Next | Previous

Objectives

The Superannuation and Insurance Provision Unit (SIPU) is responsible for the management of the funds set aside to meet liabilities of the Territory and its agencies relating to employer superannuation and insurable risk.

The Superannuation Provision receives funds and makes payments for the management of the employer superannuation liabilities of the Territory, Territory authorities and Territory owned corporations. The superannuation funds are managed through the SIPU Territorial account.

The Unit invests the funds through external managers according to an asset allocation strategy which takes into account the long term nature of the liabilities and projected cash flow requirements.

The Insurance Provision is a centrally managed fund to cover the insurable risks of Territory agencies, and managed through the SIPU Departmental account.

The objectives of the managed fund are to enable the Territory to meet the cost of its insurable claims and losses in an orderly, timely and cost effective manner, to ensure the costs are fully reflected in the Territory’s accounts in accord with accrual accounting principles, to protect the budget from the risk of very large claims and to aid and improve risk management practices in all agencies.

Strategic and operational issues to be pursued in 1999-2000 include:

• presenting a long term superannuation financing strategy taking into account the findings of the triennial review of emerging costs and accrued liabilities;
• applying $300m towards funding the previously unfunded superannuation liability;
• refining electronic claims reporting and data systems to provide an integrated management process and ensure that accurate information is available for the insurance fund and its insurers;
• providing additional training for agency risk managers and operational managers;
• continuing to provide assistance to agencies in examining operations and assets to improve risk assessments and risk management; and
• undertaking progressive reviews of arrangements between agencies and external bodies to ensure the appropriate level of risk is transferred to contractors.

 Superannuation and Insurance Provision Unit
Operating Statement

Superannuation and Insurance Provision Unit
 Statement Of Financial Position

Superannuation and Insurance Provision Unit
Cashflow Statement

Notes to the Budget Statements

The major factors impacting on the Departmental statements are the inclusion of payments from agencies for Worker’s Compensation Premiums ($20.262m) as revenue, and payments to Comcare by the Unit as expense. In the 1998-1999 Budget, these transactions were not recognised as impacting on the statements of the Unit.

In the 1998-99 Budget, administration expenses ($5.3m) covered all expenses of the Insurance Fund, including the insurance liability of $4.774m. The expense relating to insurance fund has been revised to $6.1m using data from claims history.

Operating Statement

The operating revenue includes $14.028m in user charges from government agencies as insurance premium, $20.262m in other revenue for worker’s compensation premiums, and an insurance brokerage commission of $0.305m.

Significant variations are as follows:

• interest: the increase of $0.553%m in 1999-2000 (the second year of the managed fund) is in accordance with the increased amount of cash held to meet future costs of claims reported and claims incurred but not reported;
• employee expenses: the increase of $0.101m in 1998-99 from original budget is a result of reclassifying the expense. These were included in administrative expenses in the 1998-99 Budget;
• superannuation expenses: the increase of $0.017m in 1998-99 from original budget is a result of reclassifying the expense. These were included in administrative expenses in 1998-99 Budget;
• administrative expenses: the decrease of $4.892m in 1998-99 from original budget is a result of reclassifying the expenses. Employee ($0.101m), superannuation ($0.017m) and insurance liability costs ($4.774m) were included in administrative expenses in 1998-99 Budget; and
• other expenses: the increase of $29.088m in 1998-99 from original budget is a result of reclassifying insurable risk liability costs ($6.1m), the recognition of worker’s compensation expense ($19.988m) and insurance placement costs ($3m).

Statement of Financial Position

Significant variations are as follows:

• cash: the decrease of $9.302m in 1998-99 from original budget mainly reflects investments in the managed fund, which increase by $10.970m;
• current assets: the increase of $10.006m in 1999-2000 relates to investments in the second year of the managed fund, in accordance with the increased amount of cash held to meet future costs of claims reported and claims incurred but not reported; and
• creditors: the increase of $1.604m in current and $3.7m in non-current creditors in 1998-99 from original budget is due to the recognition of the insurance liabilities incurred after the start of the fund. The increases of $0.3m in current and $4.2m in non-current creditors in 1999-2000 is due to the estimated costs of claims against the fund during the year.

Superannuation and Insurance Provision Unit
Statement Of Revenues And Expenses On Behalf Of The Territory

 Superannuation and Insurance Provision Unit
Statement Of Assets And Liabilities On Behalf Of The Territory

Superannuation and Insurance Provision Unit
 Budgeted Statement Of Cashflows On Behalf Of The Territory

Notes to the Budget Statements

Statement of Revenue and Expenses on Behalf of the Territory

The major factors impacting on the Territorial statements are the inclusion of $300m capital injection of funds at the end of 1999-2000, and the increased distributions to government of $44.339m in 1998-99, $38.017m in 1999-2000, $45.477m in 2000-01, $65.314m in 2001-02 and $66.669m in 2002-03.

Significant variations are as follows:

• interest: the increase of $20.160m in 1998-99 from original budget is as a result of higher level of funds invested through Central Financing Unit rather than placed with external managers, pending the review of the long term investment strategy, and reclassification of $16.355m from other revenue;
• other revenue: the decrease of $20.215m in 1998-99 from original budget reflects a decrease in employer contributions from agencies ($3.860m) and a reclassification of interest ($16.355m). The decrease of $2.579m in 1999-2000 reflects the revised estimates from agencies in respect of employer contributions;
• superannuation expenses: the increase of $12.365m in 1999-2000 is in accordance with actuarial estimates. These estimates are currently the subject of a triennial actuarial review;
• administrative expenses: the decrease of $1.708m in 1998-99 from original budget is a result of reclassifying the expenses. Employee, superannuation and administrative expenses were included in administrative expenses in 1998-99 budget. Administrative expenses were also reduced due to the reclassification of external funds manager fees which is netted off against interest received from banks in 1999-2000; and
• distributions to government: the increase of $40.339m in 1998-99 from original budget reflects the return to the budget of the full employer contributions by budget funded agencies, following the initiative to provide an additional capital injection of $300m in 1999-2000.

Statement of Assets and Liabilities on Behalf of the Territory

Significant variations are as follows:

• investments: the value of funds invested will increase by $339.835m in 1999-2000. The increase reflects the capital injection of $300m, and the extent to which annual funding of the superannuation provision exceeds the level of current emerging costs; and
• employee entitlements: the increases of $4.554m in current and $163.209m in non-current employee entitlements in 1999-2000 are in accordance with actuarial estimates. 

Changes to Appropriation

This table presents a reconciliation of appropriation relating to the Cashflow Statement.

This table presents a reconciliation of appropriation relating to the Cashflow Statement.