D&D options – All members
April 29, 2003
As members would be aware, the D&D Award was last month endorsed by Union members and subsequently ratified by the Industrial Relations Commission to take effect on 21 March 2003. In short, the D&D Award is now in force.
If you are one of the 1200 permanent members in the pre-1/7/85 SSS scheme, then you will continue your membership in that scheme and can therefore disregard this notice.
However, all remaining members – both permanent and retained – must now decide how you will make your compulsory D&D contributions. If you are a permanent member in SASS then you also have an additional decision to make re your level of D&D cover.
1. FOR ALL MEMBERS RE SALARY SACRIFICING FOR D&D
We can confirm that your D&D contributions will commence on the following dates:
Retained members – contributions will commence on Tuesday 1 July 2003 and will appear on retained payslips on Tuesday 15 July 2003.
Permanent members – contributions will commence on Friday 27 June 2003 and will appear on permanent payslips on Thursday 10 July 2003.
The Department will be writing to your home address later this week, inviting you to nominate one of two methods for making your D&D contributions:
a) by salary sacrifice (ie, pre-tax); or
b) by straight deductions from your nett (ie, post-tax) wages.
The second option – post-tax deductions – simply means that you will pay the full cost of your D&D contributions from your post-tax (“cash in hand”) NSWFB wages.
The first option – salary sacrifice – means that your contributions will be taken from your wagesbefore 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)
taxable salary = $39,150 per year
D&D cost = $587 per year, or $11.25 per week
taxable salary = $52,467
D&D cost = $787 per year, or $15.08 per week
Station Officer Level 2
taxable salary = $63,061
D&D cost = $945 per year, or $18.13 per week
D&D contributions with salary sacrifice (ie, paying before tax)
taxable salary = $38,562
D&D cost = $402 per year, or $7.71 per week
(cash in hand saving of $184 per year)
taxable salary = $51,680
D&D cost = $444 per year, or $8.52 per week
(cash in hand saving of $342 per year)
Station Officer Level 2
taxable salary = $62,115
D&D cost = $487 per year, or $9.34 per week
(cash in hand saving of $458 per year)
We’ve tried to be as accurate as possible with these 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. This is because the level of saving you make by salary sacrificing will be directly determined by your personal marginal tax rate.
Some important points to remember about salary sacrificing
Salary sacrificing will not affect your income in any other way. 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.
You can elect to stop (or start) salary sacrificing at any time by advising the Department (in writing) of your wish to do so, but the Department cannot make an election to salary sacrifice on your behalf. If you have not replied indicating your intention to salary sacrifice for your D&D contributions by Thursday 26 June 2003 then the Department will assume that you do not wish to do so and your contributions will be deducted from your wages post-tax.
It remains possible that there may be some members (albeit very few) whose personal financial circumstances and investments may mean that salary sacrificing for their D&D contributions might not be beneficial. Whilst all care has been taken in the preparation of this information, the Union cannot accept responsibility for its accuracy and members are advised to make your own investigations. The Union’s officials remain available to answer member queries, but we cannot give you any advice about the best option for you other than to recommend that you seek independent financial advice from a suitably qualified accountant or financial planner if you remain unsure.
2. FOR PERMANENT SASS MEMBERS RE YOUR D&D OPTIONS
SASS members will not only have to decide whether or not to salary sacrifice for the D&D contributions by June 27 2003, but also whether to:
1. Opt out of ABC in favour of the full range of Death, TPI and PPI benefits under the new D&D Award, in which case you will pay 1.5% of salary for D&D and will cease paying for your SASS Additional Benefit Cover (ABC); or
2. Stay with ABC for Death and TPI cover and be covered by the PPI benefits (only) under the new D&D Award, in which case you will pay 0.5% of salary for D&D Fund and will continue paying for your ABC; or
3. Stay with ABC and opt out of the new D&D Award, in which case you will pay nothing for D&D but will continue paying for your ABC.
The Union has prepared and distributed a separate 5-page notice to all permanent stations today which attempts to explain your options. I say only “attempts” because, try as hard as we might, this (like the entire D&D Dispute) is a complex issue which simply doesn’t lend itself to a short, sharp explanation.
Again, your one-off opportunity to choose one of the above options must be made by Thursday 26 June 2003. If you have not responded to the Department by 5pm on that day, then the Department will assume that you have taken Option 3 above (ie, opt out of D&D altogether) and you will never again be eligible for the D&D Award’s benefits.
These are important options for all members. We urge you to consider your options carefully and to make as many inquiries as you think necessary (including, if you wish, contacting your Union) before returning your advice to the Department (by post or fax) by the deadline of Thursday 26 June 2003.