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 to 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)
- 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 will be calculated using the 3-year Benefit Salary.
Remember, there were no changes to benefits accrued before 1 January 2015.
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See how the board came to this decision
Looking after the interests of DBD members as a whole is the Board’s number one priority.
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.
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 have accrued to this 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.
