Defined Benefit information

Local Authorities Superannuation Fund

This information is for the employer-sponsors of Local Authorities Superannuation Fund defined benefit sub-plan (LASF DB).

Latest updates

Latest updates

3 April update

Local Authorities Superannuation Fund Defined Benefit Plan (LASF DB) - Vested Benefit Index (VBI) update (COVID-19 #4)

Since our last update dated 26 March 2020, the impact of COVID-19 has continued to cause significant volatility in investment markets around the world.

For the period between 23 - 30 March 2020, it is estimated that LASF DB’s VBI has increased by approximately 1% to 100%:

  30 Jun 2019 (actual) 30 Sep 2019 (est.) 31 Dec 2019 (est.) 31 Jan 2020 28 Feb 2020 12 Mar 2020 18 Mar 2020 23 Mar 2020 30 Mar 2020
LASF DB 107.1% 107.3% 107.7% approx. 109% approx. 107% approx. 101% approx. 100% approx. 99% approx. 100%


The above movements reflect the impact of the widely fluctuating equity markets with daily movements in the ASX 200 of up to +/- 7% occurring.

Vision Super is continuing to monitor the sub-plan’s financial position during this period of extreme volatility. We are also closely monitoring the investment markets to identify potential threats/opportunities that we may be able to avoid/take advantage of to improve the funding position of the sub-plan.

We have begun the quarterly estimation of the LASF DB VBI as at 31 March 2020. This is involves more detailed calculations than the daily estimations we have been making during this volatile period. The methodology we use for the quarterly VBI estimations is determined by the Fund Actuary and factors in updated member/pensioner details and updated salary information as provided by employers, along with contributions received and benefits paid during the quarter.

As you would appreciate, there is a significant amount of work involved in the quarterly calculations. The results of the 31 March 2020 VBI calculations will be circulated for approval by the Vision Super Board and then communicated to employers in early May 2020.

We expect that there will be some variation in the estimated 31 March 2020 VBI compared to the estimated 30 March 2020 VBI due to the nature of the quarterly VBI calculations compared to that of the daily monitoring.

As indicated previously, the next scheduled actuarial investigation carried out by the Fund Actuary is as at 30 June 2020. This is a triennial investigation and will be a comprehensive review of the sub-plan’s position and is expected to be completed by 31 December 2020.

In the event the VBI falls below the nominated shortfall threshold (ie: 97%), an interim investigation is required to be carried out by the Fund Actuary, unless the next scheduled investigation is due within six months. If the VBI falls below 97% prior to 30 June 2020, LASF DB sub-plan’s next scheduled investigation as at 30 June 2020 will satisfy this requirement.

For further information on the LASF DB sub-plan, please refer to the LASF Defined Benefit Booklet

Action required (if any)
At this stage, no action is required by you.  If you have any queries, please contact the Employer Services team on 1300 304 947 or employerservices@visionsuper.com.au

 

26 March update

Local Authorities Superannuation Fund Defined Benefit Plan (LASF DB) - Vested Benefit Index (VBI) update (COVID-19 #3)

Since our last update (distributed on 20 March 2020), the global responses to COVID-19 have continued to significantly impact investment markets.

For the period between 18 - 23 March 2020, it is estimated that LASF DB’s VBI has dropped approximately 1%, as shown below:

  30 Jun 2019 (actual) 30 Sep 2019 (est.) 31 Dec 2019 (est.) 31 Jan 2020 28 Feb 2020 12 Mar 2020 18 Mar 2020 23 Mar 2020
LASF DB 107.1% 107.3% 107.7% approx. 109% approx. 107% approx. 101% approx. 100% approx. 99%

As previously indicated, the drop in the LASF DB VBI has been softened primarily due to:

  • Strategic exposure to equities of 44.5% and actual exposure of 36% in mid-March 2020. This allows for offsetting returns from other asset classes including bonds, infrastructure and cash, and
  • Payoff returns from the implementation of the tail risk hedge insurance. This hedge has contributed $65m or approx 3% to the sub-plan which has helped to partly offset equity market falls to 24 March 2020. This gain has been wholly reinvested for the back into sub-plan, into cash. As of 24 March 2020, the tail risk hedge was fully realised and will not provide any further cover.

