See how we’re monitoring and managing the Defined Benefit Division (DBD).

  • Monitoring the DBD’s financial position
  • DBD investment strategy
  • DBD updates

Monitoring the DBD’s financial position

We use two measures to monitor the financial position of the Defined Benefit Division (DBD):

  • Accrued Benefits Index (ABI)
  • Vested Benefits Index (VBI)

The ABI and VBI are calculated based on various assumptions, such as future investment earnings and future salary growth, which will change from time to time. They fluctuate constantly, depending on the performance of investment markets.

The ABI and VBI are reported annually on 30 June by the Actuary, with the latest Summary of the Actuarial Investigation of UniSuper available on our Disclosures page.

UniSuper also calculates estimates for 31 March, 30 September, and 31 December each year to monitor the financial position of the DBD.


More information on the DBD is available in The Defined Benefit Division explained (PDF, 492KB)

More about the ABI and VBI

Accrued Benefits Index (ABI)

The ABI reflects the most reasonable estimate of the expected pattern of members joining, contributing to, and leaving the DBD, against the assets needed to ensure that all benefits can be paid when they’re due. This is the measure the Trustee believes is the most relevant in determiningour ability to pay, over the long term, all defined benefits that have accrued to the date that the measure is calculated. The ABI determines whether there are enough 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 DBD members’ benefits from existing assets in the event they were all to leave the DBD at the same time. We must report this measure to the Australian Prudential Regulatory Authority (APRA).

We also use the ABI and VBI as an objective measure to help protect the long-term sustainability of the DBD. More information on this is available on Protecting the DBD.

Recent financial positions by quarter

The table shows the latest ABI and VBI of the DBD.

 Date Basis ABI  VBI
 31 March 2024  UniSuper estimates  137.1% 123.7%
 31 December 2023  UniSuper estimates  134.5% 121.3%
 30 September 2023  UniSuper estimates  129.0% 116.3%
 30 June 2023  Final results by the Actuary  132.9% 119.9%
 31 March 2023  UniSuper estimates  136.3% 121.5%
 31 December 2022  UniSuper estimates  133.5% 118.9%
 30 September 2022  UniSuper estimates  127.5%  113.6%
 30 June 2022 Final results by the Actuary  135.7%  121.0%
 31 March 2022 UniSuper estimates  142.0%  128.4%
 31 December 2021 UniSuper estimates  143.7%  129.9%
 30 September 2021 UniSuper estimates  140.3%  126.8%
 30 June 2021 Final results by the Actuary  134.2%  121.3%
 31 March 2021 UniSuper estimates 130.0%  118.8%
 31 December 2020 UniSuper estimates  126.6%  115.7%
 30 September 2020 UniSuper estimates 123.2% 112.7%
 30 June 2020 Final results by Actuary 124.7% 114.0%
 31 March 2020  UniSuper estimates 118.9% 110.2% 
31 December 2019 UniSuper estimates 136.7% 126.6%
30 September 2019 UniSuper estimates 136.0% 125.9%
 30 June 2019 Final results by the Actuary 135.5% 125.4%
 31 March 2019  UniSuper estimates 133.1% 122.0%
 31 December 2018  UniSuper estimates 125.3% 114.8%
 30 September 2018  UniSuper estimates 127.6% 117.0%

Financial position over the long term

This graph shows the VBI and ABI over a longer period. Over a longer period, the VBI and the ABI fluctuated in line with a number of factors, including:

  • Movements in investment markets
  • Benefit changes or improvements
  • Salary and indexation
  • Revised actuarial assumptions, including expected life expectancies of our pensioners.

A line graph showing the quarterly values of the ABI and the VBI of the DBD between 2000 and 2023.

A line graph showing the quarterly values of the ABI and the VBI of the DBD between 2000 and 2023.

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 in 2001-2002 and the global financial crisis in 2008 but has recovered to a healthy position on every occasion. As at 30 September 2023, the ABI and VBI are 129.0% and 116.3% respectively.

DBD Investment strategy

We pool defined benefit members’ contributions and invest it together in a diverse portfolio of asset classes, including shares, property, infrastructure, bonds and cash. Although defined benefits are not directly affected by market movements, an effective investment strategy is crucial to maximise the likelihood that DBD members’ benefits will be paid into the future.

The composition of the portfolio supporting the defined benefits is set by the Trustee, having regard to the need to pay out all members’ benefits as they fall due. Currently, the DBD’s asset portfolio leans towards quality assets with potential to generate sustainable income streams, capital growth and keep pace with inflation.

Protecting the DBD

We have a process to help protect the long-term sustainability of the Defined Benefit Division (DBD).

