D&D Award explained
March 11, 2003
These notes should be read in conjunction with the proposed D&D Award which can be found (in pdf format) on the Union’s website.
The negotiated agreement is quite complex, and this commentary is intended as a general guide only to help inform members in your decision to accept or reject the proposed Award. Any additional questions (and there are bound to be many) can be submitted to the Union’s officials by way of email, fax or telephone – or better still, in person at one of the meetings to be held in the coming week.
2. Participation and Member contributions
Who will we covered by the new D&D benefits?
The D&D benefits will cover all retained firefighters, and all permanent firefighters save for:
a) permanent members in the “old” State Superannuation Scheme (SSS); and
b) permanent members in SASS who have Additional Benefit Cover and who choose not to be covered by the new D&D Award.
Will I have to join the scheme?
If you are not a permanent firefighter described in either (a) or (b) above, then the answer will be yes. Your contributions – and your cover – will be compulsory throughout your employment with the NSWFB.
How much will it cost me?
This will vary depending on whether your are retained or permanent, and for the latter whether you are in FSS or SASS.
If you are a retained firefighter, then your employee contributions will be $300 per annum, or $25 per month (either before or after tax).
If you are a permanent firefighter in FSS then you will be required to contribute 1.5% of your salary (either before or after tax).
If you are a permanent firefighter in SASS but you have not elected to take out that scheme’s Additional Benefit Cover, then you will again be required to contribute 1.5% of your salary (either before or after tax).
If you are in SASS and you have taken out Additional Benefit Cover, then you will be given 3 months from the making of the Award to make a one-off election to either:
a) drop out of SASS’s Additional Benefit Cover and be covered by the full D&D package, in which case you will be required to pay 1.5% of your salary (either before or after tax); or
b) stay with the SASS Additional Benefit Cover for death or total and permanent incapacity and be covered only by partial and permanent incapacity part of the D&D benefits, in which case you will be required to pay 0.5% of your salary (either before or after tax); or
c) stay with the SASS Additional Benefit Cover and not be covered by the D&D benefits at all, n which case you will not have to pay anything.
What do you mean by “before or after tax”?
All parcipating members, permanent and retained, will be given the option to “salary sacrifice” for their contributions. Salary sacrificing simply means that your contributions are taken from your wages before your tax is calculated, thereby making those contributions effectively “tax free”.
It’s not possible to provide a working example for retained members, because your primary job’s income (which obviously varies from member to member) will determine your total taxable income. However, the salary sacrifice savings should generally be along the lines of those for permanent members, as demonstrated by the following (approximate) examples:
D&D contributions without salary sacrifice (ie, paying from your post-tax weekly wages)
Rank taxable salary actual employee actual employee
per year cost per year cost per week
Recruit Firefighter $39,150 $587 $11.25
Senior Firefighter $52,467 $787 $15.08
Station Officer Lv 2 $63,061 $945 $18.13
D&D contributions with salary sacrifice (ie, paying before tax)
Rank taxable salary actual employee actual employee cash in
per year cost per year cost per week hand savings
Recruit $38,562 $402 $7.71 $184 pa
SF $51,680 $444 $8.52 $342 pa
S/O Lv 2 $62,115 $487 $9.34 $458 pa
We’ve tried to be as accurate as possible with the above examples, which presume no other income. These figures will therefore vary (positively) from member to member depending on whatever other income/investments you might have.
We’ve received advice that there may be some members (albeit very few) whose personal financial circumstances will mean that salary sacrificing for these contributions will not be beneficial, which is why all members will be given the option. If you are in any doubt then you should seek independent advice from a suitably qualified accountant or financial planner.
Will salary sacrificing affect my income in any other way?
No. Your rates of pay (and allowances and overtime) will remain the same. Further, the Department will continue to make its compulsory employer contributions to your SASS or FSS superannuation account based on your “old” (pre-salary sacrifice) income.
How will my “salary” be determined?
For permanent members, your salary for the purposes of D&D will be the rate shown for your rank in the “Total Weekly Rate” column shown at Part D of our main Award. In other words, your “salary” will be your rate of pay and your roster allowance (if applicable), but will not include any allowances or overtime. If you are in an Operational Support position then your “salary” will be based on your operational rank’s “Total Weekly Rate”, not your Operational Support rate. The D&D benefits and employee contributions will both be based on this “salary”.
For retained members there will be two definitions to determine your D&D benefit depending on the circumstances – “actual retained earnings” or a “deemed salary”. Your “actual” earnings are just that, and are made quite clear under the proposed Award’s definitions. Your “deemed salary” will be a notional annual salary for all retained members based on a Captain’s hourly rate x 2088 hours – which is basically a 40 hour week spread over a year. From 1 April 2003 the “deemed salary” will be $50,216.40 per annum.
What is “total and permanent incapacity” (TPI)?
TPI, which is clearly a serious injury, is defined under the Award as meaning “that the firefighter is unlikely, by reason of ill-health (whether physical or mental) to ever again engage in gainful employment for which the firefighter is reasonably qualified by education, training or experience.”
