Redundancy and superannuation
The NSW Public Sector is going through many changes with cut backs in budgets, the loss of jobs and the selling of state owned enterprises.
First State Super has many members that work for the NSW public sector, some since 1992 when we first opened. We appreciate that this a difficult time for some of our members.
The following information about redundancies, retrenchments and superannuation may assist members during this period.
Leaving your employer does not mean you have leave First State Super
On leaving your employer, you can leave your benefit in First State Super and continue to enjoy the benefits of being a First State Super member:
- First State Super offers the best fee deal across all superannuation and retirement funds open to the public according to SelectingSuper
- You are part of a not for profit fund with low fees and no commissions paid where the focus is on our members.
- You can consolidate other superannuation accounts into a single account at First State Super and save on fees
- You can choose from a range of 11 investment options which allow you to choose the investments that best suit your particular needs and circumstances
- You can stay with First State Super as you approach retirement AND when you retire
- You can be confident that your superannuation is invested in a Fund that is rated by leading research companies as well balanced across the key area of organisational strength, governance, investments and performance, fees, administration, member services, employer services, communications, insurance, and advice.
New employers can send contributions First State Super
First State Super accepts contributions from any employer including those outside of the NSW public sector.
If your new employer provides Choice of Fund you can ask your new employer to make contributions on your behalf to First State Super. Click here to find out more
Leaving your employer and insurance cover
If you are not employed for a period and you keep your benefit in the Fund, your existing cover will remain in force and premiums will continue to be deducted from your account while there is money in the account, unless you advise otherwise.
Your premiums and cover may be recalculated if you subsequently become employed by an employer that participates in the Fund or if you apply and are accepted to have your insurance category improved based on your new occupation. To notify us that you have a new employer, please complete and return the Insured members change of employment form.
If you do not work, or work less than 15 hours per week, the definition of total and permanent disablement will be restricted (you will not be eligible to be assessed as having been absent from your Occupation under the second limb of the definition).
Income for Income Protection purposes is calculated as the average income for the 12 consecutive months prior to the start of disablement, so if you are unemployed for a period of time your average income is likely to be reduced.
If you need or want to access you super
You can only receive your super benefit as cash if part of your benefit contains a non-preserved amount or if you have met a condition of release.
Superannuation benefits for cashing purposes are split into three amounts:
- Preserved amount – generally this amount cannot be accessed as cash until you meet a condition of release including permanent retirement after reaching your preservation age
- Restricted non-preserved amount – can generally be accessed as cash when you cease gainful employment with an employer who had, or whose associates had, at any time contributed to First State Super
- Unrestricted non-preserved amount – can be accessed at any time.
If you would like information on the split for your own account please contact the call centre on 1300 650 873 for a benefit quote.
The following fact sheets provide more information about accessing your super benefit:
Employment Termination Payments and superannuation
From 1 July 2007 a lump sum payment made in consequence of termination of employment (known as an Employment Termination Payment) can no longer be rolled over into superannuation funds, unless they are specified in an existing employment contract (or other relevant authority) as at 9 May 2006; and payment is made prior to 1 July 2012.
Under these transitional arrangements the taxable component of the Employer Termination Payment will be taxed at 15% plus Medicare levy up to $145,000 (for 2008/9) (30% plus Medicare levy if under 55), 30% plus Medicare levy up to a maximum of $1 million and the top marginal rate plus Medicare levy for any further amounts.
Employment Termination Payments that are contributed to a superannuation fund under the transitional arrangements will be treated as a taxable contribution to the fund and taxed at 15%. The contributed amount above $1 million will be subject to the contribution caps and excess contribution taxes.
The Department of Premier and Cabinet has also released Circular 2008-47 Voluntary Redundancy Payments to provide some guidance on redundancy payments.
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