Local Government Superannuation Scheme (LGSS) will increase contribution rates for its defined benefit scheme in a bid to meet its funding requirements.
In early March, LGSS chief executive Peter Lambert told local councils that based on actuarial advice, contribution rates required for LGSS' defined benefit scheme would increase from the 1 July 2009 to 30 June 2010 period.
"The decision to increase contribution rates was not taken lightly. Actuarial advice is regularly sought and as such, the recommendation was made that the deficiency be recovered over a ten-year period," a statement from the fund said.
From 2003 to 2007, the defined benefit scheme delivered an average return of 14.8 per cent.
However, in 2007/08 the fund posted a negative 7.9 per cent return on the back of volatile markets.
"Markets have fallen considerably in the last six months due to the global financial crisis and the assets underpinning the obligations of the defined benefit scheme have been significantly affected," the statement said.
"Employers who participate in the defined benefits schemes are not immune from this."
LGSS manages more than $6 billion in funds under management. Less than 10 per cent of LGSS members use the defined benefit scheme.
Last week, Qantas Superannuation announced it would receive $66 million in additional funding from the airline in order to support the defined benefit component of its super plan.
