- I elected to contribute for retirement at age 55 and I intend to retire at 55, but I would like to continue to do casual work. What does this mean for my benefit?
- I'm approaching the age I elected for retirement but I enjoy my work. What is the effect on my super if I don't retire?
- Do my contributions stop when I reach my retirement age?
- I am finding my contributions expensive so I'm thinking of not paying for my new units. What will this mean for my benefit?
- I have been paying my contributions to SSS to retire at age 55 but on my statement my preservation age is 58. When can I retire?
- How long after I retire can I expect to be paid my benefit?
- How does extended leave (otherwise known as long service leave) affect my contributions and benefit?
- My benefit has been flagged with a family law matter. Why am I not able to access my details and benefits online?
- How do I arrange to start salary sacrificing my compulsory superannuation contributions?
- I have decided to purchase an extra four weeks leave under the new award provisions. Will there be any effect on my super?
- I'm a shift worker. What will happen to my benefit if I take my long-service leave (LSL) in the lead-up to my retirement?
- I make contributions to my superannuation scheme but others are paid the Superannuation Guarantee (SG) without having to make contributions. What is the SG and why don't I get paid it?
I elected to contribute for retirement at age 55 and I intend to retire at 55, but I would like to continue to do casual work. What does this mean for my benefit?
To access your full SSS pension at age 55, you must state in your application that it is your intention to leave the workforce permanently. This means if you are intending to work at all, that it be for less than 10 hours per week. If you intend working for 10 hours a week or more, you are considered to be participating in the work force and will not meet the Commonwealth's condition of release.
If you are unable to state that it is your intention to leave the workforce permanently, your pension will be divided into a non-preserved and preserved fortnightly amount. In these circumstances, you have two options for the preserved component:
- It can be immediately received as a non-commutable pension (that is, a pension that you can never convert into a lump sum). If you die, your spouse or de facto partner can exchange any pension they are entitled to for a lump sum within 20 years, or within your life expectancy from the date your pension commenced, whichever is the lesser.
- It can be paid each fortnight into a separate account, which can be paid to you once you satisfy a condition of release, such as reaching the preservation age. This separate account would be adjusted for interest and management charges. The preserved component of the pension will also be adjusted annually in line with the Consumer Price Index (CPI) (All Groups, Sydney). Once you meet a condition of release, the accumulated amount will be made available to you as a lump sum and your full pension will be paid to you fortnightly.
Example: Gillian is aged 56 and leaves the employment of the NSW Public Sector for a casual position with XYZ Enterprises. On leaving service, Gillian is entitled to receive an SSS pension of $800 per fortnight. As Gillian has not met the Commonwealth's condition of release, a portion of her pension entitlement must be preserved.
The scheme administrator has determined that $500 each fortnight is deemed a preserved pension under the Commonwealth rules, with $300 being immediately available to be paid (non-preserved). As Gillian does not want to receive a non-commutable pension, the preserved portion of the pension will be paid each fortnight into a deferred account and will be adjusted for interest and management charges.
Gillian works for three years with XYZ enterprises, then retires permanently from the workforce at age 59. As she has now met a condition of release, she can access the preserved portion of her pension.
It is important to note that if you do not meet a Commonwealth condition of release when you retire, your basic benefit must be preserved and will therefore not be available to meet the cost of outstanding contributions. You would have to commute some of your pension to meet this cost, or use moneys from outside the scheme, such as unused leave.
I'm approaching the age I elected for retirement but I enjoy my work. What is the effect on my super if I don't retire?
The SSS scheme was introduced when compulsory retirement existed and was designed to provide a benefit at a specific age. This is 60 for most members, but 55 in the case of female members who elected when they joined the scheme to make contributions at a higher rate in order to take their full retirement benefit earlier.
The scheme requires members to contribute for (buy) units of a fortnightly pension, to be paid as pension income on retirement at or after the nominated retirement age (maturity). As there is no longer compulsory retirement, more members now choose to continue working past their nominated retirement age, and this has some consequences for the design of the scheme.
