No super shock for councils this year
The Bass Coast Shire Council will meet this Wednesday to consider approving in principle its draft Annual Financial Report and Performance Statement for the year ending June 30, 2026, but in a complex financial document, there’s one thing they won’t have to worry about.
ONE of the horror stories for local government over the past 20 or so years has been the fluctuating fortunes of the Local Authorities Superannuation Fund and particularly its “defined benefit” scheme.
According to the Bass Coast Shire Council’s annual financial report 2025-26, to be presented to the council this Wednesday in Wonthaggi, those issues appear to be behind us.
From July 1, 2013, for example, Victorian councils were required to contribute to a $396.9 million shortfall to the fund’s Defined Benefit Plan following an actuary review by the scheme’s trustee Vision Super, with the ‘Tech Wreck’ of 2002 and ‘GCF’ of 2008 contributing factors.
While it is not known how much the Bass Coast Shire had to pay, its neighbour, the South Gippsland Shire had to find $4.61 million in 2012, which was upwards of $3 million more than it was expecting to pay into the fund that year.
Through the advocacy of the MAV, local councils had up to 15 years to meet their liabilities, although most paid it out well ahead of time.
Now, it seems, that problem has turned around with the fund holding 110.5% of the funds it requires to meet its commitments to employees at June 30, 2025. A new assessment is presently underway.
The Vested Benefit Index (VBI) surplus ($200.1m) means that the market value of the fund’s assets supporting the defined benefit obligations exceed the vested benefits that the defined benefit members would have been entitled to if they had all exited on June 30, 2025.
Bass Coast Council makes the majority of its employer superannuation contributions in respect of its employees to the Local Authorities Superannuation Fund. This fund has two categories of membership, accumulation and defined benefit, each of which is funded differently.
Thankfully, the defined benefits scheme, which was made compulsory on Local Government by the State Government, has been discontinued and as the remaining working members retire and defined benefits pensioners pass away, the call on funds will decline.
Unfortunately, it doesn’t work the other way for councils. They won’t get their money back if a surplus is declared after all liabilities are paid out. At June 30, 2025, the fund had total assets of $32 billion and total member benefit liabilities of $29 billion.
The key financial reporting meeting of the year for the Bass Coast Shire Council will be held this Wednesday, October 7 in its Wonthaggi council chambers at 10.45am.
