For almost three decades, UniSuper’s Defined Benefit Division (DBD) has successfully helped members prepare for, plan for and finance their retirement.
UniSuper’s DBD has a unique structure, as employers contribute a fixed rate of at least 14%. In many cases, employers make an additional contribution of 3% to an Accumulation account. These contributions are well above the current Government mandated contribution rate of 9%. Unlike a traditional defined benefit scheme, the benefits of UniSuper’s DBD have never been underwritten by employers. UniSuper’s Trustee has never had the right to require employers to make additional contributions to the DBD in the event of a shortfall.
A DBD member’s final benefit is determined by a formula that takes into account age, length of service, contribution levels, employment status and salary. You can find out more about the formula and how it works in our Product Disclosure Statement.
DBD members’ individual benefits haven’t been directly subject to market volatility because investment performance doesn’t directly change the formula used to calculate their benefit.
However, it’s important to understand that all contributions to the DBD (including contributions from both employers and members) are pooled together and invested by UniSuper in a diverse portfolio of shares, property, bonds and cash. So although benefits are determined by a formula, the pool of money that is used to pay benefits is subject to investment performance.
Investment performance has a significant impact on the financial position of the DBD, but many other factors also can have an impact. These other factors include actual salary growth, inflation and pensioner longevity.
A range of events since 2008 have impacted investment performance, both locally and internationally. These events include the global financial crisis, the sovereign debt crisis, and continuing weaknesses in the US and European economies.
It is worth highlighting that the performance of almost all investments globally has been affected by these recent market conditions. This includes the assets of the DBD.
That’s why UniSuper has triggered three monitoring periods under Clause 34 of the Trust Deed in recent years (Clause 34 was previously triggered in 2002). The Board of UniSuper has made a decision under Clause 34 of the Trust Deed in relation to the monitoring period that was triggered on 31 December 2008 and ended on 31 December 2012.
You can find out more about Clause 34, how it works and the Board's recent decision here.