THE financial regulator has stepped up scrutiny of defined-benefit superannuation plans operated by Australia's biggest companies after deeper investment losses across some funds caused by the past year's market turmoil.
The top 20 companies
are collectively sitting on a
$7 billion black hole in unfunded pension liabilities, hurt by falling global bond prices and choppy equity markets.
These stresses have prompted the Australian Prudential Regulation Authority to increase monitoring of the older-style superannuation plans operated by a string of companies including BHP Billiton, Telstra and Woolworths.
APRA said in its latest half-yearly regulatory update that while several funds had been able to improve their position since the start of the financial crisis, some were still in "unsatisfactory financial positions",
"These entities receive close APRA attention," it said, without naming them.
An analysis of the full-year accounts of the top 20 companies reveals defined-benefit superannuation schemes have sunk into a $7.03 billion loss over the past year, bigger than the $5.36 billion loss a year earlier.
However, the results have been skewed by Rio Tinto, which took on more than $US13 billion of mostly Canadian-based defined-benefit obligations after buying Alcan five years ago.
Rio Tinto has pumped billions of dollars into the plan over recent years, including $US610 million last year.
Despite this, the deficit on Rio's plan last year blew out to $US4.66 billion, up from $US3.24 billion a year earlier.
Other large defined-benefit funds sitting on losses include Westpac's with a deficit of $676 million and AMP, which has $370 million in losses.
Most funds have about half their assets tied up in equities, with the rest in bonds, cash and property.
Defined-benefit schemes guarantee a fixed
retirement payout regardless of how their investments perform.