AUSTRALIA is in the middle of a pension crisis, with the average Australian taxpayer facing a $10,000 pension deficit as a result of the state’s budget deficit, the Australian Securities and Investments Commission (ASIC) has revealed.
“We are in a period of extreme and unprecedented levels of debt that are unprecedented for this country,” ASIC chief executive Paul Williams said.
“It is not normal.”
The ACCC’s analysis of state and territory pension funds also revealed the State Government’s share of the pension funds’ liabilities is currently set to exceed the $30 billion set aside by the Commonwealth for its pension scheme.
The ACCC said the situation was a reflection of the way the Australian Government’s pension funds operate.
“They operate on a very high risk and it’s the same with the pension plans of the states,” ASIC’s acting chief executive David Mowat said.
“[This] means that the liabilities are very high relative to the pension plan assets.”
The ACCc’s figures are the latest ASIC has released on state and local government pension fund debt and a snapshot of the current state of the fund’s finances shows it will be the most vulnerable state to the next downturn.
“These figures are extremely alarming and they indicate that the pension system as a whole is on a trajectory towards a financial meltdown,” Mr Williams said, warning that the situation in Australia’s pension systems was “unique”.
“It’s a unique situation because there is a lot of money on the table, the liabilities on the books are huge and it is the Government’s responsibility to manage the money,” Mr Mowats said.
Mr Williams admitted the ACCc did not have an accurate assessment of the State’s pension assets.
“The pension system is a very complex system, and we don’t have a clear understanding of how much of that is being invested in a particular fund,” he said.
ASIC has warned that if the fund does not provide adequate funding to meet its debts, the Commonwealth would be unable to pay its bills, with debt servicing on the State Pension being the most likely culprit.
“That means that it’s very likely that the Commonwealth will be unable and unwilling to pay the bills that are owed to the State and local governments,” Mr Paine said.
Topics:financial-disruption,economics-and-finance,state-parliament,australia
