SUPERANNUATION PROVISION ACCOUNT
Objectives
Treasury assists the Government to effectively manage the defined benefit employer superannuation liabilities of the Territory.  This includes the responsibility for the management of the investment funds set aside to meet the defined benefit employer superannuation liabilities of the Territory.
The Superannuation Provision Account (SPA) is a banking account established to recognise the investment assets and defined benefit employer superannuation liabilities of the Territory.
The SPA also recognises the unfunded superannuation liabilities for the superannuation benefits for the Members of the Legislative Assembly.
The SPA operates within the broader Treasury portfolio.
2010‑11 Priorities
Strategic and operational issues to be pursued in 2010‑11 include:
•	managing, monitoring and reviewing, as necessary, the SPA investment portfolio in accordance with the established investment policies;
•	undertaking policy research and development for the implementation of value-adding investment strategies for the SPA investment portfolio;
•	completing the annual actuarial review of the defined benefit employer superannuation liabilities of the Territory; and
•	completing the Totalcare superannuation project.
Estimated Employment Level
2008‑09
Actual Outcome		2009-10
Budget
	2009-10
Est. Outcome	2010-11
Budget
	
9	Staffing (FTE)1	9	9	9	
Note:
1.     This includes 6 FTEs associated with the Totalcare superannuation project.
Strategic Indicators
Strategic Indicator 1
Achievement of Investment Returns Greater than Benchmark
To maintain a selection of investment managers and a mix of financial investment assets to deliver returns in excess of established performance benchmarks.
Strategic Indicator 2
Achievement of an Average Long‑Term Investment Return of Five Per Cent ‘Real’
To achieve an annualised ‘real’ rate of return of five per cent (net of inflation and fees) over the life of the investment portfolio.
Strategic Indicator 3
Superannuation Liability Funding Percentage
The Government is committed to the effective management, and eventual extinguishment, of unfunded CSS/PSS defined benefit employer superannuation liabilities.  A target of 100 per cent funding of defined benefit employer superannuation liabilities by 30 June 2030 has been established.  This is to be achieved by improving the coverage of superannuation liabilities with investment assets, over time, through the annual review and monitoring of the long-term funding plan.
As at 30 June 2010, superannuation liabilities are estimated to be 52 per cent funded, an increase from the 45 per cent funded position as at 30 June 2009.

Output Classes
	Total Cost	Payment for Expenses on Behalf of the Territory	
	2009‑10
Est. Outcome
$’000	2010‑11
Budget
$’000 	2009‑10
Est. Outcome
$’000 	2010‑11
Budget
$’000 	
EBT Class 1:
Superannuation Provision Account	443,709	386,405	1,671	5,272	
EBT 1:  Superannuation Provision Account	443,709	386,405	1,671	5,272	
Output Description
This output involves the management of the Territory’s defined benefit employer superannuation liabilities and investment assets.
The key outputs to be delivered in 2010‑11 include:
•	managing the investment assets set aside to meet the CSS/PSS defined benefit employer superannuation liabilities of the Territory by monitoring the investment strategy;
•	delivering an average investment return of CPI plus 5 per cent (net of fees), within acceptable risk tolerances, over the projected life of the investment portfolio;
•	monitoring and reviewing the performance of the Territory’s investment managers and investment service providers to achieve an investment return greater than benchmark;
•	undertaking the annual actuarial review of the Territory’s CSS/PSS defined benefit employer superannuation liabilities; and
•	preparation of annual Member Information Statements for the Members of the Legislative Assembly Superannuation Scheme.

Accountability Indicators
	2009‑10
Targets	2009‑10
Est. Outcome	2010‑11
Targets	
1.1 Superannuation Provision Account	
				
a.	Difference between the net investment earnings rate and the benchmark is to be > 0	> 0	> 0	> 0	
The difference between the actual annual portfolio investment earnings rate and the established benchmark is a measure of the relative performance of the Territory’s fund managers to the benchmark.	
b.	Annualised long-term return of 5 per cent real	>5%	4.5%	>5%	
The annualised real return of the portfolio (net of inflation and fees) is a measure of the average annual compounded return achieved over time.  This measure is updated annually.	
c.	Liability funding percentage	49%	52%	53%	
The percentage of superannuation liabilities that are covered by the investment assets is a measure of the level of liability funding.	