Our Defined Benefit Division has a unique structure

Employers generally contribute a fixed rate of at least 14% of members’ salary to the defined benefit. Unlike traditional defined benefit schemes, ours has never been underwritten by employers. Our Trustee has never had the right to require employers to make extra contributions to the DBD in the event of a shortfall.

Instead, we have a process for the Trustee Board to manage the DBD’s financial position, including a mechanism, known as Clause 34, to reduce benefits if necessary.

  • About Clause 34 and monitoring periods

    UniSuper is governed by the Trust Deed, which sets out rules and processes which we must adhere to.

    Under Clause 34 of the Trust Deed, if the Actuary’s investigation report indicates that the actuarial measures have fallen, or are likely to fall, below particular levels, a 4-year monitoring period is triggered. If this happens, we must notify members of the DBD and employers.

    A monitoring period is triggered if:

    • the Accrued Benefits Index (ABI) is less than 100%, or
    • the Vested Benefits Index (VBI) is less than 95%, or
    • the level of contributions to UniSuper mean it’s likely that either of the above measures (or both) falls below those levels.

    At the end of the monitoring period, if the Actuary’s investigation report indicates that the actuarial measures of the DBD have not improved enough, our Trustee Board must consider whether it is in the interests of DBD members as a whole (including pensioners receiving Defined Benefit Indexed Pensions) to reduce benefits payable.

    If benefit reductions are required, the Board must do so on a fair and equitable basis.

  • We’ve had 4 monitoring periods since 2008

    These occurred in 2008, 2011, 2012 and 2013.

    The monitoring period triggered in 2008 and ending on 31 December 2012 saw the UniSuper Board consider benefit reductions. Based on the results of the actuarial investigation as at 1 January 2013, the Board considered whether it was in the interests of DBD members to reduce benefits payable. On 5 August 2013, the UniSuper Board announced its decision that:

    • For future benefits accruing on and after 1 January 2015, the Benefit Salary used in the calculation of defined benefits will be based on the member’s annual equivalent full-time salaries averaged over the past five years of employment (instead of three) and past salaries used in the averaging calculation will no longer be indexed by Consumer Price Index (CPI) to the date of the Benefit Salary calculation.
    • Benefits that DBD members have accrued (and would have accrued) before 1 January 2015 will not be altered.

    See more on these changes

    The DBD recovered sufficiently and no further action was needed for the following monitoring periods:

    • 30 June 2011 - 30 June 2015
    • 30 June 2012 - 30 June 2016
    • 30 June 2013 - 30 June 2017
  • Past changes to Clause 34

    Clause 34 of the Trust Deed was changed in 2006 and 2011.

    Our Board can change the Trust Deed, with the consent of our Consultative Committee (made up of 50% member-representatives and 50% employer-representatives).

    2006 changes

    We introduced changes to make sure members don’t mistakenly think employers would contribute more to the DBD in the event of a funding shortfall.

    Employers have never been required to make extra contributions in the event of a shortfall. However, prior to 2006, we could ask employers and members to make extra contributions voluntarily if we believed the Fund’s assets were not enough to cover benefit payments. If one or more employers decided not to increase their contribution levels, then the Trustee was required to reduce benefits.

    We consulted with employers and it was clear that not all employers would approve an increase if asked. So, the option to ask employers for extra contributions was removed from Clause 34.

    2011 changes

    There were 2 changes made to Clause 34:

    We introduced an objective measure (the ABI and VBI) to determine if the DBD was in an adequate funding position and when the monitoring period is triggered.

    We allowed the Board to use discretion when deciding whether to reduce benefits.

    Before this change, the Board was compelled to reduce benefits in some circumstances.

Historical DBD updates

September 2020 – Impact of CPI movement on your defined benefit

As a result of COVID-19, the Consumer Price Index (CPI) reduced by 1.9% during the June quarter. Following the June quarter CPI coming into effect from 1 September, you may see an impact on your DB balance. These fluctuations are not uncommon; however, we understand that you may be concerned if you see a lower super balance in the short term.

The defined benefit component (DB balance) of your Defined Benefit Division (DBD) account is calculated based on a formula, which factors in the CPI. Any movement in the CPI may affect the Benefit Salary component of the DBD formula for some members. You may be impacted by this movement if:

  • you joined the DBD prior to 2015
  • you’ve deferred your DBD benefit
  • you’re on Leave Without Pay for a period of more than 3 months; or
  • you’re receiving a Disablement or Temporary Incapacity benefit.

Indexed pensions currently being paid from the DBD will not reduce due to the CPI reduction.

