Why do Employers have to make contributions to the Defined Benefit Schemes? 

LGSS Pty Limited is the Trustee of the Local Government Super (Active Super) Defined Benefit Scheme and the Retirement Scheme (Defined Benefit Schemes). The Active Super Board is required to determine a contribution rate, or rates, that will fund the defined benefit liabilities of the Defined Benefit Schemes in a manner that meets its legal obligations, as set out in the Australian Prudential Regulation Authority (APRA) Prudential Standard SPS160 Defined Benefit Matters.  

Under the Active Super Trust Deed, employers are required to make certain contributions to fund the superannuation and pension obligations of both current and past employees who are members of the Defined Benefit Schemes. These contributions are invested in an option known as the Defined Benefit Strategy. 

How does Active Super ensure the Defined Benefit Schemes are managed appropriately? 

The Active Super Board manages the investments and the administration of the Defined Benefit Schemes. In doing so it engages the services of a range of third-party service providers including an independent actuary, who assesses the level of funding required. 

Currently the Trustee has two key objectives in relation to the Defined Benefit Schemes:  

  1. To maintain the Defined Benefit Schemes at a Satisfactory Financial Position in accordance with the regulatory standards set by APRA; and 
  2. Where funding allows, to implement a de-risking plan to reduce the investment risk and therefore the volatility of contribution requirements.  

Who is the independent actuary?

Mercer is the appointed independent actuary for Active Super. Mercer is a wholly owned subsidiary of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people.  

What is the current financial position of the Defined Benefit Schemes? 

The Defined Benefit Schemes are in a Satisfactory Financial Position with funding levels exceeding the minimum of 100% Vested Benefit Interest (VBI) as at 30 June 2023.


Employer Reserve
Accrued Benefits (Past Service Liability – PSL)


Funding position (Vested Benefits Index) 104.3% 

Why has our contribution amount changed when they’re supposed to be staying at the same level? 

Each year the Fund Actuary calculates the ongoing contribution obligations for each employer based on a number of factors including its membership profile. As the profile of the membership of the Defined Benefit Schemes changes, this will be reflected in the obligations for individual employers and reported to you on annual basis.  

Given the current funding position, why do employers still have to pay contributions? 

We are legally required to maintain the funding of the Defined Benefit Schemes at 100% or above on behalf of employers. Having a small buffer protects the fund from markets declining and also allows us to continue to de-risk the portfolio, further protecting employers from volatility. We aim to maintain funding at 105-110% in order to further de-risk the portfolio so we can continue to smooth out the future contribution obligations of employers. 

What are the key financial assumptions?   

The underlying assumptions set as part of the actuarial review as at 30 June 2023 have been updated to allow for the latest financial market conditions and membership experience of the fund. The key financial assumptions at the 30 June 2023 investigation are shown below which are unchanged from the annual funding update at 30 June 2022. 



Annual Funding update  

30 June 2023

Investment return (net of tax and investment fee):
6.00% pa
Salary increases:
3.50% pa
Rate of CPI increase:
2.50%* pa
Asset based administration and Trustee expense:
0.3% pa

*Actual CPI increase of 6.6% is applied for 22/23 

What are Past Service contributions? 

Past service contributions are based on the estimated cost of providing benefits to members for service to employers prior to the valuation date. This includes pensioner members, former members who are not yet retired as well as current active members.   

What is the plan for Past Service contributions?  

Given the ongoing cost of providing these benefits, the following contribution plan is in place.  

  1. Timeframe -The Past Service contribution will continue until 31 December 2024. The funding requirement for future years will be assessed annually.  
  2. Amount Payable - The Actuary reviewed the financial position of the Defined Benefit Schemes as at 30 June 2023 resulting in the Active Super Board resolving to keep contributions at the same level until 31 December 2024.  
  3. Apportionment Basis - The amount payable is calculated based on an estimate of each employer’s proportion of the total defined benefit liabilities as at 30 June 2023.  

What are Future Service contributions? 

Future service contributions for the Defined Benefit Schemes are actuarially calculated rates to meet the cost of benefits accruing to active members of the fund over the year. Employers are billed monthly based on a multiple of the members’ own contributions.  

What is the plan for Future Service contributions?  

Future service contributions will remain at the current level for the coming financial year. 


Division B
1.9 times member contributions for non-180 Point Members
Nil for members with 180 Benefit Points*
Division C
2.5% of salary
Division D
1.64 times member contributions

Where can I obtain further information?  

If you would like more information, please do not hesitate to direct any questions to your Client Relationship Manager. Their contact details are provided in the letter you will have received from us regarding your contributions.