NTEU Advice on UniSuper Issues
Please find below NTEU's advice on the issues surrounding UniSuper that have been covered in the media this week.
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(193 KB) - PDF
(193 KB) - PDF
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Branch Contacts
Branch Office
Room 214 Transient Bdg Camperdown/DarlingtonCampus
University of Sydney
Phone: 02 9351 2827
Fax: 02 9351 7573
nteu@nteu.usyd.edu.au
http://www.nteu.org.au/sydney
Michael Thomson
Branch President
mthomson@mail.usyd.edu.au
Katherine Barnsley
Branch Organiser
kbarnsley@nteu.org.au
Comments
[ -1 ] Today's mail has just produced a corker from Terry McCredden (CEO Unisuper). Although I am in current reciept of a DBD pension, and have a very small Accumlation 2 account from occasional casual work. In Mr McCredden's letter he assures me, in bold print, that "you are not affected by Clause 34'. Later he tells me I am not a DBD member, but I might be interested in how it affects my colleagues.
Like • Dislike • Report AbuseHe doesn't seem to understand the basics of his own organisation, and has assumed because I have a few hundred dollars in an accumulation account, that I am not affected by the potential of Clause 34. My member number is the same for both accounts.
[ +3 ] I am concerned about what representation retired members on DBD pensions have. As a former NTEU member throughout my career do I have NTEU representation on this issue. I joined in the 1980's. In 1998 were offered the opportunity to change to the Accumulation scheme. At that time there were seminars where the differences in the funds were spelt out, and we were clearly told there was NO market risk in the DBD, and that employers held the risk and would be required to contribute in case of a shortfall. The Trust Deed was not generally available to the average member, we relied on handouts and talks. At best we have been misled. The universities offered the scheme/s as one of the trade-offs for the low wage levels. As a pensioner for four years, already I am very reliant on the minimal indexation which, based on the CPI, does little to cover increased costs of living.
Like • Dislike • Report Abuse[ +3 ] Bill and Leo both make good points which, on close inspection, are not ultimately inconsistent. The 2006 Trust Deed provision was, as Leo says, not enforceable in practice as it required unanimous emp-loyer agreement, and the current gap of 2% against the ABI is manageable in normal circumstances. On the other hand, the current situation may not be normal if the downturn in global markets persists, and this points to the need to consider longer term options, as Bill suggests. There is no technical reason why the Trust Deed cannot be amended to provide for wider options than simply reducing employee benefits, and this is what NTEU will be seeking. Prudence dictates that the Board should have all options at its disposal. I will be writing to Unisuper tomorrow seeking a meeting of all stakeholders in early February 2012.
Like • Dislike • Report Abuse[ 0 ] I reiterate and amend: the employer guarantee must be reinstated – both for the present or near-term future, and for the more distant future when its viability will be most at risk.
Like • Dislike • Report Abuse[ +1 ] Bill have a look at the pre 2006 Clause 34. There was never any guarantee of the fund that could have been implemented. Firstly, both employers AND members had to top up the fund. So we could be having a similar uproar right now if the old clause still existed. Members upset because they would need to pay more for the same benefit. Even before that could have come to fruition, all employers had to agree to top up, which they weren't going to do. That was crystal clear.
Like • Dislike • Report AbuseThe 2% difference is crucial because it truly indicates the extent of the problem. You can't assume the fund is going to continue to lose money and the gap will widen. It may, but it could also turn around and the gap could close. It is not correct to asume the fund will "diminish in the future" The fund is still open and new members are joining every day so the fund is not dimishing in that respect. Everyone seems to assume we're on a downward slope. Please please put more effort than the ABC and Mike Rafferty into understanding how the DB works before pouring more fuel on an uneccessary fire.
[ +5 ] Leo, the problem is not that there is a current 2% shortfall in the Defined Benefit schemes against an index of 100%.
Like • Dislike • Report AbuseThe problem is much more serious into the future.
As the fund diminishes through time, the possibility that it will be unable to meet its obligations to those who remain grows. The guarantee of any pension fund of this kind has always been that the last person left will not be faced with a loss of pension.
That is why the employer has always been considered the final guarantor of pension funds. If employers no longer backstop the fund then that guarantee no longer exists. By the time it is really needed, everyone will have forgotten 2006 – except those who find themselves without an income when they need it most.
This is why that guarantee must be reinstated – not for the present or near-term future, but for the more distant future when its viability will be most at risk.
[ 0 ] I think Mike Rafferty needs things clarified here.
Like • Dislike • Report AbuseIn the event of a funding shortfall members benefits MAY be reduced not WILL be reduced. The fund happens to be in deficit right now yet no benefits have been reduced. Come 2013 the UniSuper Trustee Board may well determine, under actuarial advice, that no action be taken to reduce benefits even if the fund is still in deficit.
I would suggest most members are far more squeamish about actually losing benefits than not being sufficiently informed that they may lose benefits or what the DB fund is called. If Mike wants to suggest that the main thrust of the orginal 7.30 story was simply that the nomenclature of the fund was wrong or that member's weren't informed that benefits won't be topped up by employers, that is most certainly not how it came across. Does any of this ring a bell?..... "Promise of a decent pension"..."gone up in smoke"....."those about to retire are going to get much, much less." Those phrases instill fear in members because many don't have a context to put them in. Mike Rafferty's appearance was irresponsible as he should have known better.
[ +3 ] In regard to Leo's claim that the funding ratio shows a small funding deficit, can I suggest he looks at my report?
Like • Dislike • Report AbuseIn it I raise as my main concern the fact that a scheme is being presented as a DB, yet should there be a funding shortfall workers will have benefits reduced.
My other concern was about the transparency and governance issues associated with that. The funding issue is the way that transfer of risk from employers to employees came to people's attention.
[ +1 ] I agree with Mike Rafferty that the NTEU response has a clear analysis of the issue. It's just a pity he didn't read it thoroughly or perhaps didn't understand the most important point. The Accrued Benefit Index is currently at 98%!! That means there is a 2% difference between assets and expected liabilities within the DBD as they fall due.....not now, but has they fall due in the years ahead. That hardly justifies the appalling beat up and fear mongering institigated by Rafferty and the ABC. It's also a shame the NTEU appears to be exploiting the same fear. If the NTEU understands the issue better than Rafferty, as it clearly does, it should focus more on appeasing the fear amongst its members.
Like • Dislike • Report Abuse[ +4 ] Grahame, I accept the seriousness of your intentions in this matter. An important reason why I have always, until retirement, been a member is that NTEU has a track record of taking its responsibilities seriously.
Like • Dislike • Report AbuseYou are right, a very serious mistake was made in 2006 – one of which retirees remained unaware until recently (I had thought that NTEU representatives understood that moves of this kind made by employers are seldom weighted toward the interests of employees).
It really is the responsibility of the Union to rectify it in a way which will ensure that it doesn't become a perennial issue whenever a problem arises with the fund.