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Thursday, September 02, 2010

Diversified managed fund for workers

By REG RENAGI

 

As apart from the traditional pension or superannuation funds in Papua New Guinea, , the government needs to make it a big part of its financial market reforms to also establish other diversified types of ‘managed funds’ with specific benefits products to cater for the overall needs of the majority of income-earners in the country. 

The public needs other alternative investment choices other than just putting their hard-earned savings in the banks and only getting a pittance for it.

While most super funds have grown over the years due to membership increases, fundamentally they have not changed much since being established.

 New managed funds are needed for future investments by the public and should be creatively designed so that the fund benefits also extend not only to members, but also to their spouses, children and immediate families.

The super funds in PNG so far are set up fundamentally for single purposes to generally provide for future needs.

 They are a single old savings scheme to give workers some security at retirement and in their old-age. 

Simply, they are life-long financial plans – an investment vehicle of member’s personal financial planning.

 All in all, they provide a great advantage to the average worker who might otherwise not have the means available for a planned retirement.

The government when designing future managed funds must be careful to ensure inbuilt hedging mechanisms are in place to safeguard against two factors: inflation and increasing life-expectancy. 

For the benefit of citizens, the government will need to introduce other suitable managed funds for all categories of workers and their families to enjoy new fund benefits as:

 

·        Home savings to buy a home;

 

·         Medical bills;

 

·         Children’s tertiary education;

 

·         Invest in shares; and

 

·         Premium for personal and home insurance.

 

The country’s new fund’s products must also cover a wide range of financial instruments from property, insurance to stocks (shares) and unit trusts. 

So upon retirement, workers have a sizeable ‘nest-egg’ to see them through in retirement years. 

What’s more, it must also be made a future government policy to encourage all citizens the importance of long-term financial planning.

 Hence, the future challenge now is for both the government and managed funds trustees to continue introducing innovative, yet conservative savings and investment strategies of allowing its national workforce in all categories to intelligently use their managed funds in meeting their future expectations.

1 comment:

  1. Wadex Wialus6:57 PM

    i respectfully suggest, having witnessed the rape of NasFund by the Skate Government and its cronies, and the rebuilding of it by Sir Mekere Morauta and the current NasFund management, that workers will be very well advised to focus on protecting what exists (which is very good) rather than looking for new get-rich-quick schemes open to manipulation by the current goverment, which is a thousand times worse than Skate. Reg, innovative and conservative tend to be mutually exclusive terms in the world of finance.

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