WELLINGTON Shire Council has been hit with a $4.8 million unfunded superannuation bill.
The council has been required to make the $4.8 million top-up payment to the Local Authorities Superannuation Fund, defined benefit plan.
In an effort to reduce its future superannuation burden, council has joined a local government push for legislative reform.
Shire mayor Peter Cleary said council had been informed that a payment would be required; but had received little warning of its magnitude.
“It would be fair to say that the size of this most recent top-up payment has caught the entire local government sector by surprise,” he said.
While the Local Government Defined Benefit Scheme was closed to new members in 1993, current State and Federal laws require the scheme to hold enough funds to meet the retirement benefits owed to members now and in the future.
Cr Cleary said that state and federal superannuation schemes carried an exemption from such onerous funding liabilities.
“Wellington Shire Council believes that it is unreasonable to expect local government to meet a higher funding requirement,” he said.
“Local government receives just over 3.5 per cent of all rates and tax revenue, the State Government receives 16.4 per cent and the Federal Government a considerable 80.1 per cent.
“Clearly the expectation that we provide more funding than our state and federal counterparts from a comparatively smaller funding bucket is unrealistic as a long term proposition,” Cr Cleary said.
“The legacy of the defined benefits plan creates a volatile system which translates into long term financial challenges for all councils.
“For large rural shires it is particularly difficult as we balance the demands of a large ageing asset base, the community’s desire for new infrastructure with an aspiration for lower rates.”
For more read Friday’s Gippsland Times.
