The 81,000 members of UniSuper’s defined benefits scheme could end up with less money in retirement than they have been promised, with the fund set to make a decision about benefit reductions in the first quarter of 2013.
Following revelations on ABC television’s 7.30 that employer groups (ie, universities) will not be forced to top up the Defined Benefits Division (DBD) in the event of a shortfall, UniSuper has moved to calm concerned members.
A letter posted on the fund’s website said the accrued benefits index (a measure of the health of the DBD) was 98.1 per cent as at 12 December 2011. However, this represents a fall from 104.2 per cent at 30 June 2011.
Clause 34 of the UniSuper Trustee Deed gives the board the power to put into place a monitoring period. Following the global financial crisis an initial monitoring period was started in 2008, and an actuarial review of the scheme on 30 June 2011 led to an additional monitoring period.
A decision is likely to be made about the reduction of member benefits in the first quarter of 2013, according to UniSuper.
“We understand this is of concern to DBD members, however we are unable to predict what the circumstances may be at that time and therefore what, if any, action may need to be taken,” said the letter.
UniSuper chief executive Terry McCredden said he was unable to speculate about what sort of recovery in investment markets would be necessary to avoid reductions to member benefits.
“We can’t speculate on this as the trustee can’t determine what reductions may be appropriate until all the circumstances, including market outlook, are known,” McCredden said.
He added that media speculation had led to a high level of member enquiries about rollovers into other funds, but “it remains to be seen if this translates into a higher level of rollover than normal”.
Less than 20 per cent of UniSuper’s 450,000 members are part of the fund’s defined benefit scheme – the majority of members are in the accumulation section of the fund.