CPI index

UniSuper maintains a ‘CPI Index’ which is reflective of the changes in the Consumer Price Index (CPI) published by the Australian Bureau of Statistics (ABS). This ‘CPI Index’ is updated quarterly each March, June, September, and December.

For members who may be impacted (as highlighted above), the ‘CPI Index’ is used to inflate historical salaries in the relevant Benefit Salary averaging calculation. The application of this ‘CPI Index’ can cause fluctuations to the Benefit Salary (both up and down), and subsequently your DB balance. A protection mechanism exists to ensure Benefit Salary will not reduce below the average of your historical annual equivalent full-time salaries within the averaging period.

If you would like further information on how the CPI indexation can affect your DB balance, please contact us.

April 2020 – Investment market update and what it means for the DBD

We are experiencing an environment without precedent in our lifetimes, with people the world over gripped with fear for their physical as well as financial well-being. At the time of writing, the American and Australian share markets are down significantly. Because the DBD is supported by a diversified portfolio of investments which have taken a hit, the funding position of the DBD has decreased since the last actuarial investigation as at 30 June 2019. However, the DBD remains in surplus at time of writing.

In monitoring the DBD’s financial health, we use two key measures—the Vested Benefits Index (VBI) and the Accrued Benefits Index (ABI) – read more about the VBI and the ABI below and on the Monitoring the DBD page. While the assets in the DBD have fallen under the current conditions, and we can’t rule out the VBI falling below 100%, the following points should be kept in mind:

  • The DBD has been designed such that contributions and investment returns are expected to be sufficient to provide for UniSuper’s defined benefits over the long term.
  • Importantly, members’ defined benefits are not automatically linked to or impacted by investment market volatility, as automatic benefit adjustments do not occur if the VBI falls below 100%. The VBI has been below 100% on previous occasions, sometimes for an extended period and there has been no impact on members’ accrued benefits.
  • Several conditions in relation to the DBD’s funding position and future sustainability need to be met (assessed as part of the DBD’s actuarial investigations) before UniSuper’s Trustee is required to consider benefit adjustments. See more about protecting the DBD.
  • The impact of further falls in share markets will be mitigated to a reasonable degree by portfolio protection strategies (‘put options’, for the technically-minded) that we put in place when the markets were trading at much higher levels.
  • The DBD was changed after the 2008 monitoring period

    After the 2008-2012 monitoring period, the UniSuper Board was required to consider whether changes to the members’ benefits should be made to improve the long-term sustainability of the Defined Benefit Division (DBD).

    Higher salary increases, lower investment returns and longer than anticipated life expectancies contributed to the underfunding of the DBD between 2008 and 2012.

    On 5 August 2013, the Board decided to change the way future benefits will accrue.

    For benefits accruing from 1 January 2015, the Benefit Salary in the defined benefit formula is calculated based on:

    • your average annual equivalent full-time salary over the past 5 years (up from 3 years) and
    • your actual past salary – no longer indexed by Consumer Price Index (CPI).

    Generally, the 5-year Benefit Salaries are lower than the 3-year Benefit Salaries. In the unlikely event that your 5-year Benefit Salary is higher than your 3-year Benefit Salary, your benefits accruing after 1 January 2015 are calculated using the 3-year Benefit Salary.

    There were no changes made to benefits accrued before 1 January 2015.

    See how the board came to this decision

    Looking after the interests of DBD members as a whole is a key priority for the Board.

    It’s also the Board’s duty to ensure, as far as possible, that the contributions to the DBD and the associated investment earnings are sufficient to fund the benefits that members will accrue into the future. Based on the expectations of future investment returns, future salary growth, and advice from our Actuary about the estimated costs of future service, the Board believed it to be in members’ interests to change the way future benefits accrue for DBD members.

    Strong investment performance during 2012-13, meant that the DBD’s assets were expected to be sufficient to cover all benefits that accrued until 1 January 2015. Therefore, the Board decided that the benefits members had accrued to that date did not need to be reduced.

    Changing the DBD helped give greater confidence that benefits can continue to be paid fairly and equitably into the future while preserving the benefits that members had accrued to 1 January 2015.

  • How the change affects your super and inbuilt benefits

    Your super balance

    The change to the Benefit Salary component of the DBD formula affects how your defined benefit accrues from 1 January 2015.

    If you had a DBD account before this date, your defined benefit component is calculated with 2 different formulae (pre- and post- 1 January 2015) – your pre 1 January 2015 benefits continue to be calculated based on the 3-year Benefit Salary and your post-1 January 2015 is calculated based on the 5-year Benefit Salary.

    Your inbuilt benefits

    As we use your salary to calculate your inbuilt benefits, these may also be affected. These benefits include Death, Disablement, and Temporary Incapacity benefits.

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