Your salary for superannuation purposes determines the number of units you are entitled to, which in turn determines the size of the benefit you will receive from the scheme.
The cost of each unit of pension is calculated to ensure that you will have paid the full cost of the unit by the time you reach your normal retirement age. Any new units that are taken up within five years of the normal retirement age are payable at an 'instalment rate' that spreads the cost of each unit over five years.
Unit entitlement depends on salary and movements in the Consumer Price Index (CPI). You are entitled to one unit for each $260 of your superable salary. Each member is also entitled to an additional number of units which are adjusted each quarter for inflation.
Your superable salary is your annual base salary, plus certain allowances and payments. The superable salary is very important because it influences the amount of personal contributions you are required to pay to SSS and, consequently, the benefits you will receive. This is because your contributions and benefit entitlement are based on the number of units to which you are entitled.
Your employer will determine the value of approved employment benefits to include in the superable salary figure they report to STC's administrator, Pillar Administration.
When is your superable salary reported?
Each year, your employer is required to report your superable salary that is being paid to you on your annual review. If your birthday is between 1 January and 30 June, your annual review day is 28 July. If your birthday is between 1 July and 31 December, your annual review day is 9 February.
For more information, please refer to SSS Fact Sheet 1: Salary for superannuation purposes.
Generally a member cannot contribute for more units than the number their superable salary entitles them to. A notice is sent to you once each year that tells you how many new units you have become entitled to as a result of inflation adjustments and increases in your salary.
Units that would increase your personal contributions above 6% of your salary are optional and you can elect to abandon them (these are abandoned units).
What happens to your contributions and unit entitlement if your salary is reduced?
If your salary is reduced to the extent that it reduces your unit entitlement, contributions at the current rate will continue to be payable unless you request otherwise within two months of your salary reduction.
If you are age 55 or over and your salary reduces by 20% or more, you may protect the benefits accrued on the higher salary by electing to defer or crystallise your benefit within SSS until you retire. This application must be forwarded to the administrator within two months of your salary reduction. Contributions will cease to be payable to SSS from the date of effect of your election. However, you may join another complying superannuation fund of your choice, including the State Authorities Superannuation Scheme (SASS).
A request to reduce unit entitlement must be made by completing SSS Form 529: Choice of contribution rate on reduction in salary. For more information about these options, please refer to SSS Fact Sheet 2: Unit entitlement.