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Superannuation scheme needs changing
Greater Bendigo City Council last night voted to step up their fight against legislation that requires local government to top up a defined benefits superannuation scheme closed to new members since 1994.
Councillors will seek to nominate Mayor Cr Alec Sandner to a Municipal Association of Victoria (MAV) taskforce being formed to look at how best to address the state-wide $450M shortfall.
The terms of reference for the taskforce will be determined at the MAV’s next board meeting on August 3. Council will also ask the MAV to review its membership of the scheme’s (Vision Super) board to ensure independence.
Cr Sandner said Council viewed the issue as one of the most serious facing the City and local government in Victoria.
“We will actively lobby the Federal and State Governments to change the status of the scheme so it can be transitioned back to a State-managed scheme that is not required to be fully funded,” Cr Sandner said.
Under current legislation, local government, water authorities and libraries are required to top up the scheme whenever there is a shortfall in funds. The City will soon be asked to find between $10M and $11M to cover the latest shortfall with the money due by July 1, 2013.
“To put this in some perspective, this amount of money is equivalent to our total annual roads budget and it is double our annual spending on drainage,” Cr Sandner said.
He warned that without legislative change ratepayers will face repeated requests to cover such shortfalls over the next 30 plus years.
While the City had planned ahead by setting aside considerable funds to help cover the cost, no council anywhere had predicted the call this time would be five times greater than the previous one in 2010.
“This problem isn’t going to go away. It must be addressed by our State and Federal politicians to ensure ratepayers aren’t burdened with a massive impost that weakens local government’s capacity to deliver future works and services,” Cr Sandner said.
“State and Federal Governments are not required to fully fund their equivalent schemes so why are we? What’s good for the goose is good for the gander, especially if it means that ratepayers will no longer have to be burdened with this ridiculous and costly impost.”
The Local Authorities Superannuation Fund Defined Benefits Plan was compulsory for all councils when it was set up by the State Government in 1982. The scheme covered employees of local government, certain water authorities and certain other government and semi-government authorities within Victoria.
It has been closed to new members since January 1 1994. When the scheme closed to new members legal agreements were put in place, including legislation that requires the fund to be fully-funded until the last person (or their spouse) no longer draws on the fund.
Therefore, in accordance with legislative requirements, local authorities such as the City of Greater Bendigo are required to top up the fund.
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Updated: 1:23 PM, 26 July 2012
195-229 Lyttleton Terrace
Bendigo Victoria 3550
PO Box 733
Bendigo Victoria 3552
Telephone: (+61 3) 5434 6000
Fax: (+61 3) 5434 6200
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