What is “partial and permanent incapacity” (PPI)?
PPI is defined under the Award as meaning “that a firefighter is no longer fit to work as a firefighter within the NSW Fire Brigades.”
It’s important to note that this definition does not include members on “alternate” or “light” duties, because they will still be working “as a firefighter within the NSW Fire Brigades.” Clause 9 of the proposed Award covers the redeployment to “alternate duties” of permanent members who are deemed to be PPI.
TPI, PPI – what’s the difference?
Basically, if you’re deemed to be PPI then you won’t be TPI, in which case it will be “likely” that you’ll be able to gain another job of similar skills and wages. But if it’s judged “unlikely” that you’re injury is such that you’ll be able to find such a job then you’ll be deemed TPI. The distinction between the two is really whether or not you’ll be able to find comparable work elsewhere and the use of the word “unlikely” rather than simply “unable” is significant, because it will mean practical issues (like the state of the local job market) will need to be considered.
The distinction between TPI and PPI will often be fine and will doubtless often be the subject of dispute between the Department and the Union. The Award provides that any dispute as to a member’s entitlements which cannot be resolved will be able to be referred to the Industrial Relations Commission of NSW, which will make a final determination on the matter.
What’s “on duty” and “off duty” mean?
Both terms are explained in detail in the Definitions clause of the proposed Award, but the basic difference is that “on duty” will include any death or injury which occurs either whilst working as a firefighter or as result of your work as a firefighter. This expressly includes any disease which is contracted as a result of your firefighting duties.
It follows that all other occasions will be considered to be “off duty”, including death or injury sustained whilst travelling to or from work – the only exception being retained members, who will be deemed to be “on duty” from the time of call.
Who will be my dependants?
A member’s “spouse” will include a wife or husband, or a de-facto partner (including a same sex partner). “Children” will include your children up to and including age 18, or up to 25 years if they are undertaking tertiary studies.
4. D&D benefits – Death and TPI
The type and scale of the D&D benefits will be determined by a number of questions.
In the case of death, the only question to answer is whether the death was sustained on duty (including death as a result of your work on duty), or off duty.
In the case of an injury which leaves you permanently incapacitated then there is not only the on duty/off duty question, but also whether the injury is a total and permanent incapacity (“TPI”) or a partial and permanent incapacity (“PPI”). There is a further question for retained members (only) who are injured on duty, which is whether the injury was such that it caused you to lose both your primary job and your retained job, or your retained job only.
It is important to note that these benefits are in addition to any superannuation and/or workers comp benefits that you or your dependants might be entitled to. It’s also worth remembering that unlike almost all other insurance arrangements available commercially, there are no qualifications, penalities or exclusions on your cover.
About the D&D pensions
The bottom line is that the pensions payable under the proposed Award will be exactly the same as that which would have been payable had you been a member of SSS. The same rules will also apply to children’s pensions, and to your ability to commute these pensions to a lump sum.
There are, however, “offsets” under the proposed award which you (or your spouse) will be required to pay before the full pension can be paid. These offsets are detailed in the Award itself, but can generally be described as the total amount of employer contributions, plus interest, to your superannuation account. This offset will be calculated from the time you joined the NSWFB to the date of your death or TPI retirement. For example:
You’ve been a permanent firefighter for 10 years, and over that time the Department has paid $40,000 in compulsory employer super contributions into your FSS account. That amount has risen to (say) $45,000 with interest. You (or your spouse) will therefore have to pay that $45,000 over to the D&D fund before you (or your spouse) will be able to receive the full D&D pension. You will, however, be entitled to keep any employee contributions (ie, money which you paid in voluntarily yourself), together with any interest, as a lump sum.
Why the offsets? Put simply, if you’re in SSS and you die or you’re medically retired then you receive a pension – not a pension and a lump sum.
What about the tax on the benefits?
The pensions will be taxed as per SSS. The death and TPI benefits under the proposed Award will be delivered through a specially established “Death and Disability Superannuation Fund”, and will therefore attract the same tax concessions – including the 15% rebate – which apply to SSS.
As an example of these tax concessions (but using no particular rank), a 30 year old member who was medically retired TPI on a D&D pension of $30,000 would qualify for an annual tax free amount of $5,000 and would be subject to tax as follows:
Taxable income ($30,000 – $5,000) = $25,000
Tax on $25,000 = $3,880
Less 15% rebate ($30,000 x 15%) = $3,750
Net tax payable = $130 per annum
(For the sake of simplicity, the Medicare levy was ignored in the above example.)
In order to avoid federal preservation laws (which freeze your benefits until you reach retirement age), the lump sum PPI payments will not be delivered through a super fund, but rather as a lump sum by the NSWFB upon exit. Suffice it to say that the tax treatment of these benefits is extremely complex – far too complex to go into any further here – and will vary according to the circumstances and options exercised by individual members.
Death on duty?
A two-thirds pension will be paid to your spouse (and dependant children, if applicable). If you are a permanent member, this pension will be based on your final “salary” and if you are a retained member, then it will be based on the current “deemed salary”. In both cases the pension will continue to be paid (and indexed to the Sydney CPI) for the remainder of your spouse’s life.