What if the VBI drops below the shortfall limit?

Under the superannuation prudential standards, no specific action is required when the VBI is above the fund’s nominated shortfall threshold of 97% (or 100% during an actuarial investigation). Where the VBI falls below the relevant threshold, a restoration plan is required to restore VBI to 100% within 3 years.

As previously advised, in the event the VBI falls below the nominated shortfall threshold (ie: 97%), an interim investigation is required to be carried out by the Fund Actuary, unless the next scheduled investigation is due within six months. If the VBI falls below 97% prior to 30 June 2020, LASF DB sub-plan’s next scheduled investigation as at 30 June 2020 will satisfy this requirement. This actuarial investigation will be completed by 31 December 2020.

If it is likely that the 30 June 2020 VBI will be less than 100%, the Trustee will develop a proposed restoration plan in consultation with the Fund Actuary, sponsoring authorities/employers, APRA and other relevant bodies. The restoration plan may include any or a combination of the following:

  • Keeping a watching brief on investment market movements
  • Higher regular contributions, and/or
  • A funding call if necessary within the three years

The Fund Actuary will review the proposed restoration plan and, if appropriate, recommend that proposed restoration plan be adopted.

Will there be a funding call?

Funding calls are just one option that may be included in a restoration plan. Depending on the size of the funding deficit/unfunded liability, there are a number of ways for the DB sub-plan to be returned to a satisfactory position and there are no prescribed options to be included as part of a restoration plan.

If Vision Super is required to establish a restoration plan, the final restoration plan must be approved within 3 months of the Trustee receiving the Fund Actuary’s report which includes the Fund Actuary’s recommended restoration plan. If LASF DB sub-plan’s 30 June 2020 VBI is less than 100%, the Fund Actuary’s report will be received by 31 December 2020. Assuming that the report is received on 31 December 2020, the Trustee must adopt the final restoration plan by 31 March 2021.

We appreciate that, as employers, you would like as much advance notice of a funding call as possible to assist you with your own budgeting and planning. At this stage, it is too early to determine whether a restoration plan will be required and whether a funding call would form part of that restoration plan.

Vision Super will continue to monitor the sub-plan’s financial position. We note the next detailed estimation of the LASF DB VBI will be as at 31 March 2020. As indicated above, the next scheduled actuarial investigation is as at 30 June 2020. This is a triennial investigation and will be a comprehensive review of the sub-plan’s position.

For further information on the LASF DB sub-plan, please refer to the Defined Benefit Employer Booklet

Action required (if any)

At this stage, no action is required by you. 

If you have any queries, please contact the Employer Services team on 1300 304 947 or employerservices@visionsuper.com.au

20 March update

Local Authorities Superannuation Fund Defined Benefit Plan (LASF DB) - Vested Benefit Index (VBI) update

Our last LASF DB VBI update was distributed on 17 March 2020. Since that date, the global spread and responses to COVID-19 have had significant impact on the investment markets. 

However, while LASF DB’s estimated VBI has fluctuated in the intervening period, there has only been an overall drop of approximately 1% in the estimated VBI from 12 March 2020 to 18 March 2020 as follows: 

  30 Jun 2019 (actual) 30 Sep 2019 (est.) 31 Dec 2019 (est.) 31 Jan 2020 28 Feb 2020 12 Mar 2020 18 Mar 2020
LASF DB 107.1% 107.3% 107.7% approx. 109% approx. 107% approx. 101% approx. 100%

The LASF DB fund is estimated to be at approximately 100% despite recent and ongoing equity market movements, primarily due to:

  • Strategic exposure to equities of 44.5% and actual exposure of 35% in early March 2020. This allows for offsetting returns from other asset classes including bonds, infrastructure and cash, and
  • Payoff returns from the implementation of the tail risk hedge insurance have contributed to the LASF DB investment return for the month to date ending 18 March 2020. This has partly offset equity market falls. However, please note the tail risk hedge has now been fully realised and it will provide no further cover.

Action required (if any)

At this stage, no action is required by you. We will continue to monitor the situation and provide further updates. 

