Hume Council backs bid to lighten ‘super’ load
HUME Council has backed a new taskforce that will lobby the state and federal governments to reduce councils’ contributions to a superannuation fund for staff.
The taskforce, set up by the Municipal Association of Victoria (MAV), will also work on accessing lower borrowing rates and reducing contribution taxes and WorkCover premiums.
As reported by the Weekly on July 10, under the ‘local authorities superannuation fund defined benefit scheme’, which is run by Vision Super, payments for staff employed before 1993 are fixed by a formula based on the final salary.
Councils have to pick up the tab for any shortfall, and it was announced by Vision Super last month that Victorian councils would be required to cover nearly $400 million to make up the latest shortfall – that’s up from $62 million in 2010.
Hume’s figure is expected to be close to $10 million. Since payments were first made in 1997, the council has contributed nearly $14 million to the fund.
MAV chief executive Rob Spence said the old scheme was a “volatile and unpredictable model” that councils could not plan ahead for.
“At a briefing on July 4, councils agreed to unite to fight for legislative reform that puts local government on an equal footing with exempt state and federal schemes.
“An exemption for other public sector schemes allows the Australian government to have an unfunded defined benefit liability of around $61 billion. The Victorian government’s liability exceeds $29 billion.”
Mr Spence said Hume Council had up to 15 years to pay out its $10 million bill, but in making it an exempt public sector scheme, councils would have even longer to pay.
Hume city governance and information director Daryl Whitfort said the council was still unaware of the actual figure it would pay.
“Council would welcome any change to the Commonwealth Superannuation Administration Act that would assist in minimising the impact of future obligations to the defined benefits fund that council may face.”