Changes to Appropriation
Changes to Appropriation - Territorial						
 	2009-10	2010-11	2011-12	2012-13	2013-14	
Payment for Expenses on Behalf of Territory	Est. Out.	Budget	Estimate	Estimate	Estimate	
 	$'000	$'000	$'000	$'000	$'000	
						
2009-10 Budget	5,221	 - 	 - 	 - 	 - 	
						
FMA Section 16B Rollover from 2008-09						
Totalcare Superannuation Liability	1,722 	- 	- 	- 	- 	
						
2010-11 Budget Technical Adjustment						
Rollover - Totalcare Superannuation Liability	(5,272)	5,272 	- 	- 	- 	
						
2010-11 Budget	1,671	5,272	 - 	 - 	 - 	

Changes to Appropriation - Territorial						
 	2009-10	2010-11	2011-12	2012-13	2013-14	
Capital Injections	Est. Out.	Budget	Estimate	Estimate	Estimate	
 	$'000	$'000	$'000	$'000	$'000	
						
2009-10 Budget	137,107	140,534	144,047	147,649	147,649	
						
2010-11 Budget Technical Adjustment						
Revised Indexation Parameters	- 	- 	- 	- 	3,692 	
						
2010-11 Budget	137,107 	140,534 	144,047 	147,649 	151,341 	

Superannuation Provision Account
Statement of Income and Expenses on Behalf of the Territory
  2009-10			  2009-10	   2010-11		  2011-12	    2012-13	  2013-14		
    Budget			Est.Outcome	   Budget	     Var	  Estimate	    Estimate	  Estimate		
    $'000			    $'000	   $'000	      %	    $'000	     $'000	   $'000		
		Income								
		Revenue								
5,221		Payment for Expenses on behalf of Territory	1,671	5,272	215	0	0	0		
19,742		Interest	32,106	27,918	-13	27,177	29,063	30,942		
35,782		Dividend Revenue	46,535	44,322	-5	49,412	52,841	56,258		
94,087		Other Revenue	258,944	96,713	-63	99,612	106,410	113,169		
154,832		Total Revenue	339,256	174,225	-49	176,201	188,314	200,369		
		Gains								
5,221		Other Gains	11,000	0	-100	0	0	0		
5,221		Total Gains	11,000	0	-100	0	0	0		
160,053		Total Income	350,256	174,225	-50	176,201	188,314	200,369		
		Expenses								
701		Employee Expenses	697	721	3	745	771	799		
356,248		Superannuation Expenses	368,026	371,883	1	399,427	410,646	421,716		
5,512		Supplies and Services	5,048	5,251	4	5,460	5,578	5,822		
10,721		Other Expenses	69,938	8,550	-88	3,460	3,682	3,902		
373,182		Total Ordinary Expenses	443,709	386,405	-13	409,092	420,677	432,239		
-213,129		Operating Result	-93,453	-212,180	-127	-232,891	-232,363	-231,870		
0		Superannuation Prior Year Actuarial Movement	271,507	0	-100	0	0	0		
0		Total Other Comprehensive Income	271,507	0	-100	0	0	0		
-213,129		Total Comprehensive Income	178,054	-212,180	-219	-232,891	-232,363	-231,870		

Superannuation Provision Account
Statement of Assets and Liabilities on Behalf of the Territory
    Budget			Est.Outcome	    Planned		   Planned	   Planned	   Planned		
as at 30/6/10			as at 30/6/10	as at 30/6/11	   Var	as at 30/6/12	as at 30/6/13	as at 30/6/14		
   $'000			   $'000	     $'000	    %	    $'000	    $'000	    $'000		
		Current Assets								
500		Cash and Cash Equivalents	500	500	-	500	500	500		
0		Receivables	286	286	-	286	286	286		
500		Total Current Assets	786	786	-	786	786	786		
		Non Current Assets								
1,968,391		Investments	2,090,304	2,274,984	9	2,437,881	2,600,992	2,762,751		
1,968,391		Total Non Current Assets	2,090,304	2,274,984	9	2,437,881	2,600,992	2,762,751		
1,968,891		TOTAL ASSETS	2,091,090	2,275,770	9	2,438,667	2,601,778	2,763,537		
		Current Liabilities								
0		Payables	867	867	-	867	867	867		
109,462		Employee Benefits	115,523	147,649	28	162,783	179,389	196,411		
109,462		Total Current Liabilities	116,390	148,516	28	163,650	180,256	197,278		
		Non Current Liabilities								
3,950,147		Employee Benefits	3,909,833	4,134,033	6	4,370,640	4,601,859	4,827,125		
3,950,147		Total Non Current Liabilities	3,909,833	4,134,033	6	4,370,640	4,601,859	4,827,125		
4,059,609		TOTAL LIABILITIES	4,026,223	4,282,549	6	4,534,290	4,782,115	5,024,403		
-2,090,718		NET ASSETS	-1,935,133	-2,006,779	-4	-2,095,623	-2,180,337	-2,260,866		
		REPRESENTED BY FUNDS EMPLOYED								
-2,090,718		Accumulated Funds	-1,935,133	-2,006,779	-4	-2,095,623	-2,180,337	-2,260,866		
-2,090,718		TOTAL FUNDS EMPLOYED	-1,935,133	-2,006,779	-4	-2,095,623	-2,180,337	-2,260,866		

