19 December 2011 - Defined benefits and LGsuper
Recent media reports on defined benefits may prompt some LGsuper members to seek more information on their defined benefit arrangements and their fund’s financial health following the global financial crisis and more recently, sovereign debt concerns in Europe.
LGsuper’s Defined Benefits Fund and Defined Benefit account for former City Super members are both hybrid defined benefit funds and use a combination of funding from both the member and their employer to fund the defined benefit component.
Member’s benefits are determined by a formula and are generally not subject to fluctuations in investment returns (except for the accumulation based comparison for LGsuper Defined Benefits Fund members that uses the accumulation comparison rate, and the accumulation component for former City Super defined benefits).
Member and employer contributions, along with investment earnings, are pooled in these two separate funds to provide benefits. Ultimately, it is the employers who bear the investment risk in our defined benefit funds, not members, and any shortfall must be made up by the employers.
Both of LGsuper’s defined benefit funds are subject to review by an independent Actuary at least once every 3 years to ensure there are sufficient funds to pay benefits. Both funds remain in a sound financial position.
For more information on how your defined benefit works, download the relevant PDS or guide.
