its resilience and ability to surpass expected levels in contributions, cash income, and drive operational cost management. “It is wonderful to be able to announce some great news for our members, in what has been a difficult time for many”.

The positive financial outcomes were significantly influenced by key factors such as above budget performance in cash income, and valuation gains of K 180m, a substantial improvement compared to the loss of K44m last year. Additionally, a net foreign exchange gain of K85m was recorded, in contrast to a loss of K40m in the prior year. These factors contributed to a total valuation gain of    K265 m which equates to 4.08 % of the 9% crediting rate for the members this year.

Our crediting rate for 2023 of 9%, underscores our dedication to providing strong and stable returns to our members above CPI over a rolling five-year period , which on average is 6.12% compared to 4.92 % CPI average over the same time during 2019 to 2023.

This performance underlines our dedication to ensuring the financial well-being and confidence of our members, and we look forward to this positive trajectory in the future.

Main highlights for FY2023 include:

•           Cash income of K485 million compared to budget of K432 million (FY22: K493 million income)

•           Valuation gain of K180 million (FY22: K44 million loss)

•           Foreign currency gain of K84 million (FY22: 40 million loss)

•           Expenses of K74 million compared to budget of K82 million (FY22: K72 million)

•           Net profit before valuation of K415 million against Budget of K278 million

•           Net profit after tax of K597 million  (FY22: K256 million)

•           Total assets of K7.13 billion (FY22: K6.35 billion)

•           Net assets of K7.07 billion (FY22: K6.30 billion)

•           Employer receipts of K706 million, 9% higher than collected in 2022 (FY22: K650 million)

•           Member withdrawals of K534 million (FY22: K546 million)

•           34,415 new members registered resulting in a 5% increase in total membership to 688,169 members (FY22: 653,754)

•           Gross employer base increased by 7% to reach 3,585 employers (FY22: 3,020)

•           905 shop floor presentations covering 26,163 members / potential members compared to 771 conducted in 2022.

•           Reserve 31 m to 34 m

The future of PNG’s economy remains cautiously positive, performance will be underpinned by a projected recovery in the extractive sector. Nasfund as an investor and landlord sees extraordinarily improved performance when the country’s resource projects are operational, as it improves the property portfolio in terms of value and rental income and increases contributions due to a larger work force.

Throughout the year, while there were economic challenges, it’s important to recognize the resilience and strategic adaptations made by our team. Despite the increased tax on the tier one banking sector, which rose from 30% to 45% in January 2023 and had a significant influence on Nasfund, our financial acumen helped us mitigate the impact to a loss of around K20 million or 0.31% of the annual crediting rate for FY 23.

Additionally, although we experienced a 3% decline in yields on Government securities in 2022, impacting our FY 23 results with a reduced interest income of K30m or 0.46%, our strategic response and portfolio adjustments have been proactive and thoughtful.

Our Strategic Assets Allocation (SAA) for international investments is currently at 11.85% of Net Asset Value, which is well within both the prudential standard limit of 35% and the board-approved limit of 15%. The limited availability of foreign exchange continues to restrict our ability to fully capitalize on international opportunities, it’s worth noting the potential benefits had we been able to invest fully. Investing the full 15% in international markets could have generated an additional K41.7m million in income, translating to a 0.64% increase in crediting rate. This scenario underscores the substantial opportunities that lie ahead as we continue to navigate and adapt to the evolving economic landscape.

The investment division will intensify efforts to identify and assess opportunities in FY24 while remaining vigilant in monitoring market conditions and adjusting our investment  as needed to ensure we are maximizing returns for our members while also managing risk.

This year we will implement our strategy for the years 2024 – 2026, which aims at enhancing operational efficiencies and superannuation education to current and prospective members. We launched e-branch in 2023, and this will be followed by more digital initiatives like a WhatsApp appointment process and strategic initiatives aimed at improving the overall member experience. This means putting more of an emphasis on adding value for our membership while also helping them increase their retirement funds.

We also aim to grow our membership base organically by offering educational content on superannuation through videos and presentations, specifically targeting exempt smaller employers to encourage them to join Nasfund voluntarily, for the good of their employees.

Our members fund was adversely impacted by the events of 10 January 2024 in many ways – loss of investment capital, loss of contributions, loss of dividends, loss of employment, and lower investor confidence. We are working with the business peak bodies to access financial support to our investee companies from the government.

Our domestic environment makes achieving our key target returns of exceed rolling inflation a difficult one.  Blackouts, interrupted fuel supply and increased lawlessness impact not only on the lives of our members and their families but also our Fund.  We will continue to work with our stakeholders to improve our operating environment.

Whilst 2023 has been our best performing year since 2013 , I would urge members to look at consistent long term returns as superannuation is for the long term – This year our results were supported by international markets and kina depreciation which is beyond our control, next year it may be different story.

Ms. Wardley stated, “At Nasfund we are always focused on being ready for tomorrow. We remind our members that if you remain invested throughout employment then your long-term returns can grow exponentially over time. This will provide financial security following your retirement from active employment”.

I would like to sincerely thank our CEO Rajeev Sharma, executive management, and staff for their commitment and hard work in 2023 in delivering such commendable results in this economic environment.