Once you reach your nominated retirement age, you are entitled to begin drawing an income from the scheme, but only if you have ceased employment. If you go on working, you are, in effect, working for the difference between your net income (after taxes and superannuation contributions) and your net pension (which is free of tax from age 60 and, due to a tax offset, may have little or no tax applied to it between 55 and 60). Many members find that there may not be a significant difference between their net salary and their net pension. If you continue working beyond your nominated retirement age, you will still be eligible for any new units offered as a result of pay increases.
Women who elected to retire at 55, but continue to work beyond this age and intend to exchange their pension for a lump sum need to note that the lump sum factor decreases for each day they are older than 55. This means that the benefit taken in the form of a lump sum will be less than if taken on their 55th birthday unless they later receive a pay rise that entitles them to a higher number of units.
Once you reach age 65, you are able to access your SSS benefit without having to retire or resign. For further information, see STC Fact Sheet 4: When can I be paid my superannuation benefits?
Do my contributions stop when I reach my retirement age?
Your contributions to the scheme do not cease when you reach your nominated retirement age. Contributions are generally continued at the same rate through to the next annual adjustment day following your birthday, when the contributions for the units you began contributing for more than five years before your nominated retirement age will cease. The only units you will still be required to contribute for are those for which you began contributing less than five years before your nominated retirement date, as these are paid for over a five-year instalment period. The result will be a reduction in your fortnightly contributions at the first annual adjustment day after you reach your nominated retirement age, generally by as much as a half to two thirds. Any additional amount collected for units which are fully paid for at your nominated retirement age will be used to reduce the amount you will owe the scheme at retirement.
Alternatively, if you notify the scheme within two months of reaching your nominated retirement age that you wish to cease paying contributions for the units you began contributing for more than five years before your nominated retirement age, these contributions will be stopped. However, contributions for instalment units will continue. For further information, see SSS Fact Sheet 3: Contributions.
I am finding my contributions expensive so I'm thinking of not paying for my new units. What will this mean for my benefit?
A unit that is fully contributed for is worth $5.50 per fortnight of pension (less 15% contributions tax) and is notionally divided into an employer component of $3.30 and an employee component of $2.20. If you elect to abandon any new units that you become entitled to you will remain entitled to the $3.30 value of those units. These are called reduced value units. If you abandon a unit, you are choosing not to pay for the $2.20 component of the unit. In the event that you do not remain a contributor until your normal retirement age because you die, are medically retired, are retrenched or take an early voluntary retirement benefit, the benefit payable for your abandoned units will be based on the lower value.
Abandoned units can be recovered at normal retirement age at their full cost. Alternatively, you can begin contributing for any previously abandoned units at any future annual review day, although you will not be given death or invalidity entitlements at the higher rate on these units until you have been contributing for them for two and a half years.
The cost of a unit is spread over each fortnight from the time you first begin contributing for it until your retirement age. Units that you begin contributing for at later ages have a higher fortnightly cost because the total cost of the unit is spread over a shorter period of time. For further information, see SSS Fact Sheets 2: Unit entitlement and 3: Contributions.
I have been paying my contributions to SSS to retire at age 55 but on my statement my preservation age is 58. When can I retire?
You will still be entitled to be paid your pension from SSS on retirement after reaching age 55 but there will be some restrictions on the payment of your pension if you elect to commence your pension before reaching your preservation age.
If you commence your pension before reaching your preservation age, your pension will be divided into a non-preserved and preserved fortnightly amount. The non-preserved amount will be paid to you each fortnight but you will have to choose between two options for your preserved component:
- It can be immediately received as a non-commutable pension (that is, a pension which you can never convert into a lump sum). If you die, your spouse or de facto partner can exchange any pension they are entitled to for a lump sum within 20 years, or within your life expectancy from the date your pension commenced, whichever is the lesser.
