Purchased leave is a voluntary arrangement between you and your employer where you may 'purchase' additional leave by reducing your annual salary. The conditions under which such agreements can be made are generally set out in your Award or employment contract.
The benefits from SSS are based on your salary at or near to your exit from the scheme. If you purchase additional leave, your salary, including your salary for superannuation purposes, will be reduced to 96.15% if you purchase an additional 10 days leave and 92.3% of your salary if you purchase an additional 20 days leave. Your salary is reported annually to the scheme and is used to calculate the cost of your contributions for the following year. It is also used to calculate the value of your benefit at retirement, retrenchment, invalidity or death and the value of your preserved benefit if you resign.
Where a purchased leave agreement is in place, on your annual review day or when you exit the scheme, your employer will report your purchased leave salary for that year (that is, they will report the reduced salary as your superable salary). Your contributions and benefits will be based on the reduced salary which will result in a lower benefit being paid.
If you are entitled to any Additional Employer Contributions during a year when a purchased leave arrangement is in place these contributions will be made based on your reduced salary.
We recommend you seek financial advice before taking a period of purchased leave.
A StatePlus financial planner can assist you in assessing the impact of purchased leave on your pension entitlement. To find out more, call StatePlus on 1800 620 305 or visit www.stateplus.com.au.
Note: State Super Financial Services Australia Limited, trading as StatePlus, is the holder of an Australian Financial Services Licence 238430, ABN 86 003 742 756. StatePlus is a ‘for profit’ financial services organisation which also provides financial planning advice. As of 6 June 2016, StatePlus is wholly owned by FSS Trustee Corporation (ABN 11 118 202 672 and AFSL 293340) as trustee of the First State Superannuation Scheme (ABN 53 226 460 365). StatePlus has its own Board and Management team. State Super does not pay any fees to StatePlus for the financial advice and member seminar services it provides to State Super members. State Super is not a representative of StatePlus and receives no commission when making referrals to StatePlus for financial planning services. Neither State Super nor the New South Wales Government take any responsibility for the services offered by StatePlus, nor do they or StatePlus guarantee the performance of any service or product provided by StatePlus.