POWERED BY MOMENTUM MEDIA
Super taskforce to investigate defined benefit wage cap
The Municipal Association of Victoria's (MAV) Superannuation Taskforce will investigate a salary rate movement cap for Vision Super's defined benefit (DB) members as a way to resolve its current DB shortfall.
MAV said it would assess setting a cap for wage movements based on actuaries' projections of long-term wage rate movements. Excess payments would be rolled into an accumulation account to reduce the exposure of super funds to an actuarial shortfall.
The move is one of 19 recommendations the taskforce has suggested to reduce the effect of calls on councils, to reduce employers' liabilities in relation to the scheme, and to oversee the super fund's governance and performance.
MAV President Cr Bill McArthur said a shared solution among government, employer and super funds was necessary.
McArthur said there was no "silver bullet" - but a simple step towards achieving the objectives would be for Vision to align its actuarial review with the councils' yearly budget cycles.
He said key reform recommendations included access to cheaper borrowing rates, reviewing the methodology and budget allocations for shortfalls, waiving ancillary government costs, and greater awareness of wages and investment returns that could impact the liability.
"The Australian and Victorian governments can assist by helping councils to access cheaper borrowing rates, plus removing WorkCover liabilities and the 15 per cent contributions tax to save councils over $82 million.
"However, local government can also progress other solutions such as increasing employer and employee contributions; more frequent monitoring of the Local Authorities Superannuation Fund's performance and salary movements; and annual allocation of shortfall funds in council budgets to smooth payments over time," he said.
It said Vision Super's defined benefit (DB) scheme should be removed from the Superannuation Industry (Supervision) (SIS) Act or be exempt from some SIS requirements if it would reduce the burden of future calls on employers.
Councils have been called on to fund the DB shortfall on four occasions - but last year's shortfall of $453 million with $396.9 million payable by councils and due on 1 July 2013 set a record and prompted many councils to lobby the Government to amend legislation.
The taskforce was formed in July last year to lobby government to remove the burden on local councils to fully fund shortfalls arising from Vision's DB scheme by returning to a state-managed scheme.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Private market assets in super have surged, while private debt recorded the fastest growth among all investment types.
The equities investor has launched a new long-short fund seeded by UniSuper, targeting alpha from ASX 300 equities using AI insights.
The fund has strengthened efforts to boost gender diversity, targeting 40:40:20 balance across its investment teams by 2030.
The lower outlook for inflation has set the stage for another two rate cuts over the first half of 2026, according to Westpac.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
