Note 16: Government Superannuation Fund (GSF) Liability
The GSF liabilities have been calculated by the Government Actuary as at 30 June 2006. The liabilities arise from closed schemes for past and present public sector employees (set out in the GSF Act 1956). A Projected Aggregate Funding Method, based on balance-date membership data, is used for the valuation. This method requires the benefits payable from the GSF in respect of past service to be estimated and then discounted back to the valuation date.
The GSF net unfunded liability included as at 30 June 2006 was $11,438 million. This was an increase of $7 million compared with 30 June 2005.
The 2006 movement in the net unfunded liability of $7 million reflects an increase in the gross liability of $279 million and an increase in net assets of $272 million.
The main drivers of the movement in the net unfunded liability are changes to the economic assumptions since 30 June 2005 and actual GSF experience to 30 June 2006.
The changes in underlying assumptions accounts for $359 million of the movement. The significant change in valuation assumptions was an increase in the Consumer Price Index, of 2.25% (2.0% as at 30 June 2005). The other principal long-term financial assumptions used in the calculation remained unchanged, which were an average after-tax discount rate of 3.8% and an annual salary increases rate, before any promotional effects, of 3.0%. The remainder of the change is due to actual fund experience.
| Forecast | Actual | |||
|---|---|---|---|---|
| Original Budget $m | Estimated Actual $m | 30 June 2006 $m | 30 June 2005 $m | |
| GSF Liability and Asset Information | ||||
| Gross GSF Liability | ||||
| 14,103 | 14,952 | Opening gross liability | 14,952 | 13,542 |
| (24) | 409 | Net projected change | 279 | 1,410 |
| 14,079 | 15,361 | Closing Gross Liability | 15,231 | 14,952 |
| Less Net Assets Available to the GSF Scheme | ||||
| 3,510 | 3,521 | Opening asset value | 3,521 | 3,375 |
| Net projected change: | ||||
| - | 455 | - Investment valuation changes | 368 | 279 |
| 77 | (208) | - Contributions and other income less membership payments | (96) | (133) |
| 77 | 247 | Total projected change | 272 | 146 |
| 3,587 | 3,768 | Closing Net Asset Values | 3,793 | 3,521 |
| Net Unfunded Liability of the GSF Schemes | ||||
| 10,593 | 11,431 | Opening unfunded liability | 11,431 | 10,167 |
| (101) | 162 | Net projected change | 7 | 1,264 |
| 10,492 | 11,593 | Net Unfunded Liability | 11,438 | 11,431 |
| Opening balance | 11,431 | 10,167 |
|---|---|---|
| Expected service cost | 221 | 208 |
| Expected interest cost | 622 | 548 |
| Change in underlying valuation assumptions | 359 | 1,240 |
| Experience gains and asset gains | (197) | (110) |
| Expected return on assets | (207) | (199) |
| Change in data | (152) | 227 |
| Expected contributions | (639) | (650) |
| Closing Balance | 11,438 | 11,431 |
| 30 June 2006 $m | 30 June 2005 $m | |
|---|---|---|
| Liabilities to Pensioners | ||
| Pensioners | 9,054 | 8,700 |
| Deferred pensioners | 943 | 871 |
| Liabilities to Contributors | ||
| General Government Superannuation Fund members | 4,051 | 3,897 |
| Police | 635 | 897 |
| Armed Forces | 389 | 428 |
| Judges | 58 | 59 |
| Prison Services | 41 | 41 |
| Islands | 45 | 43 |
| Members of Parliament | 15 | 16 |
| Total Liabilities in respect of Past Services | 15,231 | 14,952 |
| Less Assets available to schemes | 3,793 | 3,521 |
| Total Net Pension Liabilities | 11,438 | 11,431 |
