2012 Consolidated Financial Statements - Notes 37 - 39
Note 37: Defined benefit superannuation plans (continued)
(a)Accounting policies
The Australian Government has elected to recognise actuarial gains or losses directly
in other economic flows within the operating statement.
(b)Plan descriptions
CSS and PSS
The CSS and PSS schemes are partly funded. The schemes include a member
component, comprising the member’s own contributions, plus earnings on these
amounts. The schemes also include an employer component, which is a defined
benefit. Except for the portion relating to employer 3 per cent productivity
contributions, this component of the benefit is unfunded. Members generally receive
an indexed pension benefit on retirement, disablement, redundancy or death (to an
eligible spouse/children) with an option in most cases to receive the funded
component as a once off lump sum or convert to additional non-indexed pension. The
CSS and PSS are closed to new members.
PCSS
Members who leave Federal Parliament (or their beneficiaries) are entitled to either a
lump sum or pension benefit depending on the length of their parliamentary service
(or, in the case of death, their marital status). For certain members, payment of their
pension is deferred until age 55. The scheme is closed to new members.
DFRDB
The DFRDB is a closed defined benefit scheme. It provides a pension benefit, usually
to those individuals with more than 20 years of service on exit. Part of the pension
benefit can be commuted to a lump sum. The scheme is totally unfunded. The scheme
is closed to new members.
MSBS
The MSBS is a partly funded scheme. The scheme includes a member component,
comprising the member’s own contributions, including amounts notionally brought
over from the DFRDB Scheme, plus earnings on these amounts. Investment choice is
applicable to this component of the benefit. The scheme also comprises an employer
component, which is a defined benefit based on the member’s period of membership
and final average salary. Except for the portion relating to employer 3 per cent
productivity contributions, this component of the benefit is unfunded. That is, the cost
is met by the Australian Government on an emerging cost basis when the benefit falls
due.
Other
These schemes are defined benefit superannuation plans that provide benefits for
employees on retirement, death, disablement or withdrawal. These funds generally
provide defined benefits based on years of service and final average salary.
160
Note 37: Defined benefit superannuation plans (continued)
(c)Reconciliation of the present value of the defined benefit obligation
Scheme
CSS
2012
$m
2011
$m
PSS
2012
$m
2011
$m
PCSS
2012
2011
$m
$m
DFRDB
2012
2011
$m
$m
MSBS
2012
$m
2011
$m
Other
2012
2011
$m
$m
Present value of defined benefit
obligations at beginning of the year
(64,271)
(64,446)
(44,720)
(41,544)
(836)
(803)
(28,588)
(28,559)
(25,272)
(22,922)
(8,324)
(7,979)
(270)
(302)
(1,431)
(1,494)
(9)
(11)
(139)
(172)
(1,499)
(1,422)
(292)
(292)
(31)
(32)
(211)
(210)
-
-
-
-
-
-
-
-
(3,378)
(3,331)
(2,345)
(2,138)
(43)
(41)
(1,478)
(1,450)
(1,427)
(1,270)
(512)
(481)
(85)
(90)
(557)
(545)
-
-
-
-
(247)
(242)
(70)
(71)
(18,529)
262
(31,663)
323
(428)
(17)
(10,631)
84
(22,431)
230
(1,320)
89
3,647
3,664
952
857
35
35
1,524
1,510
385
354
439
393
5
5
32
31
-
-
-
-
-
-
3
3
-
-
-
-
-
-
-
-
-
-
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(82,912)
(64,271)
(79,943)
(44,720)
(1,282)
(836)
(39,311)
(28,588)
(50,491)
(25,272)
(10,076)
(8,324)
Current service cost
Productivity contributions
Interest cost
Contributions by scheme participants
Actuarial gains/(losses)
Benefits paid(a)
161
Taxes, premiums and expenses paid
Transfers in
Net disposal cost
Past service cost
Exchange rate gains/(losses)
Experience adjustments on benefits
Effects of changes in benefit
actuarial assumptions
Present value of defined benefit
obligations at end of the year
(a) Benefits paid includes estimate of net benefits paid and productivity payments.
