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MAROONDAH and Yarra Ranges councils may have to come up with up to $10 million each by next July to cover a superannuation shortfall.
Yarra Ranges Council’s corporate services director Rebecca McKenzie confirmed to the Weekly today that this would be the shire’s share of a $400 million shortfall that the Municipal Association of Victoria revealed on July 4 in a briefing note to the councils.
Councils are required to subsidise any Local Authorities Superannuation Fund shortfall from year to year.
Maroondah Council did not give an estimated figure for 2012-13 but the Weekly calculated the $10 million figure from the percentage of the total paid in 2010.
In 2010, Victorian councils contributed $62.1 million to top up the fund, and $127 million in 2003.
Maroondah Council paid $1.61 million in 2010 funded from cash reserves, and $2.146 million in 2003 funded through borrowings.
Both councils said at this stage it was unknown exactly what they would be required to pay.
Ms McKenzie did not rule out a flow-on effect to Yarra Ranges rates.
‘‘The $10 million-plus hit on the council’s budget cannot be managed without having some flow-on impact on services, capital works or rates.
‘‘However, council will work with officers to ensure Yarra Ranges’ funding approach is managed in a way that minimises local impact as much as possible.’’
The LASF, known as Vision Super, is a defined benefit scheme that covers past and present council employees who began work prior to December 1993. Under the scheme which closed in 1993, these employees are given a guaranteed amount when they retire.
It means councils have to make up any shortfalls when investments sour during ‘global economic crises’.
Maroondah Council’s director of corporate services Marianne Di Giallonardo said councils had no choice but to make these payments.
Both councils said they should know the exact amount they were required to pay by the end of the month and would then make decisions on the preferred funding approach once they had more details.
Maroondah Council has voiced concerns about the inconsistency of the superannuation schemes between the three levels of government — as neither the state nor federal governments are required to fully fund their defined benefit scheme liabilities.
Yarra Ranges Council agreed the system should be changed.