Defined benefit scheme continues in surplus and performing strongly

Treasurer and Minister for Trade and Investment, Curtis Pitt, says the state’s defined benefit scheme continues to perform well and remains in surplus. 

Mr Pitt said the latest information from QIC Limited showed the scheme experienced a return on total assets of 8.57 per cent in 2016-17 — significantly above the 5 per cent average return used by the independent State Actuary in a recent review. 

“The State Actuary’s review of the scheme — available publicly since May — showed a healthy surplus of more than $9 billion,” Mr Pitt said. 

“The surplus funds in the scheme are excess superannuation contributions by the government as employer. The surplus funds do not belong to the scheme’s members, but belong to Queensland taxpayers. 

“The recent State Actuary’s review reaffirmed that the repatriation of a $4 billion portion of the surplus funds and $2 billion pause in employer contributions should proceed.  This is allowing for building job-creating infrastructure and paying down debt.” 

The review found the scheme was in “a very healthy position” even with a conservative assessment of future expected investment returns. There was no requirement identified to provide a government injection of funds or to consider further repatriations. 

The review also found that forecasts showed the measures taken in the past two Budgets were expected to reduce overfunding of the scheme, and there would still be a significant buffer to protect against adverse market conditions.  

Mr Pitt said Queensland was the only state jurisdiction in the nation to fully fund future superannuation liabilities and that position would continue — all liabilities would be met.

“This is in stark contrast to NSW which, despite asset sales, reported a $71.2 billion unfunded superannuation liability in its 2016 Report on State Finances. Victoria also has a material unfunded superannuation liability of $29.4 billion and is working to achieve a fully funded superannuation liability by 2035,” he said. 

Mr Pitt said reports of a “new insight” into the repatriation of a portion of the scheme’s surplus ignored the fact that full and detailed information about the scheme was in the State Actuary’s released in May. 

He said while the LNP continued to attack and reject revenue measures based on the defined benefit scheme, it had been too lazy to outline alternative funding sources. 

“With these measures built in to the State Budget forward estimates, the options the LNP has are to slice $6 billion off our $42.75 billion four-year infrastructure program or impose an extra $6 billion tax burden on Queenslanders,” he said. 

“Queenslanders deserve to know today how the LNP will make up the $6 billion revenue shortfall. Tim Nicholls has supposedly rule out job cuts and asset sales, so all they have left are a $6 billion cut to capital works or $6 billion in extra taxes, fees, and charges,” Mr Pitt said. 

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