02/07/2008 - 22:00

Mutualisation of GESB stopped

02/07/2008 - 22:00

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Plans to turn over ownership of the state's $9 billion superannuation manager GESB to 295,000 members have been thrown into disarray, with the body and the government apparently unable to conclude a deal at the 11th hour.

Mutualisation of GESB stopped
DELAY: GESB chief executive Michelle Dolin said legal and financial matters had delayed the organisation’s mutualisation. Photo: Grant Currall

Plans to turn over ownership of the state's $9 billion superannuation manager GESB to 295,000 members have been thrown into disarray, with the body and the government apparently unable to conclude a deal at the 11th hour.

The decision to halt the process was made by treasurer Eric Ripper on June 30, the day before the transition was officially set to take place, due to concerns government had with the changeover.

GESB chief executive Michele Dolin said that her organisation - formerly the Government Employees Superannuation Board - could not proceed with a long-planned mutualisation because of unresolved issues.

"The essence of the delay is a number of legal and financial matters need to be finalised between GESB and the government," Ms Dolin said.

Ms Dolin would not clarify what the issues were that had derailed the shift to a mutual body, a transition that had been underway since October 2007.

A spokesman for the treasurer confirmed that Mr Ripper had stopped the transition process on advice from the under-treasurer Tim Marney due to unresolved concerns, including the transfer of surpluses from undefined pension schemes.

GESB staff were informed early on July 1, and then provided with a further briefing mid-morning.

WA Business News has previously reported disquiet among members regarding hundreds of millions of surplus funds linked to the Gold State Super defined benefit scheme.

Due to its structure, that fund will not transition to mutual status and will remain the responsibility of the state.

GESB's most recent annual report appears to show that most of the Gold State Super surpluses had been allocated to the body's general reserve, which would mean they would be lost to the state in the mutualisation process.

Those member concerns have been echoed more recently by the Community & Public Sector Union/ Civil Service Association of WA. Branch secretary Toni Walkington said she wrote to treasurer Eric Ripper in May seeking clarification on how up to $345 million worth of surplus funds, mainly linked to Gold State Super, would be used.

"We were seeking information from the treasurer where the surplus funds from that defined benefit fund will be applied and how they are used," Ms Walkington said.

She said that she had not received a reply, beyond an acknowledgement of her letter.

Ms Dolin made it clear the delay was not due to an issue at GESB in terms of managing the transition. She said GESB was prepared for the transition and ready to go live today, the start of the new financial year when members of the state funds would have taken effective ownership of the organisation.

Private sector employees would also have been able to place their superannuation with GESB under the change, which has now been deferred until possibly as late as November 1.

The four-month delay also provided the potential for a political motivation in the delay, especially with electioneering getting underway in WA; however, Ms Dolin said the transition could take place sooner and the government denied an impending election was a component of the decision.

She said it was difficult to line up the numerous fund management bodies required to change the various funds' status.

The move stunned financial planners contacted by WA Business News.

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