Superannuation Provision Account
Budgeted Statement of Cash Flows on Behalf of the Territory
  2009-10			  2009-10	   2010-11		  2011-12	    2012-13	  2013-14		
    Budget			Est.Outcome	   Budget	     Var	  Estimate	    Estimate	  Estimate		
    $'000			    $'000	   $'000	      %	    $'000	     $'000	   $'000		
		CASH FLOWS FROM OPERATING ACTIVITIES								
		Receipts								
5,221		Cash from Government for EBT	1,671	5,272	215	0	0	0		
19,742		Interest Received	32,106	27,918	-13	27,177	29,063	30,942		
41,283		Other Revenue	50,986	52,374	3	52,192	55,621	59,038		
66,246		Operating Receipts	84,763	85,564	1	79,369	84,684	89,980		
		Payments								
695		Related to Employees	689	712	3	736	762	789		
97,257		Related to Superannuation	121,785	115,567	-5	147,695	162,832	179,440		
5,512		Related to Supplies and Services	5,048	5,251	4	5,460	5,578	5,822		
10,721		Other	4,849	8,550	76	3,460	3,682	3,902		
114,185		Operating Payments	132,371	130,080	-2	157,351	172,854	189,953		
-47,939		NET CASH INFLOW/ (OUTFLOW) FROM OPERATING ACTIVITIES	-47,608	-44,516	6	-77,982	-88,170	-99,973		
		CASH FLOWS FROM INVESTING ACTIVITIES								
		Receipts								
0		Proceeds from Sale/Maturities of Investments	126,500	0	-100	0	0	0		
0		Investing Receipts	126,500	0	-100	0	0	0		
		Payments								
89,168		Purchase of Investments	218,310	96,018	-56	66,065	59,479	51,368		
89,168		Investing Payments	218,310	96,018	-56	66,065	59,479	51,368		
-89,168		NET CASH INFLOW/ (OUTFLOW) FROM INVESTING ACTIVITIES	-91,810	-96,018	-5	-66,065	-59,479	-51,368		
		CASH FLOWS FROM FINANCING ACTIVITIES								
		Receipts								
137,107		Capital Injection from Government	137,107	140,534	2	144,047	147,649	151,341		
137,107		Financing Receipts	137,107	140,534	2	144,047	147,649	151,341		
137,107		NET CASH INFLOW/ (OUTFLOW) FROM FINANCING ACTIVITIES	137,107	140,534	2	144,047	147,649	151,341		
0		NET INCREASE/ (DECREASE) IN CASH HELD	-2,311	0	100	0	0	0		
500		CASH AT BEGINNING OF REPORTING PERIOD	2,811	500	-82	500	500	500		
500		CASH AT THE END OF THE REPORTING PERIOD	500	500	-	500	500	500		
Superannuation Provision Account
Statement of Changes in Equity on Behalf of the Territory
    Budget			Est.Outcome	    Planned		   Planned	   Planned	   Planned		
as at 30/6/10			as at 30/6/10	as at 30/6/11	   Var	as at 30/6/12	as at 30/6/13	as at 30/6/14		
   $'000			   $'000	     $'000	    %	    $'000	    $'000	    $'000		
		Opening Equity								
-2,014,696		Opening Accumulated Funds	-2,250,294	-1,935,133	14	-2,006,779	-2,095,623	-2,180,337		
-2,014,696		Balance at the Start of the Reporting Period	-2,250,294	-1,935,133	14	-2,006,779	-2,095,623	-2,180,337		
		Comprehensive Income								
-213,129		Operating Result for the Period	-93,453	-212,180	-127	-232,891	-232,363	-231,870		
0		Superannuation Prior Year Actuarial Movement	271,507	0	-100	0	0	0		
-213,129		Total Comprehensive Income	178,054	-212,180	-219	-232,891	-232,363	-231,870		
0		Total Movement in Reserves	0	0	-	0	0	0		
		Transactions Involving Owners Affecting Accumulated Funds								
137,107		Capital Injections	137,107	140,534	2	144,047	147,649	151,341		
137,107		Total Transactions Involving Owners Affecting Accumulated Funds	137,107	140,534	2	144,047	147,649	151,341		
		Closing Equity								
-2,090,718		Closing Accumulated Funds	-1,935,133	-2,006,779	-4	-2,095,623	-2,180,337	-2,260,866		
-2,090,718		Balance at the End of the Reporting Period	-1,935,133	-2,006,779	-4	-2,095,623	-2,180,337	-2,260,866		
Notes to the Budget Statements
Significant variations are as follows:
Statement of Income and Expenses on Behalf of the Territory
•	payment of expenses on behalf of the Territory:
–	the decrease of $3.550 million in the 2009‑10 estimated outcome from the original budget is due to former Totalcare employee superannuation settlements being below expectations; and
–	the increase of $3.601 million in the 2010‑11 Budget from the 2009‑10 estimated outcome reflects the estimated amount of payments of former Totalcare employee superannuation settlements in the 2010‑11 financial year.
•	interest:
–	the increase of $12.364 million in the 2009‑10 estimated outcome from the original budget is due to maintaining a higher allocation to cash and fixed interest investments; and
–	the decrease of $4.188 million in the 2010‑11 Budget from the 2009‑10 estimated outcome is due to an anticipated lower level of allocation to cash investments.
•	dividend revenue:
–	the increase of $10.753 million in the 2009‑10 estimated outcome from the original budget is due to the strong recovery in global share markets leading to higher equity investments during the year; and
