UniSuper Defined Benefit – what you need to know…

UniSuper – are your funds really safe?? As discussed on the ABC 7:30 report December 2011

While many watched helplessly as their retirement savings took hit after hit during the global financial crisis, members of Defined Benefit Superannuation funds felt their money and long term indexed pensions were safe.

Recent discussions on ABC’s 7:30 Report may have some members concerned about their retirement savings and what is really happening to their Defined Benefits. Read more on the Herald news website, or view the ABC report by clicking here: ABC UniSuper report.

So why are the members of UniSuper Defined Benefits super and pension funds worried about their retirement savings?

In simple terms, unlike other Government Defined Benefit schemes where the government backs the pension and foots the bill from revenue and other sources; the UniSuper scheme relies on the growth and returns from a pool of investment assets, and those assets have been heavily reduced over the past years. This has meant that the UniSuper Trustee is no longer certain that they will have funds to meet current commitments, and so they are forced to consider revaluing Defined Benefit formulas used to calculate members benefits.

Defined Benefit members

Careful reading of the UniSuper Product Disclosure Guide with regards to Defined Benefit indexed pensions and you will see the following:

“…As Pension payments are made from the pooled investment of the DBD, if the experience in relation to factors including investment returns, inflation and/or longevity is worse than expected, the Trustee may be required to revise the formula that governs Defined Benefit Indexed Pensions; reduce pension’s payments; reduce the indexation of pension payments; or a combination of these measures…”

The same goes for the calculations for Defined Benefit superannuation lumps sums.

Recently I saw clients with UniSuper accounts, and they were looking for advice on how to prepare for retirement. Natalie felt that she was lucky to be a part of the Defined Benefit and not have to watch her retirement savings drop over the recent years with the Global Financial Markets. When I highlighted the above, Natalie was quite concerned.

So what does this mean for the members of UniSuper and should they be concerned?

My advice, however, to those affected or unsure if UniSuper is still right for them, is to not jump too hastily. Seek professional advice.

“out of the frying pan and into the fire”

It is possible that there is a better solution out there for you, but be careful to get advice from someone who isn’t influenced by UniSuper or another product provider, paid commissions for transferring your funds, or who has other conflicts of interest.

UniSuper has some great options available to their members that may not be available in a new super fund.

Although many members won’t actually have ‘choice’ of super fund, they can transfer all or part of your accumulation component to another complying superannuation fund.  New contributions by Uni Super employers will continue to be made to the fund. They can request a transfer once in each 12-month period.

There are lots of issues to consider before transferring funds and it is important that you get professional advice to ensure that you have weighed up all the options, costs and benefits before making any major financial decisions with your super.

The important thing is to make an informed decision and understand why you should stay or leave. And if the UniSuper is the best option for you, then how do you maximise the benefits on offer for your particular needs and circumstances.

If you are looking for advice on your UniSuper fund; whether you have an Accumulation Super(1) account; Accumulation Super (2) account; Spouse account; or UniSuper Defined Benefit Division account, Florisson Financial can you help you. We have helped UniSuper members with:

  1. Deciding if they should I remain a member of the Defined Benefit or switch to accumulation
  2. Investment choices – now and in retirement phase
  3. Insurance options – and if you need to top this up
  4. Contributions amounts
    • How much and to which scheme
    • How to contribute tax effectively
    • Upgrades of contributions for past periods of service
  5. Resignation and Redundancy options and choices
  6. Retirement options to
    • Maximise Centrelink entitlements
    • Minimise tax
    • Increase income in retirement
    • Lump sum versus Pension options
    • Understanding the difference between pension options
  7. Estate planning advice for your superannuation

Florisson Financial charges a fee for advice so that we can provide holistic advice on your current  industry and government superannuation funds. Contact us now for a complimentary appointment to see if we can help you.

Florisson Financial has clients across Australia, so why not call us to see if we are visiting your area soon.