The Government will increase employer contributions to public sector superannuation schemes to cover actuarial deficiencies in its lump sum and pension funds.
The Minister assisting the Treasurer, Geoff Gallop, said the decision followed consideration of the actuary's report on the state of the Government Employees Superannuation Board's funds as at June 30, 1991.
"In relation to the lump sum fund the actuary's valuation identified a deficit of $193.6 million while the pension fund had a shortfall of $19.7 million.
"This amount will be needed over the next 30 years to cover the shortfall between future contributions and future benefits over the 30-year lifetime of the current membership.
"In line with the actuary's recommendations, the Government has decided to cover the deficiencies by applying a levy of 0.61 per cent on the State's share of pension funds and by increasing Government contributions to the lump sum scheme by 11.1 per cent, phased in over four years.
"For the lump sum scheme this will mean that public-sector employer contributions will rise from the current level of 12 per cent of salary to 13.3 per cent by 1995/96."
Allowance for the funding changes was provided for in the State Budget brought down on September 1.
Dr Gallop said it was proposed that the funding changes would be implemented in early 1993. Legislative amendments would be required for the pension scheme changes.
"The actuary attributed the deficit in the funds to a combination of the imposition of Commonwealth taxation, recent poor investment returns and the particular age structure of the membership."
Dr Gallop said the biggest contributing factor was the introduction of taxation for superannuation funds by the Commonwealth Government.
Out of a total deficit across the funds of $213.3 million, the tax effect accounted for $100.8 million or 47.3 per cent.
Poor investment returns associated mainly with property write-downs contributed $71.4 million (33.5 per cent).
Another $41.1 million (19.2 per cent) was the result of the original scheme not catering for a high proportion of transfers of members of mature age from the pension scheme.
Dr Gallop said the GESB's annual report would be tabled in Parliament next month. It would give a comprehensive account of its current performance.
There was no question as to the board's ability to meet members' entitlements.
