BRIMBANK Council may be forced to fork out $1 million by next July to cover a statewide superannuation shortfall.
General manager of corporate services Doris Cunningham said that while no payment was required in 2012, the council had allocated $1 million for the unfunded superannuation liability in this year’s budget.
Councils across the state will be required to subsidise the Local Authorities Superannuation Fund (LCAF) shortfall, set to total $400 million.
It’s not the first time councils have been asked to step in.
In 2003 Brimbank was required to pay $3.9 million of a $62.1 million shortfall.
The council also paid $2.6 million in 2011.
The LCAF, known as Vision Super, is a defined benefit scheme that covers past and present council employees who began work before December 1993.
Under the scheme, these employees are given a guaranteed amount when they retire.
The scheme requires that councils make up any shortfalls when investments fall.
The $1 million payout could take a sizeable chunk out of the council’s forecast operating revenue of $160.9 million for 2012-13.
But the council maintained that if a payment was made, it would be voluntary.
Ms Cunningham said 120 present and past staff members were included in the scheme.
“The council is required to pay for current staff under the defined benefit scheme and previous staff who opted for a pension plan in their retirement,” she said.
Vision Super chairman and Municipal Association of Victoria chief executive Rob Spence called on the state government to make the LCAF an exempt public sector fund.
He said this would allow council liabilities to be spread out over time, rather than via top-up payments every three years.
Mr Spence said the situation was worsened by the small number of contributing members remaining in the scheme.