Notes to the financial statements
Curtailment gain
Scheme
CSS
2012
$m
2011
$m
PSS
2012
$m
MSBS
2012
2011
$m
$m
Other
2012
2011
$m
$m
4,232
4,380
11,584
10,551
-
-
-
-
3,741
3,239
7,332
6,881
281
291
820
748
-
-
-
-
273
238
587
549
(172)
14
(550)
29
-
-
-
-
(324)
(70)
(111)
38
3,106
3,093
469
389
35
35
1,524
1,510
460
446
243
222
31
32
211
210
-
-
-
-
247
242
-
-
85
90
557
545
-
-
-
-
-
-
71
71
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3)
2011
$m
PCSS
2012
2011
$m
$m
DFRDB
2012
2011
$m
$m
Fair value of scheme assets at
beginning of the year
Expected return on scheme assets
Actuarial gains/(losses)
Employer contributions
Employer contributions - productivity
contribution
Contributions by scheme participants
162
Transfers in
Foreign currency exchange
rate changes
7,562
7,901
13,090
12,472
35
35
1,524
1,510
4,397
4,095
8,121
7,758
Less
Benefits paid(a)
3,647
3,664
952
857
35
35
1,524
1,510
385
354
439
393
5
5
32
31
-
-
-
-
-
-
36
34
Taxes, premiums and expenses paid
3,652
3,669
983
888
35
35
1,524
1,510
385
354
475
427
Fair value of scheme assets
at end of the year
3,911
4,232
12,107
11,584
(a) Benefits paid includes estimate of net benefits paid and productivity payments.
(0)
-
-
-
4,012
3,741
7,646
7,331
Notes to the financial statements
Note 37: Defined benefit superannuation plans (continued)
(d)Reconciliation of the fair value of scheme assets
Note 37: Defined benefit superannuation plans (continued)
(e)Reconciliation of the net surplus/deficit to recognised assets and liabilities in the balance sheet
Scheme
CSS
2012
$m
PSS
2012
$m
2011
$m
PCSS
2012
2011
$m
$m
2011
$m
DFRDB
2012
2011
$m
$m
MSBS
2012
$m
Other
2012
2011
$m
$m
2011
$m
Defined benefit obligation
(82,912)
(64,271)
(79,943)
(44,720)
(1,282)
(836)
(39,311)
(28,588)
(50,491)
(25,272)
(10,076)
(8,324)
3,911
4,232
12,107
11,584
(0)
-
-
-
4,012
3,741
7,646
7,331
-
-
-
-
-
-
-
-
-
-
(35)
43
-
-
-
-
-
-
-
-
-
-
705
301
(79,001)
(60,039)
(67,837)
(33,136)
(1,283)
(836)
(39,311)
(28,588)
(46,479)
Fair value of scheme assets
Adjustment for contributions tax
Actuarial losses not included in
balance sheet under corridor
approach as per AASB119
Net superannuation asset/(liability)
(21,531)
(1,760)
(649)
163
Notes to the financial statements
2012 Consolidated Financial Statements - Notes 37 - 39
The net superannuation asset for defined benefit plans included as ‘other’ comprises
the following amounts by scheme:
Net superannuation assets
2012
$m
2011
$m
-
-
-
287
-
-
-
-
41
61
-
-
-
-
41
348
218
86
234
-
10
6
1,273
854
-
-
-
-
-
-
65
1,800
(1,759)
51
998
(649)
AvSuper
Australia Post Superannuation Scheme
State Authorities Superannuation Scheme,
State Superannuation Scheme and State Authorities
Non contributory Superannuation Scheme
Judges’ Pension Scheme
Officers’ Superannuation Fund
UK Pension Scheme
Australian Submarine Corporation Superannuation Fund
Other
Net superannuation liability
AvSuper
Australia Post Superannuation Scheme
State Authorities Superannuation Scheme,
State Superannuation Scheme and State Authorities
Non contributory Superannuation Scheme
Judges’ Pension Scheme
Officers’ Superannuation Fund
UK Pension Scheme
Australian Submarine Corporation Superannuation Fund
Other
Net 'Other' superannuation asset/liability
164
Note 37: Defined benefit superannuation plans (continued)
