Shorten warning on unfunded super liabilities
The Minister for Financial Services, Bill Shorten, has signaled that both the State Governments and local government bodies are going to have to accept greater responsibility for unfunded liabilities associated with defined benefit superannuation schemes.
The minister's attitude was revealed during a visit to regional Victoria yesterday where he was questioned on the issue of concerns around the defined benefits elements of industry superannuation scheme Vision Super.
"I think there is a challenge here for local government in terms of how they fund their contributions to superannuation," he said.
"I think there is also a policy piece: does the State Government want to support local government or not?"
Shorten questioned whether a number of local government councils had appropriately met their obligations with respect to funding defined benefit super schemes.
"In the case of some parts of local government, they created their superannuation schemes even before there was accumulation superannuation. In other words, people would be given a certain amount when they retire," he said.
"In the case of local government, what we've seen is councils agreeing to wage increases for people who are eligible for a defined benefit pension when they retire. I'm not sure that the councils have kept pace with putting money aside for the pensions for when people retire."
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