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Note 26:  Retirement Plan Liabilities

Note 26:  Retirement Plan Liabilities (continued)
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2009
$m 		30 June 2008
$m
8,216 10,557 Government Superannuation Fund (GSF) 8,988 8,257
5 -  Other funds 5 - 
8,221 10,557 Total retirement plan liabilities 8,993 8,257

By source

 
8,215 10,557 Core Crown 8,991 8,255
3 1 Crown entities 1 3
4 (1) State-owned enterprises 1 (1)
(1) -  Inter-segment eliminations -  - 
8,221 10,557 Total retirement plan liabilities 8,993 8,257

The Government operates a defined benefit superannuation plan for qualifying employees who are members of the Government Superannuation Fund (GSF). The members' entitlements are defined in the Government Superannuation Fund Act 1956. Members make regular payments to GSF and in return, on retirement, receive a defined level of income. GSF is closed to employees who were not members at 1 July 1992.

The GSF obligation has been calculated by the Government Actuary as at 30 June 2009. A Projected Unit Credit 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.

Amounts recognised in the statement of financial position in respect of GSF are as follows:

Note 26: Retirement Plan Liabilities (continued)
Actual
30 June 2009
$m 		30 June 2008
$m

Net GSF Obligation

 
Present value of defined benefit obligation 11,792 11,831
Fair value of plan assets (2,804) (3,574)
Present value of unfunded defined benefit obligation 8,988 8,257

Present value of defined benefit obligation

 
Opening defined benefit obligation 11,831 11,167
Expected current service cost 133 141
Expected unwind of discount rate 821 833
Actuarial (gains)/losses (111) 617
Benefits paid (882) (947)
Past service cost -  20
Closing defined benefit obligation 11,792 11,831

Fair value of plan assets

 
Opening fair value of plan assets 3,574 4,007
Expected return on plan assets 223 220
Actuarial losses (806) (481)
Funding of benefits paid by Government 618 691
Contributions from other entities 13 15
Contributions from members 64 68
Benefits paid (882) (947)
Other -  1
Closing fair value of plan assets 2,804 3,574

Amounts recognised in the statement of financial performance in respect of GSF are as follows:

Note 26: Retirement Plan Liabilities (continued)
Forecast Actual
Original
Budget
$m 		Estimated
Actuals
$m 		30 June 2009
$m 		30 June 2008
$m

Personnel Expenses

 
Expected current service cost 133 141
Expected unwind of discount rate on GSF obligation 822 833
Expected return on plan assets (223) (220)
Contribution from funding employers (77) (84)
    Past service cost -  20
652 680 Total included in personnel expenses 655 690

Net (Gains)/Losses on Non-Financial Instruments

 
-  2,262 Actuarial losses recognised in the year 695 1,098
652 2,942 Total GSF expense 1,350 1,788

The Government expects to make a contribution of $648 million to GSF in the year ended 30 June 2010.

In addition to its obligations to past and present employees, because GSF is liable to income tax, the Crown will be required to make additional contributions equivalent to the tax on future investment income.

The principal assumptions used for the purposes of the GSF actuarial valuations are as follows:

Note 26: Retirement Plan Liabilities (continued)
Actual
30 June 2009
% 		30 June 2008
%

Summary of assumptions

 

For following year

 
Discount rate 3.79% 6.95%
Expected return on plan assets 6.25% 5.50%
Expected rate of salary increases 3.00% 3.00%
Expected rate of inflation 2.25% 2.50%

Beyond next year

 
Discount rate from 2 to 15 years 3.84% to 7.70% 6.06% to 6.38%
Discount rate from 16 years onwards 6.00% 6.36%
Expected return on plan assets 6.25% 5.50%
Expected rate of salary increases 3.00% 3.00%
Expected rate of inflation from 2 to 15 years 2.00% to 2.25% 2.50%
Expected rate of inflation from 16 years onwards 2.00% 2.50%
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