(f)Total expense recognised in income statement, amounts recognised directly in equity and cumulative amount of actuarial gains and
losses recognised in the balance sheet
Scheme
CSS
2012
$m
2011
$m
PSS
2012
$m
PCSS
2012
2011
$m
$m
2011
$m
DFRDB
2012
2011
$m
$m
MSBS
2012
2011
$m
$m
Other
2012
2011
$m
$m
Current service cost
270
302
1,431
1,494
9
11
139
172
1,499
1,422
292
292
3,378
3,331
2,345
2,138
43
41
1,478
1,450
1,427
1,270
512
481
(281)
(291)
(820)
(748)
2,884
-
-
-
-
(273)
(238)
(587)
(549)
3,367
3,342
2,956
52
52
1,617
1,622
2,653
2,454
217
223
(428)
(17)
(10,631)
84
(22,755)
160
(727)
428
(15,328)
(4,697)
(28,225)
(5,146)
(627)
100
Interest cost
Expected return on assets
Superannuation (expense)/income
Total amounts in recognised equity(a)
Actuarial gains/(losses)
(18,701)
275
(32,214)
352
165
Cumulative amount of actuarial gains and losses recognised in the balance sheet
Cumulative actuarial gains/(losses)
(27,293)
(8,592)
(41,651)
(9,437)
(488)
(59)
Notes to the financial statements
(a) Where applicable, the actuarial gains/(losses) reported above are net of income tax. In the consolidated operating statement, income tax is eliminated. The actuarial
gains/(losses) represent the sum of the actuarial gains/(losses) from Table 37(c) and (d). The total amount recognised as an ‘Other economic flow’ in the
consolidated operating statement for the year ended 30 June 2012 was a $85,901million loss (2010-11: $898 million gain).
Scheme
Australian equity
CSS
2012
2011
23.1%
26.5%
PSS
2012
2011
23.1%
26.5%
Market Neutral Hedge Funds
10.2%
10.2%
10.2%
10.2%
Long short equities
0.0%
1.9%
0.0%
1.9%
International equity
28.6%
28.7%
28.6%
28.7%
PCSS
2012
2011
DFRDB
2012
2011
MSBS
2012
2011
22.0%
28.0%
Other
2012
2011
8.8%
8.7%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28.0%
13.0%
0.6%
0.4%
-
-
-
1.2%
0.8%
-
-
-
-
5.0%
5.0%
20.9%
24.8%
-
-
-
18.0%
13.0%
7.8%
7.6%
4.0%
4.0%
-
-
8.0%
8.0%
-
-
11.2%
9.4%
30.2%
30.8%
19.2%
17.5%
Fixed income
14.7%
Property
12.8%
14.7%
12.8%
Private equity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hedge funds
166
Infrastructure
Credit
8.0%
6.3%
8.0%
6.3%
International bonds
6.0%
5.2%
6.0%
5.2%
Other
5.6%
3.6%
5.6%
3.6%
Cash
3.8%
4.8%
3.8%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15.0%
29.0%
-
-
-
-
4.8%
(h)Actual return on scheme assets
Scheme
CSS
2012
$m
2011
$m
PSS
2012
$m
2011
$m
PCSS
2012
2011
$m
$m
DFRDB
2012
2011
$m
$m
MSBS
2012
2011
$m
$m
Other
2012
2011
$m
$m
Actual return on scheme assets
109
305
269
777
-
-
-
-
(51)
168
383
574
Notes to the financial statements
Note 37: Defined benefit superannuation plans (continued)
(g)The fair value of scheme assets is represented by:
Note 37: Defined benefit superannuation plans (continued)
(i)Principal actuarial assumptions at the balance sheet date
Scheme
Discount rate (active members)
Discount rate (pensioners)
Expected rate of return on plan
assets (active members)
Expected salary increase rate
Expected pension increase rate(a)
CSS
2012
3.1%
3.1%
7.0%
4.0%
2.5%
2011
5.3%
5.3%
7.0%
4.0%
2.5%
PSS
2012
3.1%
3.1%
7.0%
4.0%
2.5%
2011
5.3%
5.3%
7.0%
4.0%
2.5%
PCSS
2012
2011
3.1%
5.3%
3.1%
5.3%
DFRDB
2012
2011
3.1%
5.3%
-
-
4.0%
2.5%
4.0%
2.5%
4.0%
4.0%
4.0%
4.0%
MSBS
2012
2011
3.1%
5.3%
Other
2012
2011
3.3%
5.2%
-
-
-
-
7.0%
7.0%
8.1%
8.2%
4.0%
2.5%
5.0%
2.5%
3.6%
3.7%
3.7%
3.7%
(a) Not relevant for all schemes. See notes below for more information.
