Department of Premier and Cabinet
Category
Department of Premier and Cabinet Circular
Identifier
C2002-57
Status
Active

C2002-57 Employer Contributions for First State Super and Complying Accumulation Superannuation Funds

Description:

The purpose of this Circular is to:

  1. confirm NSW Government policy with respect to certain superannuation contributions;
  2. announce payments for certain employees and former employees who may not have received compulsory employer contributions; and
  3. announce new circumstances in which employer contributions are now payable.
FunctionFinancial Management and AccountingSubjectSuperannuation

The purpose of this Circular is to:

  1. confirm NSW Government policy with respect to certain superannuation contributions;
  2. announce payments for certain employees and former employees who may not have received compulsory employer contributions; and
  3. announce new circumstances in which employer contributions are now payable.

This Circular applies to full members of First State Super (FSS) and those employees and former employees who receive their Superannuation Guarantee (SG) contributions in other complying superannuation funds. This Circular does not apply to employees who are members of the closed NSW public sector superannuation schemes.

1. Confirmation of Existing Policy
When FSS was established, it was the Government's intention that "compulsory employer contributions" would be required in some circumstances that are not required by the Commonwealth's Superannuation Guarantee Act or rulings. In First State Super these include:

  • Where an employee is on paid maternity leave;
  • Where an employee is on paid adoption leave;
  • Where an employee is under 18 years old and employed part time; and
  • Where an employee is paid less than $450 per month.

Equivalent employer contributions should be made for employees who receive their SG contributions in another complying superannuation fund.

All employers who make compulsory employer contributions to First State Super are directed to make compulsory FSS employer contributions in respect of all full FSS members who take paid maternity leave and paid adoption leave. These employers are also directed to make equivalent contributions for those employees who receive SG contributions in another complying superannuation fund.

2. payments for employees who have not received compulsory employer contributions
Some employers may not have been aware of the obligation to make superannuation contributions in the above circumstances. Where agencies have not made these contributions for employees or former employees, they are to make a contribution in accordance with the formula in Attachment A. Where a person's SG contributions are paid to a complying superannuation fund other than FSS, an equivalent contribution is to be made to that fund.

The contributions will be equal to the compulsory employer contributions that would be payable in FSS for the duration of paid maternity leave or paid adoption leave, plus compound interest using the average of the annual crediting rates for all investment options in FSS.

Former employees with current FSS accounts
Payments to former employees who are current members of the FSS (because, for example, they were required to preserve their superannuation benefit) should be paid into the former employee's FSS account if the Trustee, FSS Trustee Corporation (FTC), agrees to accept the payment.

Former employees for whom FTC can not accept contributions and employees who do not have a current FSS account
Former employees for whom FTC can not accept contributions and employees without a FSS account may have the contributions paid to another complying accumulation fund. If the former employee does not have an account with a complying accumulation fund then the contributions may be paid as ordinary PAYE income (ie taxed at marginal tax rates).

The compulsory employer contribution percentage rates and FSS interest rates are provided in Attachment A, together with an example of the way in which the payment is calculated.

Payments made into employees' or former employees' FSS accounts by Budget dependent employers will be reimbursed by NSW Treasury in the same way that other FSS employer contributions are reimbursed.

Payments made as PAYE income by Budget dependent employers should be paid out of the usual allocation for employee salary costs. If the existing Budget allocation is insufficient to meet these additional costs, and there are no offsetting savings available, agencies should request supplemental funding. Any queries in this regard should be directed to your agency's Agency Relationship Manager in Treasury.

All other employers (ie off Budget, GTEs etc) will be required to meet their own costs associated with these payments.

3. New circumstances in which employer contributions are now payable
The First State Superannuation Regulation 2002 prescribes allowances and payments that are included in the definition of "salary or wages" upon which compulsory employer contributions are calculated. The regulation came into effect on 8 November 2002.

Under the regulation, the following are now prescribed payments:

  • paid parental leave;
  • weekly workers compensation payments; and
  • non-cash benefits that attract compulsory employer superannuation contributions under an industrial award.

This means that compulsory employer contributions are to be made on these payments.

Equivalent contributions are to be made for employees who receive their SG contributions in another complying superannuation fund unless an industrial award specifies that the contributions may only be made to FSS.

The weekly workers compensation payments that are to be treated as salary for superannuation purposes do not include any amount that exceeds the aggregate of:

a) the weekly workers compensation payment, and
b) the salary actually paid while partially incapacitated.

C. Gellatly

Director-General