–	the decrease of $2.213 million in the 2010‑11 Budget from the 2009‑10 estimated outcome is due to a return to an anticipated lower level of allocation to share investments.   
•	other revenue:
–	the increase of $164.857 million in the 2009‑10 estimated outcome from the original budget is due to the strong recovery in global investment markets leading to the recognition of significant capital gains on investment; and
–	the decrease of $162.231 million in the 2010‑11 Budget from the 2009‑10 estimated outcome reflects a return to the long‑term investment earnings assumption of a portfolio return of CPI plus 5 per cent (net of fees), as compared with the higher estimated actual return in 2009‑10.
•	other gains:
–	the increase of $5.779 million in the 2009‑10 estimated outcome from the original budget is due to the total write‑down of the Totalcare employer superannuation liability provision; and
–	the decrease of $11 million in the 2010‑11 Budget from the 2009‑10 estimated outcome reflects the removal of the Totalcare employer superannuation liability provision.
•	superannuation expenses:
–	the increase of $11.778 million in the 2009‑10 estimated outcome from the original budget is due to the 2008‑09 financial year end update to the actuarial review of superannuation liabilities and reflects the impact of the decreased discount rate of 5.6 per cent as at 30 June 2009; and
–	the increase of $3.857 million in the 2010‑11 Budget from the 2009‑10 estimated outcome is due to the estimated growth in superannuation liabilities following the recent actuarial review.
•	other expenses:
–	the increase of $59.217 million in the 2009‑10 estimated outcome from the original budget is due to the recognition of capital losses in relation to the investment portfolio; and
–	the decrease of $61.388 million in the 2010‑11 Budget from the 2009‑10 estimated outcome reflects a return to the long-term investment earnings assumption of a portfolio return of CPI plus 5 per cent (net of fees).
•	superannuation prior year actuarial movement:
–	the increase of $271.507 million in the 2009‑10 estimated outcome from the original budget is due to the budget actuarial estimate of the superannuation liability as at 30 June 2010 incorporating a long term discount rate (10 year Commonwealth Government bond rate) of 6 per cent, rather than the actual ten year Commonwealth Government bond rate of 5.6 per cent as at 30 June 2009.  A higher discount rate leads to a lower liability valuation and vice versa; and
–	the decrease of $271.507 million in the 2010‑11 Budget from the 2009‑10 estimated outcome is due to continuing to utilise a long term discount rate of 6 per cent for the 2010‑11 Budget and forward year superannuation liability valuation estimates.
Statement of Assets and Liabilities on Behalf of the Territory
•	non current investments:
–	the increase of $121.913 million in the 2009‑10 estimated outcome from the original budget is due to the strong recovery in global investment markets and the recognition of significant capital gains; and
–	the increase of $184.680 million in the 2010‑11 Budget from the 2009‑10 estimated outcome is due to the reinvestment of projected investment earnings and the net cash inflows to the portfolio.
•	current employee benefits:
–	the increase of $6.061 million in the 2009‑10 estimated outcome from the original budget reflects the outcome of the latest actuarial review and the estimated increase in annual employee superannuation benefit payments; and
–	the increase of $32.126 million in the 2010‑11 Budget from the 2009‑10 estimated outcome reflects the outcome of the latest actuarial review and the estimated growth in annual employee superannuation benefit payments.
•	non current employee benefits:
–	the decrease of $40.314 million in the 2009‑10 estimated outcome from the original budget reflects the outcome of the latest actuarial review that incorporates membership data as at 30 June 2009; and
–	the increase of $224.2 million in the 2010‑11 Budget from the 2009‑10 estimated outcome reflects the outcome of the latest actuarial review and the estimated growth in annual employee superannuation benefit liabilities.
Statement of Cash Flows on Behalf of the Territory
Variances in the statement are explained in the notes above.
Statement of Changes in Equity on Behalf of the Territory
Variances in the statement are explained in the notes above.