167
Notes to the financial statements
2012 Consolidated Financial Statements - Notes 37 - 39
Note 37: Defined benefit superannuation plans (continued)
(i)Principal actuarial assumptions at the balance sheet date (continued)
CSS and PSS
Assumptions have been made regarding rates of retirement, death (for active,
preserved and pension members), mortality improvements, invalidity, resignation,
retrenchment, retention and take up rates of pensions in the scheme. Assumptions
have also been made for the ages of spouses and rates of member contributions. Unless
stated otherwise, all assumptions are the same as those used for the Long Term Cost
Report as at 30 June 2011. Certain estimates and approximations were required to
determine the year end assets and liabilities in the time frame required.
The fair value of scheme assets at 30 June 2012 was estimated using the audited fair
value of scheme assets at 30 June 2011 with cash flow items provided by the scheme
manager, other than benefits paid. An estimate of the actual rate of investment return
earned by the scheme during the year to 30 June 2012 was used in determining the fair
value of scheme assets.
In relation to the defined benefit obligation, member data as at 30 June 2011 was
projected forward allowing for decrements in accordance with the Long Term Cost
Report 2011. The data was then adjusted for the difference between the actual benefit
payments and those based on the assumed decrements. Salaries at 30 June 2012 were
estimated using an assumption derived from the APS remuneration survey. Members’
account balances were increased to be consistent with the level of exit rates prevailing
at 30 June 2012.
The expected return on assets assumption is determined by weighting the expected
long-term return for each asset class by the target allocation of assets to each asset class
and allowing for the correlations of the investment returns between asset classes. The
returns used for each asset class are net of investment tax and investment fees.
PCSS
For PCSS, in relation to the defined benefit obligation, member data as at 30 June 2011
was projected forward to 30 June 2012 assuming no increase to the backbench salary.
Pensioner data as at 1 July 2011 was projected forward to 30 June 2012 allowing for
mortality in accordance with the 2011 actuarial investigation.
168
Notes to the financial statements
Note 37: Defined benefit superannuation plans (continued)
(i)Principal actuarial assumptions at the balance sheet date (continued)
DFRDB and MSBS
The Australian Government Actuary (AGA) estimates the unfunded provisions and
expected future cash flows as at 30 June each year. These estimates are reflected in the
Schedule of administered items. The AGA completes a full review of the unfunded
liabilities (Long Term Cost Report) every three years. This was last completed in 2011.
For the DFRDB the expected return on assets assumption is not relevant as the scheme
is an unfunded arrangement with no assets.
For the MSBS the expected return on assets reflects the fact that the majority of plan
assets are in growth assets that would be expected to return a premium over fixed
interest investments in the long term. In recent years, the real yield on Government
bonds has been of the order of 2.5 per cent per annum to 3.5 per cent per annum. In
this context, a 4.5 per cent per annum real rate of return on plan assets seems
reasonable giving a nominal rate of return on plan assets of 7 per cent per annum.
Other
The actuarial assumptions associated with these defined superannuation plans, such as
rates of retirement, death, and the expected rate of return, were based on the
recommendations of the scheme’s actuary.