If you don’t have a spouse at the time of your death, then your estate will receive a lump sum payment equivalent to the off duty lump sum death benefit.
TPI on duty?
A full pension will be paid to you (and to your dependant children, if applicable). ). If you are a permanent member, this pension will be based on your final “salary” and if you are a retained member, then it will be based on the current “deemed salary”. In both cases the pension will continue to be paid (and indexed to the Sydney CPI) to you for the remainder of your life. Upon your death, a reversionary pension of two-thirds of your pension will then be paid to your spouse for the remainder of your spouse’s life.
Death or TPI off duty?
A one-off lump sum payment of $250,000 (or less, based on the tables at clauses 8 and 11 if you’re 61 years or older) will be paid to your estate. Unlike the on duty pensions, there will be no offset and your estate will also be entitled to receive your full superannuation balance.
5. D&D benefits – PPI
Rehabilitation and Retraining for permanent members?
For permanent members, clause 9 of the proposed Award sets out the process for rehabilitation and retraining in fairly clear terms. Whilst the objective will always be redeployment to alternative duties rather than medical retirement, there may be occasions where redeployment is either not possible – or indeed where the member concerned might actually prefer to be medically retired.
Nevertheless, the proposed Award makes it abundantly plain and clear that re-deployment of PPI permanent members within the Brigades will remain the rule rather than becoming the exception. Some of the more obvious safeguards for members within clause 9 are:
a) It’s not ambiguous – the Dept. must make “all reasonable efforts” to “place every permanent firefighter who suffers partial and permanent incapacity in a suitable position within [the] NSW Fire Brigades”;
b) It’s not just about existing job vacancies – the Dept. will be required to look at both current and “potential employment opportunities”; and
c) The Dept. can’t leave it until the last minute to say ‘sorry, there’s no job available’. The member and the Union must both be “informed at the earliest possible opportunity” if the Dept. “believes that … a suitable position may not be found”, at which point the Union can (and will) “put that opinion into dispute” – provided, of course, that you’re an FBEU member.
There is no rehabilitation and retraining provision for retained members because the nature of retained employment doesn’t allow for alternative duties. That’s not to say that there aren’t any PPI benefits for retained members, though.
PPI on duty?
For permanent members who exit from the Brigades, a one off lump sum payment will be made to you based on your final salary and your age as per the table at page 17 of the proposed Award. By way of example:
Rank final salary PPI lump sum payment
Recruit Firefighter $39,150.05 at age 20 = $326,119.91
at age 30 = $267,790.85
at age 40 = $209,844.26
at age 50 = $120,582.15
Senior Firefighter $52,467.05 at age 30 = $370,942.04
at age 40 = $281.223.38
at age 50 = $161,598.51
Station Officer Lv 2 $63,061.89 at age 30 = $445,847.56
at age 40 = $338,011.73
at age 50 = $194,230.62
For retained members your level of benefit will be determined on the same table, but the level of benefit will depend on whether your PPI injury caused you to lose both your primary job and your retained job, or your retained job only. If your injury caused you to lose both jobs then your benefit would be based on the retained “deemed salary”, as shown in the following examples:
“deemed salary” PPI lump sum payment
Retained Firefighter $50,216.40 at age 20 = $418,302.61
(loss of primary job) at age 30 = $355,029.94
at age 40 = $269,159.90
at age 50 = $154,666.51
However, if your injury only led to you losing your retained employment, then your benefit would be based on your “actual retained earnings”. For example (using the statewide average annual earnings of approximately $6,500 pa):
“actual earnings” PPI lump sum payment
Retained Firefighter $6,500.00 at age 20 = $54,145.00
(loss of NSWFB job only) at age 30 = $45,955.00
at age 40 = $34,840.00
at age 50 = $20,020.00
PPI off duty?
For permanent members who exit from the Brigades, a one off lump sum payment will be made to you based on your final salary and the balance of your two years’ of rehabilitation and retraining. Using a Senior Firefighter as an example:
Rank final salary PPI lump sum payment
Senior Firefighter $52,467.05 no rehab = $104,934.10
6 months’ rehab = $78,700.57
12 months’ rehab = $52,467.05
2 years’ rehab = $0
For retained members who exit from the Brigades, a one off lump sum payment will be made to you based on two years of your “actual retained earnings”. So using the statewide average annual earnings of approximately $6,500 pa, your lump sum payment would be $13,000.00.
6. Health and Fitness
Will the health and fitness provisions apply to all firefighters?
Will there be different health and fitness standards?
No. Subclause 14.4 requires that “health and fitness standards will be subject to negotiation and agreement, but shall apply to all firefighters, with no distinction based upon rank”. There will not be one standard for junior ranks and another (lower) standard for more senior ranks.
Will the health and fitness provisions start straight away?
No. None of the detail of that programme has been discussed, let alone agreed to. The issue is sufficiently complex to guarantee that it will require many months, if not years of detailed negotiations before any programme will be developed, accepted and implemented.
7. Have your say as a Union member – come to a meeting and vote!