Volume Five 2011 focus on Superannuation, Compensation and Housing
The Auditor-General, Mr Peter Achterstraat, today released his Volume Five Report to Parliament for 2011. The report includes comments on financial audits of government agencies in the Superannuation, Compensation, Housing and Finance sectors.
High unfunded superannuation liabilities
Unfunded superannuation liabilities remain high at approximately $20.0 billion. These liabilities relate to defined benefit superannuation schemes for public servants – these schemes are closed to new members.
‘Unfunded superannuation liabilities continue to pose significant challenges for the New South Wales Government, as the liabilities are borne by the Government’, Mr Achterstraat said.
Parliamentary Contributory Superannuation Scheme’s unfunded liabilities continue to increase. At 30 June 2011 liabilities were $184 million, substantially up from $40.3 million at 30 June 2007 - representing an increase from 12 per cent to 46 per cent unfunded.
Cost savings in consolidation of Superannuation Trustee Boards
‘Consolidation of Superannuation Trustee Boards is occurring in private sector superannuation funds. I expect this to flow to the public sector superannuation funds, and may offer cost savings for the benefit of members,’ said Mr Achterstraat.
‘I caution that proper analysis should be carried out to ensure efficiency gains are tangible, drawing from the lessons from the already merged private sector superannuation funds,’ he added.
Police Superannuation Scheme members mostly retire hurt on duty
‘Hurt on duty’ remains the most common way Police Superannuation Scheme members retire. The Scheme closed to members joining the Police from 1988.
At 30 June 2011, 66 per cent of police superannuation scheme pensioners were receiving a ‘hurt on duty’ pension. The Scheme paid $220 million in ‘hurt on duty’ pensions in 2010-11. The average age for these members on retirement is 45. In 2010-11, 198 members retired ‘hurt on duty’ compared to 176 for 2009-10.
The NSW WorkCover Scheme’s financial position continues to deteriorate
The State’s compensation liabilities continue to increase. The Workers Compensation Scheme’s financial position was $2.4 billion in deficit at 30 June 2011. The Scheme may not collect enough premiums in 2011-12 to meet its requirement for sustainable long term funding.
‘There appears to be emerging changes in workers compensation claimant behaviour indicating attempts to maximise claims resulting in increased Scheme liabilities’, said Mr Achterstraat. ‘I am concerned that lump sum claims are re-emerging, significantly increasing workers’ compensation costs. This requires proactive management’, he added.
Higher Lifetime Care and Support Services Scheme compensation
The liability for people severely injured in motor vehicle accidents in New South Wales is estimated to increase to $4 billion by 2016, up from $1.4 billion at 30 June 2011.
NSW Land and Housing Corporation identified risks associated with builders becoming financially stressed while constructing its dwellings. These risks had emerged on 12 separate projects involving the construction of 141 dwellings and eight bedsitting conversions to one bedroom units.
The Corporation advised that the failure rate of firms engaged on the Corporation’s projects is currently 0.3 builders per $100 million spent on construction contacts. The Department of Finance and Services advised that the general New South Wales rate of insolvencies of construction firms in 2009–10 is approximately four firms per $100 million.
Barry Underwood, on 02 9275 7220 or 0403 073 664 and email firstname.lastname@example.org