(j)Employer contributions
The following table shows the expected contributions for 2012 by scheme:
2012
$m
Scheme
Commonwealth Superannuation Scheme
29
Public Sector Scheme
210
Parliamentary Contributory Superannuation Scheme
36
Defence Force Retirement and Death Benefits Scheme
1,544
Military Superannuation Benefits Scheme
502
Other schemes
249
Where applicable, the surplus or deficit between accrued benefits and the net market
value of plan assets as determined in accordance with AAS 25 Financial Reporting by
Superannuation Plans is disclosed in the annual financial reports for each scheme.
The accrued benefits for the CSS, PSS and MSBS comprised a funded component,
which will be met from the relevant scheme’s funds (that is, accumulated member
contributions and, where applicable, productivity contributions, plus interest) and an
169
2012 Consolidated Financial Statements - Notes 37 - 39
unfunded component to be financed by the Australian Government at the time the
superannuation benefits become payable.
Note 37: Defined benefit superannuation plans (continued)
The accrued benefits for the DFRDB, DFRB and PCSS have no assets to meet benefit
payments. Instead, the plans are financed by the Australian Government at the time
benefits become payable.
The following table provides a breakdown of the superannuation provision reported in
Note 30 by scheme as at the reporting date.
Scheme
General Government
Australian
Government
2012
2011
$m
$m
2012
$m
2011
$m
79,001
60,039
79,001
60,039
67,837
33,136
67,837
33,136
1,283
836
1,283
836
39,311
28,588
39,311
28,588
46,479
21,531
46,479
21,531
1,315
888
1,778
980
159
95
151
91
235,385
145,113
235,840
145,201
Commonwealth Superannuation Scheme
Public Sector Scheme
Parliamentary Contributory Superannuation Scheme
Defence Force Retirement and Death Benefits Scheme
Military Superannuation Benefits Scheme
Other schemes
Other superannuation liabilities
The following table provides a breakdown of defined benefit plan assets by scheme
(that is where the sponsored scheme has a surplus of assets over defined benefit
obligations) as reported in Note 18.
Scheme
General Government
Australian
Government
2012
2011
$m
$m
2012
$m
2011
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41
349
-
-
41
349
Commonwealth Superannuation Scheme
Public Sector Scheme
Parliamentary Contributory Superannuation Scheme
Defence Force Retirement and Death Benefits Scheme
Military Superannuation Benefits Scheme
Other schemes
170
Notes to the financial statements
Note 38: Events occurring after balance date
In accordance with AASB 110 Events after the Reporting Period, reporting entities are
required to disclose any event between the balance sheet date and the date the
financial statements are authorised for issue that may affect the financial statements.
The standard classifies these events as either ‘adjusting’ or ‘non-adjusting’. Adjusting
events refer to conditions that existed before the balance sheet date, and if the
conditions change the statements should be adjusted accordingly. Non-adjusting
events are significant conditions that arise after the balance sheet date, but do not
require the statements to be adjusted.
a) Adjusting Events
There have been no significant events occurring after reporting date that require the
Consolidated Financial Statements to be adjusted as at 30 June 2012.
b) Non-Adjusting Events
There have been no significant non-adjusting events occurring after reporting date.
Note 39: Consolidated revenue fund
The cash balance reflected in the balance sheet for the General Government Sector
includes the reported cash balances controlled and administered by Australian
Government entities subject to the FMA Act and the reported cash balances controlled
and administered by entities, subject to the CAC Act, that implement public policy
through the provision of primarily non-market services.
Revenues or moneys raised by the Executive Government automatically form part of
the Consolidated Revenue Fund by force of section 81 of the Constitution. The
Consolidated Revenue Fund will not equal the cash balance reported in the balance
sheet. For practical purposes, total Australian Government GGS cash, less cash
controlled and administered by CAC Act entities, plus special public monies,
represents the Consolidated Revenue Fund referred to in section 81 of the
Constitution. On this basis, the balance of the Consolidated Revenue Fund as at
30 June is shown below.
Total general government sector cash
less CAC Agency cash balances
plus Special public monies
Balance of consolidated revenue fund at 30 June
171
2012
$m
2,523
(1,927)
294
890
2011
$m
2,364
(1,965)
382
781