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HORSHAM RURAL CITY COUNCIL


NOTES TO THE FINANCIAL STATEMENTS (Cont.) FOR THE YEAR ENDED 30th JUNE, 2014


32 . SUPERANNUATION (cont.)


The pre-1 July 1993 and post-30 June 1993 service liabilities of the Fund are based on: • The service periods of all active members split between the active members pre-1 July 1993 and post- 30 June 1993 service period; • The service periods of all deferred members split between the deferred members pre-1 July 1993 and post- 30 June 1993 service period; and • The pensioner (including fixed term pension) liabilities which are allocated to the pre-1993 period.


The pre-1 July 1993 component of the shortfall is apportioned between the participating employers based on the employer's share of the total participating employer payroll at 30 June 1993.


The post-30 June 1993 component of the shortfall is apportioned between the participating employers based on the employer's share of the total participating employer payroll at the date the shortfall has been calculated.


Due to the nature of the contractual obligations between the participating employers and the Fund, and the Fund includes lifetime pensioners and their reversionary beneficiaries, it is likely that the Fund will be wound up. In the unlikely event that the Fund is wound up and there is a surplus in the Fund, the surplus cannot be applied for the benefit of the defined employers where there are on-going defined benefit obligations. The surplus would be transferred to the fund accepting those defined obligations (including the lifetime pension obligations) of the Fund.


In the event that a participating employer is wound-up, the defined benefit obligations of that employer will be transferred to that employer's successor.


Differences between calculations The Fund surplus or deficit (i.e. the difference between fund assets and liabilities) is calculated differently for funding purposes (i.e. calculated required contributions), for the calculation of accrued benefits as required in AAS 25 and for the values needed for the AASB 119 disclosure in the Horsham Rural City Council's financial statements. AAS 25 requires that the present value of the defined benefit liability be calculated based on benefits that have accrued in respect of membership of the plan up to the measurement date, with no allowance for future benefits that may accrue.


Retrenchment increments During 2013/14, Council was not required to make payments to the Fund in respect of retrenchment increments ($nil in 2012/13). Council's liability to the Fund as at 30 June 2014, for retrenchment increments, accrued interest and tax is $nil. ($nil in 2012/13).


Shortfall amounts The Local Authorities Superannuation Fund's latest actuarial investigation as at 31 December 2011 identified an unfunded liability of $406 million (excluding contributions tax) in the defined benefit category of which Council is a contributing employer. Council was made aware of the expected shortfall during the 2011/12 year and was informed of its share of the shortfall on 2 August 2012. Council has not been advised of any further adjustments.


Council's share of the shortfall amounted to $2,611,105 (excluding contributions tax) was accounted for in the 2011/12 Comprehensive Operating Statement within Employee Benefits (see Note 10) and in the Balance Sheet in Current and Non-Current Payables (see note 22).


No further amount has been accounted for in the 2013/14 Comprehensive Operating Statement within Employee benefits (see note 10) and in the Balance Sheet in Current Liabilities Provisions (see note 22), $137,000 in the 2012/13 Comprehensive Operating Statement with Employee Benefits and $0 in the 2012/13 Balance Sheet in Current Liabilities Provisions.


For the 2012/13 year, Council received a early payment discount of $137,431which has been accounted for in the 2012/13 Comprehensive Operating Statement within Employee Benefits (see Note 10) and in the Balance Sheet in Current and Non-Current Payables (see note 22).


There is no unpaid shortfall at 30 June 2013.


Annual Report 2013-2014 q Page 47


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