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Are you maximising your super?
by Ron Davis
You should have received your annual superannuation benefit statement around mid October. It's tempting just to glance at it and not look at the detail, but a little time taken to check your statement now may result in many thousands of dollars extra when you exit your scheme. Often members wait until they are ready to retire before they try to understand their scheme benefits, but then it may be too late. If you had understood the rules of your scheme earlier, you may have been able to obtain a higher benefit.
Which scheme are you in?
You may think of yourself as belonging to State Super. However State Super is the general name used to cover all the schemes run by the SAS Trustee Corporation (STC). These schemes are:
- State Authorities Superannuation Scheme (SASS) <0x2014> your annual statement is green
- State Superannuation Scheme (SSS) <0x2014> your annual statement is red.
SASS members
- Maximise your benefit by understanding your points.
SASS has a flexible contribution system which lets you select a personal contribution rate from 1 per cent to 9 per cent of your salary each year. However, if your contribution rate is less than an average of 6 per cent for each year of your membership, you will not have accrued your maximum available employer financed benefits. You could be missing out on many thousands of dollars in employer contributions towards your SASS benefit.
If you are working full-time, each 1 per cent that you contribute each year from your salary up to an average of 6 per cent for each year of membership entitles you to 1 benefit point which represents 2.5 per cent (for some members 3 per cent) of your final average salary at retirement up to a maximum of 180 points. In addition to this employer financed benefit you will get back your own contributions with interest.
The first paragraph of your annual statement shows you how many maximum available benefit points (employer) and how many contributed benefit points (yours) are available to you at the end of the statement period. If your statement shows that you have contributed for fewer than the maximum available employer points, then you could miss out on benefits that your employer would otherwise have paid you at retirement. You can make up for some if not all of these points by contributing 7 per cent, 8 per cent or 9 per cent of your annual salary. The higher your contribution rate the faster you will catch up. If you are behind don't leave it too late to catch up! The fastest you can catch up is by paying 9 per cent which will close the gap between your contributed and maximum available points at 3 points per year. If you have already reached 180 maximum available points the full percentage you are contributing will close the gap. The very most that the employer will pay is based on 180 points - an average of 6 points per year over 30 years.
- Where possible don't leave the service just before a pay rise.
- Retire at the start of the month to attract the employer contribution for the previous month.
- Retire in the early part of the year because of the way final average salary is calculated.
- Have you applied for the Additional Benefit Cover?
SSS members
- Will you owe contributions when you retire at or after age 60 (age 55 for women who elected to contribute to retire at age 55)?>
On normal retirement aged 60 or 55 for some women you may have an outstanding balance of personal contributions to be paid as follows:
*instalment units <0x2014> spread over five years
*new units acquired since your annual review date and recalculated at your salary on your last day of service
*any abandoned units you may choose to pay for.
These amounts are referred to as outstanding contributions and, along with any contribution arrears that may have arisen from a period of leave without pay or any other reason, must be paid within one month after your last day of service. Outstanding contributions are not payable on Early Voluntary Retirement.
- Make sure your superable salary is correct.
- Review your unit entitlement. Do you have any abandoned units?
- Women members <0x2014> did you elect age 55 or 60 retirement?
- Consider salary sacrifice, spouse contributions and topping up into another super fund.
Pre-retirement seminars
Your Trustee Board provides SSS and SASS members with the opportunity to attend a free retirement preparation seminar which provides information on scheme options and entitlements, legislative changes and financial planning. The retirement preparation seminars for SSS and SASS members aged 50 and over are as follows:
Scheme Date Time Location
SSS/SASS November 20 4:15pm - 8:30pm Moree
SSS/SASS November 26 4:15pm - 8:30pm Tweed Heads
SSS December 4 8:45am 1:00pm Sydney
SASS December 4 1:45pm - 6:00pm Sydney
SASS December 7 8:45am - 1:00pm Sydney
If you wish to book to attend a seminar please call (02) 9238 5930 or email stcseminars@statesuper.nsw.gov.au. It is important to advise which scheme you are a member of when making your booking.
Ron Davis is Full time Trustee Board Member, SAS Trustee Corporation
New year to focus on salaries campaign
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