If you have any queries, please contact the Employer Services team on 1300 304 947 or employerservices@visionsuper.com.au


17 March update

Local Authorities Superannuation Fund Defined Benefit Plan (LASF DB) - Vested Benefit Index (VBI) update

The 31 December 2019 VBI update was recently distributed to all LASF DB authorities and employers. In that update, we advised that we would conduct an employer briefing in March. However, with the spread of CoVID19 and the current market volatility, we have decided to delay that briefing and will send more regular updates on the VBI instead, this being the first.

As highlighted previously, the spread of COVID19 is causing considerable anxiety and volatility in the investment markets around the world. This has resulted in falls in the ASX 200 and S&P 500 of approximately 20-25% from peaks in mid February 2020 to 13 March.

The LASF DB plan needs to take investment risk to achieve long term returns and remain well funded. The portfolio seeks to take investment risk efficiently and takes risk that is necessary to achieve the required earning rates assumed by the Fund Actuary.

As part of the Vision Super de-risking strategy, which has been progressively implemented over the last few years, the LASF DB plan has been partly sheltered from the recent and ongoing equity market movements. This is primarily due to:

  • Strategic exposure to equities of 44.5% and actual exposure 34.4% as at 11 March 2020, and
  • Payoff returns from the implementation of the tail risk hedge insurance.


The impact on the LASF DB VBI over recent period is shown below: 

As at 30 Jun 2019 (actual) 30 Sep 2019 (est.) 31 Dec 2019 (est.) 31 Jan 2020 28 Feb 2020 12 Mar 2020
LASF DB 107.1% 107.3% 107.7% around 109% around 107% around 101%

We expect volatility to continue across investment markets around the world, but following the worst of the crisis, the return outlook for equity markets is likely to be very attractive.

Vision Super will continue to monitor the plan’s financial position, noting that the next VBI review will be as at 31 March 2020 with a full actuarial investigation occurring as at 30 June 2020.

What if the VBI drops below the shortfall limit?

Under the superannuation prudential standards, no specific action is required when the VBI is above the plan’s nominated shortfall threshold of 97% or 100% during an actuarial investigation. Where the VBI falls below the relevant threshold, a restoration plan to restore VBI to 100% within 3 years is required.

In the event the VBI falls below the nominated shortfall threshold (ie: 97%), an interim investigation is required to be carried out by the Fund Actuary, unless the next scheduled investigation is due within six months. If the VBI falls below 97% prior to 30 June 2020, the LASF DB plan's next scheduled investigation as at 30 June 2020 will satisfy this requirement. This actuarial investigation will be completed by 31 December 2020.

If it is likely that the 30 June 2020 VBI will be less than 100% based on the initial actuarial investigation work:

  • The Trustee will develop a proposed restoration plan in consultation with the Fund Actuary, sponsoring authorities/employers, APRA and other relevant bodies. This proposed restoration plan may include:
    - Keeping a watching brief on investment market movements
    - Higher regular contributions
    - A funding call if necessary within the three years, and
  • The Fund Actuary will review the proposed restoration plan and, if appropriate, recommend that proposed restoration plan be adopted.

The above also applies if the VBI falls below 100% during the actuarial investigation.

Once the final investigation report is received, the trustee is required to:

  • Provide the Fund Actuary’s report to APRA within 15 days of receipt
  • Approve the final restoration plan within 3 months of receiving the Actuary’s report, and
  • Implement the final restoration plan subject to any changes required by APRA.

Action required (if any)

At this stage, no action is required by you.

If you have any queries, please contact the Employer Services team on 1300 304 947 or employerservices@visionsuper.com.au

Employer information booklet

Employer information booklet

You can download a comprehensive employer information booklet here

Vested benefit index (VBI)

Vested benefit index (VBI)

Defined benefit plans are required by law to have an actuarial investigation at least once every three years. In addition, because LASF DB provides lifetime pensions, a mini-review is held every year in-between. Vision Super monitors the vested benefit position of the sub-plan on a quarterly basis. Details of the VBIs are as follows:

