Monitoring the DBD

UniSuper monitors the financial position of the DBD to help make prudent and proactive decisions in managing your retirement savings. There are two measures UniSuper uses to monitor the financial position of the DBD at any given point in time.

Accrued Benefits Index (ABI)

The ABI reflects the most reasonable estimate of the expected pattern of members actually joining, contributing to and leaving the Fund, against the assets required to ensure that all members’ benefits can be paid when they fall due. This is the measure the Trustee of UniSuper believes is the most relevant in determining the ability of the Fund to pay, over the long term, all defined benefits that have accrued to the date that the measure is calculated. But the ABI is an estimate and actual experience will ultimately determine whether the Fund has sufficient assets available to meet members’ benefits as they fall due.

Vested Benefits Index (VBI)

The VBI measures the capacity of the DBD to pay out all members’ benefits from existing assets in the event they were all to leave the DBD at the same time. The Fund must compulsorily report this measure to the Australian Prudential Regulatory Authority (APRA).

How has the DBD performed over time?

The graph below shows the VBI and the ABI from September 1992 to March 2017.

A line graph showing the quarterly values of the ABI and the VBI of the DBD between 1992 and 2017. During this period, the values of both the ABI and the VBI fluctuated well above and below 100%, reflecting movements in investment markets as well as benefit changes or improvements of the DBD. Noticeably, the VBI has fallen below 100% during financial crises such as the ‘dot com’ dip and the GFC but has recovered to a healthy position on every occasion. As at 31 March 2017, the ABI and the VBI are over 120% and 110% respectively

During this period, the value of both the VBI and the ABI fluctuated in line with a number of factors, including:

  • movements in investment markets;
  • benefit changes or improvements;
  • salary growth higher or lower than expected; and
  • revised actuarial assumptions.

How does UniSuper use the ABI and VBI?

In addition to helping us understand the financial position of the Fund, the VBI and ABI play an important part in the function of Clause 34 of the Trust Deed. The Clause uses the ABI and VBI as the objective measures of when a monitoring period must be triggered. You can find out more about this Clause of the Trust Deed and how it works in About Clause 34.