01/07/2008 - 09:27

Treasurer halts GESB mutualisation

01/07/2008 - 09:27

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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.

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.

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

The decision to halt the process was made yesterday, she said. A spokesman for the treasurer confirmed that that Mr Ripper had stopped the transition on advice from the under-treasurer Tim Marney due to unresolved concerns, including the transfer of surpluses.

"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 in detail.

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.

Those concerns have been echoed more recently by the Community & Public Sector Union / Civil Service Association of WA.

CPSU/CSA 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 a receipt of acknowledgement of her letter.

Ms Dolin made it clear the delay was not due to issues 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 organization.

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 appearance of a political motivation in the delay, with electioneering getting underway in WA. However Ms Dolin said the transition could take place sooner and the November date was a worst case scenario at this stage..

She said that 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. It follows months of advertising the changeover date to inform existing members of the changes as well as promote the fund management option to potential new customers.

Below is the full GESB announcement:
WA's biggest superannuation fund GESB today announced that its planned transition to mutual status has been delayed until 1 November 2008.

GESB and the State Government were unable to finalise the necessary transition arrangements in time to meet the target 1 July start-up date for GESB Mutual.

The transition will see GESB transfer to member ownership and Commonwealth regulation by APRA and ASIC.

GESB Chief Executive Officer Michele Dolin said the delay was unfortunate but it was important that all necessary formalities should be completed before the transition took effect.

"It is very important to ensure GESB has the very best platform for success as a mutual and we will continue to work closely with the State Government to finalise the outstanding arrangements," said Ms Dolin.

"We will contact our members in the coming days to inform them of the revised schedule."

GESB has been advised that 1 November 2008 is the earliest date on which the technical transition of GESB's 295,000 members and their funds can take place.

"We will use best endeavours to bring forward the transition date if possible through working closely with the range of third parties involved, including custodians, fund managers, regulators and tax authorities," said Ms Dolin.

GESB is the largest WA-based investment institution, with assets of more than $9 billion.

 

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