Who is the Employer?
An employer is an entity that hires a person by means of a formal agreement to provide labour or service for pay. This includes any company, government department or statutory authority. It is compulsory for employers employing 15 or more employees to contribute to any Authorised Superannuation Fund (ASF) in the country.
Role of the Employer
The PNG Government sees superannuation in PNG as an important means of saving by the work force for their financial wealth in retirement. Therefore, for the benefit of its people, the Government has made superannuation compulsory through the legislation. Sections 76 & 77 of the Superannuation (General) Provisions Act 2002 requires every employer to contribute for and on behalf of its employees at the rate prescribed by the regulation.
Penalties against Defaulting Employers
All contributing authorities to Authorized Superannuation Fund (ASF) are to take note of the mandatory requirements under the Superannuation (General) Provisions Act 2002 and the Superannuation Regulations in terms of the measures/penalties for failing to comply with such requirements in remitting both employer and employee contributions.
An employer is required to contribute on behalf of each employee; it is also required to deduct employee contributions from employees’ salaries. These are then remitted to an ASF at the end of each month and each fortnight respectively.
Failure by an employer to comply with these requirements amounts to an offence under Section 78 of the Superannuation (General Provisions) Act 2002, which carries a fine not exceeding K 500, 000.00 or imprisonment for 10 years or both.
In view of the tougher penalties, which are now in force and to avoid the Central Bank from taking extreme measures against the defaulters, employers are urged to remit all contributions within the time required.
Recovering Missing Superannuation Contributions
When an employer fails in making superannuation contribution for and on behalf of its employees, a relevant Authorised Super Fund (ASF) has the authority under Section 79 of the Superannuation General Provisions Act 2002 to act on behalf of employees (members) to recover the outstanding contributions together with interest and penalty fees at the rate prescribed in the regulation from the date on which payment was due to the date of actual payment.
Employer Contribution Rate
The employer may also increase its portion from 8.4% to a maximum of 15% if it wishes to do so on behalf of its employees.
The new Superannuation (General Provisions) Act 2002 provides for both employee and employer contributions to be remitted to an Authorized Superannuation (ASF) on regular basis. Employer must remit their employer contributions within 14 days of the end of each month and employee contributions are required within 14 days of date of deduction.
Now employers have a choice of which Superannuation Fund they want to join and remit their contributions to.
Employee Contribution Rate
Employees contribute 6% of their gross salaries and the employer contributes 8.4%, which is based on the employee gross salary and is paid by the employer from its own funds.
Members may if they wish, make additional voluntary contributions from 6% up to a maximum of 15% of their fortnightly gross salary to the Fund to maximize their superannuation savings with the Fund. The employer may also increase its portion from 8.4% to a maximum of 15% if it wishes to do so on behalf of its employees.
The new Superannuation (General Provisions) Act 2002 provides for both employee and employer contributions to be remitted to an Authorized Superannuation (ASF) on regular basis. Employer must remit their employer contributions within 14 days of the end of each month and employee contributions are required within 14 days of date of deduction.
Now employers have a choice of which Superannuation Fund they want to join and remit their contributions to.