BENDIGO’S superannuation shortfall could get a lot worse than this year’s $11 million, according to the city’s mayor.
The City of Greater Bendigo council was “shocked” last week to discover its share of the $400m statewide unfunded superannuation bill was so high.
The scheme provides those who joined councils between 1982 and 1993 with a fixed super return on retirement, no matter how bad the investment returns are.
Any shortfall between what is owed and what the investments returned is paid by the council they were employed with.
Council is looking at a range of options for how to pay the shortfall, and has not ruled out scaling back its capital works budget this year.
Mayor Alec Sander said he did not think the problem would go away anytime soon.
“The fund has to stay active until the last member ceases to draw a fund,” he said.
“One of the reasons it would be so high now is there are so few people contributing to the fund.
“My personal opinion, is that it will get worse, because as time goes on there will be less and less people contributing to the fund, and more and more drawing off it.”
Cr Sander attacked the rules of the fund, which mean it had to be funded in case everyone retired and started drawing on it on the same day.
“I would like to see the government change that rule so the fund doesn’t have to be fully funded at that time, and that will take the pressure off the fund to make these draconian calls on local government,” he said.
Cr Sandner said a council-requested report would look at all options for paying the debt, but he would not be drawn on whether cutting the capital works budget was an option.
“I’m not going to be drawn as to what may or may not be in the report,” he said.
“Our options are to borrow funds to do it, I can’t see us putting up the rates to do it.
“I believe there will be a system where we could pay it off over 15 years at a low rate of interest.
“But, as councillors have already recognised, that is only a band-aid fix, because in three or four years there could quite easily be a call of the same magnitude.”