- It can be paid each fortnight into a separate account, which can be paid to you once you satisfy a Commonwealth condition of release, such as reaching the preservation age. This separate account would be adjusted for interest and management charges. The preserved component of the pension will also be adjusted annually in line with the CPI (All Groups, Sydney). Once you meet a condition of release the accumulated amount will be made available to you as a lump sum and your full pension will be paid to you fortnightly.
Whichever option you choose, the basic benefit is always required to be preserved and therefore will not be available until you reach your preservation age and meet a condition of release.
It is important to note that if on retirement before reaching your preservation age you elect to exchange (commute) your pension, the portion of the lump sum related to the preserved component of your pension will not be payable until you have reached that age and met a condition of release. Please contact Customer Service for more details.
There are also taxation implications to be considered. The taxable component of a pension taken before reaching your preservation age will be taxed at the full marginal tax rates and will not receive the 15% tax offset, unless you are able to provide two certificates of incapacity. This would generally only be applicable if you were medically retired.
If you elect to exchange the non-preserved part of your pension for a lump sum before reaching your preservation age, you will not be entitled to receive the low rate cap amount tax-free, and would therefore be required to pay tax at 21.5% on the full taxable component of the lump sum.
Please note that reaching your preservation age alone will not trigger a condition of release. In order to trigger a condition of release on reaching your preservation age, you need to be working less than 10 hours a week, change your employment arrangement on reaching age 60, or reach the age of 65.
For further information, see STC Fact Sheet 4: When can I be paid my superannuation benefits?
How long after I retire can I expect to be paid my benefit?
The following documents are required before your retirement benefit can be processed:
- your application form – fully and correctly completed
- your tax file number
- your proof of identity and age
- advice from your employer that you have ceased employment, along with advice of your last contribution.
Benefit payments are generally processed for payment within five working days of receiving all the necessary information. If you are taking a lump sum, it will be forwarded to your nominated financial institution, and will generally be received within four weeks of your last day of service.
If you are taking a pension, it will be paid on the next pension payroll day, providing all information was received at least 14 days before that day. Your first pension payment will include pension backdated to the date of your retirement, with benefits generally being paid within six weeks of your last day of service.
You should follow up on how your application is progressing to ensure that both your documents and your employer's forms have been received and that your application is being dealt with. You can do this by calling 1300 130 096.
Important: You are advised not to rely on the early receipt of your benefit for the payment of a major expense, such as the settlement on a property. For further information, see STC Fact Sheet 5: Retiring or resigning? What you need to know for payment of your benefit.
How does extended leave (otherwise known as long service leave) affect my contributions and benefit?
You can take long service leave at single pay, double pay or half pay. For superannuation purposes, these are all treated as if they were taken at single pay. If you are employed full time, the salary reported is the full-time salary and benefits are accrued at the full-time rate for the period of your long service leave. However, you need to be aware that if you take long service leave at half pay, you will need to make arrangements with your employer to ensure that your contributions are still deducted at the full-time rate from your half-time salary. Part-time employees' leave entitlements are paid on a pro rata basis. (See the NSW Public Sector Personnel Handbook for further information.)
My benefit has been flagged with a family law matter. Why am I not able to access my details and benefits online?
When a superannuation account is flagged as being subject to a family law order or has been reduced as a result of the implementation of a family law order, any requested benefit estimates must be calculated manually and can no longer be calculated automatically by the system. Therefore, all benefits that are subject to family law splits will require manual calculation. This can be arranged by contacting Customer Service on 1300 130 096. You may also refer to your Annual Statement, where benefits are estimated as at 30 June each year.
How do I arrange to start salary sacrificing my compulsory superannuation contributions?
Salary sacrifice is an arrangement made between you and your employer as it forms part of the way you are remunerated. Therefore, you need to ask your employer for the form you will need to complete, and return it to your employer. Some employers make these forms available to their employees on their intranet sites; alternatively, you may need to approach your payroll officer or human resources manager.
