Understanding how your super grows.

Superannuation contributions are one of the most effective ways to build your retirement savings.

Whether you are a PNG citizen making mandatory contributions or a non-citizen contributing voluntarily, understanding how contributions work can help you better understand how your super is calculated, taxed and managed.

This guide explains member and employer contributions, salary packaging arrangements and the contribution limits that apply under current PNG legislation.

 

Who can contribute?

Both PNG citizens and non-citizens, including expatriates and self-employed individuals, can contribute to superannuation.

There are two types of contributions:

·         Member Contributions – paid by you, the employee

·         Employer Contributions – paid by your employer on your behalf

Member Contributions

·         Made from your salary after income tax has been applied

·         The mandatory contribution rate for PNG citizens is 6%

·         Members may choose to make voluntary contributions above the mandatory rate

·         Voluntary contributors, including expatriates and self-employed individuals, may contribute any amount

Employer Contributions

·         Paid by your employer and calculated on your taxable salary

·         The mandatory employer contribution rate for PNG citizens is 8.4%

·         Employers may contribute up to 15% through an approved salary packaging arrangement.

·         Contribution amount and arrangement must be agreed in writing between employer and employee

What’s excluded from super calculations?

Super contributions are not applied to the following:

·         Overtime

·         Allowances

·         Bonuses

·         Salary sacrifice amounts

·         Compensation payments

·         Gifts from employer

Only your gross taxable salary is used to calculate super contributions.

Salary Packaging for Super

Salary packaging is allowed if:

·         It’s agreed to in writing

·         The arrangement is long-term

·         The super contribution is paid by the employer

·         Your employment contract or addendum clearly outlines both the taxable salary and the superannuation component

Superannuation contributions via salary packaging cannot exceed 15% of your taxable salary.

Examples

Example 1: Voluntary contributions through salary packaging

Your employment contract includes:

• Taxable Salary: PGK 100,000
• mployer Superannuation Contribution: PGK 15,000

Because the contribution equals 15% of your taxable salary, this arrangement is valid. As long as it’s clearly stated in your employment contract or a signed contract addendum.

Your total remuneration package is PGK 115,000, comprising a taxable salary of PGK 100,000 and employer superannuation contributions of PGK 15,000.

 

Example 2: Restructuring an existing remuneration package

You currently earn PGK 100,000 and agree with your employer to restructure your remuneration package to include salary packaged superannuation.

The revised arrangement is:

• Taxable Salary: PGK 87,000
• Employer Superannuation Contribution: PGK 13,000

The contribution remains within the allowable 15% limit and is documented through an updated employment contract or contract addendum. Your total remuneration package remains PGK 100,000, with part of the package allocated to employer superannuation contributions.

Example 3: Mandatory contributions for PNG citizens

A PNG citizen earning PGK 50,000 per year would have the following contributions:

• Member Contribution (6% after tax): PGK 3,000
• Employer Contribution (8.4%): PGK 4,200

The total annual superannuation contribution is PGK 7,200. These contributions are paid by the employer, with the member contribution deducted from the employee’s salary after income tax has been applied.

We are here to help

Have questions or need some help? Speak to one of our knowledgeable local team, call toll free 180 5100 or email us at info@pacsuper.com.pg