Australian Government, Australian Government Actuary

The Financing and Costing of Government Superannuation Schemes

VI CONCLUSIONS

It is not necessary for the Commonwealth Government to fund its superannuation schemes in the same way as private sector superannuation schemes. However, it may be desirable to fund them to some extent, provided the extent of their funding can be translated into an efficient and effective increase in national saving. Aside from national saving, there is no other reason to consider the funding of superannuation schemes for Commonwealth Government employees.

Whether a Commonwealth Government scheme is funded or not, it is essential that appropriate estimates be made of its cost. The following estimates should be made:

  1. A long term projection of future Commonwealth outlays on superannuation benefits, so that any possible undesirable trends can be identified in advance, and whatever action is necessary may be taken. This should be expressed as a percentage of GDP.

  2. The additional employment cost which arises from the existence of the superannuation benefits. This should be calculated using the Projected Unit Credit method, and presented as a percentage addition to salaries.

  3. The unfunded liabilities of the scheme - that is the extent to which the liabilities for superannuation in respect of employment services already rendered exceed any assets that may be held against them. This should be expressed in dollar terms.

  4. The offset to the unfunded liabilities which arises from the interaction of the superannuation scheme with the tax and social security system. This should also be expressed in dollar terms.

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