After regaining control of superannuation on behalf of NSW Councils just three years ago, the Local Government Superannuation Scheme is not only a recognised leader in terms of returns on investment but is also a great example of putting triple bottom line principles into practice.
Chairman of the Scheme and President of the NSW Local Government Association, Councillor Peter Woods, quite rightly points out that properly organised public sector bodies can out perform their private sector counterparts. As well as its business credentials in returns on investment, the scheme clearly demonstrates its commitment to environmental principles and social dividends.
Returns on investment of 17.5 percent have resulted in the scheme's investment pool increasing over the last three years from $2.5 billion to a tidy $3.2 billion. Some $151 million in rebates have been returned to Councils over this period and $200 million from reserves has been used to improve benefits for the Scheme's 70,000 members
With Councils no longer required to make further contributions in regard to the defined benefits scheme (pensions), this translates into an additional $96 million savings per annum for New South Wales Councils. These savings mean that additional funds are freed up for use on other community projects, as deemed appropriate by individual Councils, thereby providing a substantial social dividend.
On the environmental front, respect for environmental and economic sustainability is paramount. As an example, the scheme's investment portfolio does not include any tobacco related stocks.
After wresting control of its super funds from the State scheme, the Local Government Superannuation Scheme set up its own Board, comprising four union and four employer representatives.
As a further indication of its social and community building credentials, the Local Government Superannuation Scheme has joined with Deutsche Asset Management to establish private equity funding for projects in regional NSW. Through its Regional Development Trust, some $130 million from the scheme is now available for investment projects in regional areas and outer metropolitan areas.
Targetting business development, infrastructure and selected community projects, the sorts of investments that could be funded through the Trust include hospitals, carparks, retirement villages, tourist developments, business enterprises, tollroads, bridges, airports and telecommunications facilities.
To stimulate regional and rural economies, funding decisions will be based on projects that can deliver a multiplier effect through stimulating growth and new job opportunities.
Workshops are planned to assist those interested in presenting proposals for funding. The involvement of Deutsche, with its investment experience across 60 nations, will ensure proposals are not only commercially viable but will deliver environmentally and socially.
Councillor Woods has thrown down the challenge to State and Federal Governments. He stated recently, "The Local Government Superannuation Scheme is putting its money where its mouth is. Central Governments need to stop mouthing platitudes on the issue of regional development and follow suit."
Few people question the long term social benefits of superannuation contributions. With enormous amounts of funds now tied up in superannuation, the opportunity for workers across the nation to see the returns of their investment being put to use on environmentally sustainable and socially beneficial projects should be a priority for governments can deliver on.
The Regional Development Trust is yet another example of Local Government leading the way.