Vested Benefit Index (VBI)
Year QTR 1 - September
(estimated)
QTR 2 - December
(estimated)
QTR 3 - March
(estimated)
QTR 4 - June
(actual)
2012/13 96.6% 97.9% 99.4% 100.7%
2013/14 103.1% 105.1% 104.6% 103.4%
2014/15 102.6% 103.1% 108.5% 105.8%
2015/16 104.0% 104.4% 102.4% 102.0%
2016/17 103.7% 105.4% 106.6% 103.1%
2017/18 103.8% 106.4% 106.2% 106.0%
2018/19 106.9% 101.9% 105.4%  107.1%
2019/20 107.3%  107.7%    

Sample employer superannuation note for financial statements

Sample employer superannuation note for financial statements

Actuarial Investigation reports

Actuarial Investigation reports

At the end of each triennial review, the Fund Actuary issues a report outlining the findings and recommendations of the review. A copy of these reports are below:

30 June 2018 
30 June 2017
30 June 2014
31 December 2011

Benefit Certificates

Benefit Certificates

The Fund Actuary has issued the following Benefit Certificates, confirming that employers have met their Superannuation Guarantee obligations in relation to their defined benefit employees. The Certificates will remain current for five years unless a notifable event occurs.

Certificate Effective date Valid until *
LASF Benefit Certificate 2018 1 July 2018 30 June 2023
LASF Benefit Certificate 2015 1 April 2015 31 March 2020
LASF Benefit Certificate 2013 1 July 2013 30 June 2018
LASF Benefit Certificate 2008 1 July 2008 1 July 2013

 * Unless a notifiable event occurs

Funding and Solvency Certificate

Funding and Solvency Certificate

Vision Super obtains a Funding and Solvency Certificate from the Fund Actuary on a regular basis. These are valid for 5 years unless a notifiable event occurs. Under the regulations, the Certificates must be replaced 12 months before they expire.Copies of the Certificates are below:

Certificate Effective date Expiry date Replacement date
FSC 2018 1 July 2018 30 June 2023 30 June 2022
FSC 2015 1 April 2015 31 March 2020 31 March 2019
FSC 2013 1 July 2013 30 June 2018 30 June 2017
FSC 2012 27 March 2012 31 December 2016 31 December 2015

Funding apportionment methodology

Funding apportionment methodology

The same process for apportioning liabilities has been applied since 1998. Application of the process was externally reviewed by PriceWaterhouseCoopers in relation to the 2011 Funding call.

Methodology

Workers compensation and Payroll tax

Workers compensation and Payroll tax

All employers pay Workers compensation premiums and some pay Payroll tax. Generally, 100% of an employer's defined benefit contributions are included in the employer's Workers compensation and Payroll tax calculations. However, where a funding call is made, a portion of the funding call payment may be excluded for Workers compensation/Payroll tax purposes. The Fund Actuary has provided letters advising what proportion of a funding call is assessable.

Workers Compensation Payroll Tax 
2010 letter 2010 letter
2011 letter 2011 letter

Worksafe has raised a number of issues regarding the treatment of a funding call for WorkCover purposes. The following may be of assistance.  
WorkSafe letter

FAQs

FAQs

What are the LASF DB demographics at the dates of the recent actuarial reviews?
The fund membership statistics were as follows.

  Review date
Active member 30 June 2019 30 June 2018 30 June 2017 30 June 2014 31 December 2011
Number  2,198 2,529 2,855 3,983  4,971 
Average Age   56.9 years 56.7 years 56.3 years 55.2 years   54.1 years 
Average Past Membership  31.3 years 30.4 years 29.5 years 26.9 years  24.6 years 
Average Salary  $91,326  $88,738  $86,885  $78,502  $70,727 
Lifetime Pensioners      
Number  4,465 4,449 4,597 4,882  5,132 
Average Age  78.2 years  78.3 years  78.5 years  79.0 years  79.1 years 
Average Annual Pension  $12,948 $12,102 $11,187 $8,862  $7,172 
Deferred Beneficiaries      
Number  1,366  1,511 1,598  1,910  2,212 
Average Age  55.6 years  55.0 years  54.3 years  52.9 years  51.7 years 
Average Account Balance  $234,464 $218,851 $204,048 $180,571  $149,842 

Please call your Account Manager or the Employer Hotline on 1300 304 947 if you require further information about any of the content displayed on this page.

Close

Member login

Employer login