Queensland's public sector superannuation liability is expected to fall $7 billion over the next five years, and this is despite the state's defined benefit scheme surplus being partially repatriated.
The figures were published in the Queensland Government budget papers, released earlier this week. They show that superannuation liabilities are projected to fall from $25.9 billion in 2017 to $18.9 billion by 2021.
"Financial assets are projected to decrease by $2.64 billion as investments are repatriated from the actuarially assessed defined benefit superannuation fund and Queensland Government Insurance Fund (QGIF) surpluses. These repatriations will be used to fund the State Infrastructure Fund and additional priority capital projects as well as reducing debt," the budget papers reported.
Giving the government room to make this DB scheme surplus repatriation is the state government's actuary reporting the scheme is in strong surplus, resulting in the scheme's liabilities being almost 5% lower than they were forecast last year.
The scheme achieved investment returns of 7.5% in the period July 2016 to March 2017, one third higher than was forecast in last year's budget, reinforcing the Queensland Government's comfort zone around these forecasts.
Explaining the fiscal policy move, Queensland Treasurer Curtis Pitt said: "The State Actuary's review found the scheme remains in a strong position, with Queensland unique among Australian jurisdictions in fully funding our defined benefit scheme."
This will allow $4 billion of the scheme's $9 billion surplus at June 2016 to be released back to state government consolidated revenue, half for infrastructure projects and half for paying down debt over the forward estimates.
Despite the surplus repatriation the Queensland government state actuary advised that the scheme will maintain its 120% solvency ratio and that this should climb to 140% by 2026 even if the government continues its contribution holiday. This compares to the Australia-wide DB funding ratio of only 75%, according to research by Rainmaker.
Queensland's DB superannuation liabilities are expected to fall as a share of total state government's liabilities from 33% in 2017 to 25% by 2021.