With the agreement of your employer, salary sacrificing your compulsory personal contributions to SSS can be commenced from any future pay. You do not need to wait until your annual adjustment day to elect to begin salary sacrificing your compulsory contributions. An arrangement to salary sacrifice your SSS compulsory contributions is made with your employer's payroll function and is entirely separate from any arrangement you make to salary sacrifice additional contributions to another top-up superannuation fund or to salary package other benefits. For further information, see SSS Fact Sheet 24: Salary sacrifice your compulsory personal contributions to SSS.
I have decided to purchase an extra four weeks leave under the new award provisions. Will there be any effect on my super?
The benefits from SSS are based on your salary at or near your exit from the scheme. If you purchase additional leave, your salary, including your salary for superannuation purposes, will be reduced to 96.15% of your salary 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 a preserved benefit on resignation. A reduction in your reported salary will also reduce the value of monthly Additional Employer Contributions made by your employer (if applicable).
Your final average salary, which is used to calculate the basic benefit, is the average of your salary at exit and at the previous two annual review days. A reduction in any of these salaries would result in a lower benefit being paid.
For further information, see SSS Fact Sheet 1: Salary for superannuation purposes.
I'm a shift worker. What will happen to my benefit if I take my long-service leave (LSL) in the lead-up to my retirement?
As a shift worker, your salary for superannuation purposes may include a loading that depends on the number of shifts you worked in the 12 months prior to the salary reporting date. There may be a loading of 0%, 10%, 15% or 20% applied to your base salary for superannuation purposes, which depends on the number of shifts you have worked in the 12-month period, for which you have received a shift penalty.
If you take LSL in this period, you will not be working shift work and will not be receiving shift penalties, so you will potentially be reducing or eliminating the loading applied to your salary for superannuation purposes. A reduction in the salaries reported at the previous two annual review days and/or at exit will result in a lower benefit being paid. A reduction in your reported salary will also reduce the value of monthly Additional Employer Contributions made by your employer (if applicable).
For further information, see SSS Fact Sheet 1: Salary for superannuation purposes.
I make contributions to my superannuation scheme but others are paid the Superannuation Guarantee (SG) without having to make contributions. What is the SG and why don't I get paid it?
Compulsory super in Australia began with a national pay rise awarded in 1986. This pay rise was awarded on the condition that it be saved in the form of superannuation to negate its potential inflationary effects, and extended access to superannuation benefits to all Australian workers.
Individual unions were given the authority to negotiate with employers to have a 3% superannuation benefit included in their awards on the basis that they agreed to productivity improvements. This benefit is often referred to as "award super" or "the productivity benefit". It was granted to members of STC schemes from 1 April 1988 and is known as the basic benefit.
By the early 1990s, the Commonwealth Government recognised that payment of superannuation contributions would need to be enforced. In 1992, it introduced the SG, which was to be administered by the Australian Taxation Office.
The SG set minimum levels of superannuation contributions that an employer must make on behalf of their employees, rather than maximum levels. This meant that for members of superannuation funds whose employers funded benefits that were worth more than the SG, the employer was not required to pay more. However, your employer must ensure that the employer-financed benefit (EFB) payable is equal to or more than the SG that would have accrued.
In order for this to occur, STC schemes measure the EFB payable, including the basic benefit and Additional Employer Contributions, against the SG that would have accrued. If the EFB payable from the scheme is lower than the SG payable, an additional payment representing the difference is also paid. Therefore, if the 3% basic benefit plus the EFB payable is less than the SG, a shortfall representing the difference is payable. This amount will be included on your annual statement.
Legislation announced in recent years provides for the SG rate to increase gradually to 12% by 2025 (increasing to 10% by 2021 and then gradually to 12% by 2025). As the SG increases, your scheme entitlement will be measured against the SG at the increased level.