This Information Sheet has been prepared for Salaried Payroll members in the Defined Benefit Section who are under age 65.

Transcription

1 HOLDEN EMPLOYEES SUPERANNUATION FUND INFORMATION SHEET SUPERANNUATION GUARANTEE MINIMUM BENEFIT February 2009 This Information Sheet has been prepared for Salaried Payroll members in the Defined Benefit Section who are under age 65. It describes how the Superannuation Guarantee Minimum benefit is calculated. Please note that this Information Sheet has been prepared for general information only. Overview of Superannuation Guarantee The Government s Superannuation Guarantee ( SG ) legislation commenced 1 July 1992, requiring all employers to provide a minimum level of superannuation for their employees. For employees in a defined contribution superannuation fund, a minimum level of employer contribution was prescribed as follows: Period Minimum Employer Contribution % * 1/7/92 31/12/92 4 1/1/93 30/6/95 5 1/7/95 30/6/98 6 1/7/98 30/6/00 7 1/7/00 30/6/02 8 1/7/02 onwards 9 * From 1 July 2008, this percentage rate must be applied to an employee s Ordinary Time Earnings ( OTE ). However, for a defined benefit superannuation fund it is not feasible to set a minimum level of employer contribution. A defined benefit fund is one where generally the retirement, death and total and permanent disablement benefits are provided in the form of defined benefits. This is the case with the Holden Employees Superannuation Fund where these benefits are based on: your period of membership, your pension rate and your Base Salary. You make Basic Contributions and your employer pays the balance of the cost of providing the benefits. As such, the employer contribution rate varies over time. The Government recognised this issue and consequently a minimum level of benefit for members in a defined benefit fund was prescribed, instead of a minimum contribution level. In the Holden Employees Superannuation Fund, this is known as the SG Minimum Benefit. SG Minimum Benefit In accordance with the SG legislation, the calculation of the SG Minimum Benefit in the Fund is detailed in a Benefit Certificate prepared by the Fund Actuary.

2 Key features of the Fund s SG Minimum Benefit are: It needs to allow for the Supplementary Superannuation Contributions made by your Employer. This is a defined contribution equal to a percentage of your OTE which is credited to your Supplementary Superannuation Account. From 1 July 2008 it is based on OTE, whereas Base Salary applied prior to 30 June The calculation is quite complex. In the Appendix we have detailed the calculation and provided an example to assist. How does the SG Minimum Benefit work? Under the Fund, whenever your benefits are calculated, the Fund Administrator checks that the benefit as prescribed in the Fund s Trust Deed is not less than your SG Minimum Benefit. If it is, then you receive a Superannuation Guarantee Additional Amount. This is the amount paid in addition to your benefit as prescribed in the Fund s Trust Deed to ensure that you receive at least your SG Minimum Benefit. Further Information If you have any questions about this Information Sheet or about the Fund, call the Fund Helpline on This is a freecall number exclusively for Holden Employees Superannuation Fund members. You can call the Helpline weekdays from 8.30am to 5.30pm EST (excluding Victorian Public Holidays). Note the Helpline team is able to assist members in a number of languages other than English. Disclaimer This document is intended to provide general information only and not advice. It should not be relied upon as advice, or take the place of professional advice. It has been prepared without taking into account your individual objectives, financial situation or needs. Accordingly, before acting on the content of this document, you should consider whether it is appropriate to you, having regard to your objectives, financial situation and needs. Issued by Holden Employees Superannuation Fund Pty Ltd ABN , RSE Licence No. L as Trustee of the Holden Employees Superannuation Fund ABN RSE Registration No. R

3 APPENDIX The SG Minimum Benefit for a member under age 65 is calculated as the sum of the following four components: Component 1 Membership in the Fund pre 1 July 1992 This component is calculated according to the following formula: Member s resignation benefit at 30 June 1992* x Current Base Salary Member s Base Salary at 30 June 1992 *(excluding any Additional Accounts) Component 2 Basic Contributions by the member since 1 July 1992 This calculation is the same whether you make Basic Contributions on a Salary Sacrifice or an After Tax basis. The formula for this component is: TMCR/0.85 x F x Current Base Salary (capped) TMCR (Total Member Contribution Rate) is the member s Basic Contribution rate (i.e. 5%) multiplied by the number of years of membership since 1 July is a factor to allow for the 15% Contributions Tax. F is a discount factor which depends on the member s age at the calculation date. It is 0.7 if the member s age at the date of calculation is less than 45, and then increases on a linear basis to be 1.0 at age 65. This factor reflects the discount that is considered appropriate for payment of a defined benefit prior to age 65. Current Base Salary (capped) is the member s base salary capped at the legislative Maximum Superannuation Contribution Base as specified by the Australian Taxation Office from time to time ($152,720 for 2008/2009 financial year). Component 3 Supplementary Superannuation Contributions by the Employer since 1 July 1992 For GMAC employees, the rate of the employer s Supplementary Superannuation Contributions since 1 July 1992 is 3% of Ordinary Time Earnings. For GM Holden employees, the rates of the employer s Supplementary Superannuation Contributions since 1 July 1992 are shown in the following table: Period Supplementary Superannuation Contribution Rate (as a % of Ordinary Time Earnings) 1/7/92 Date 1 3 Date 1 Date Date 2 onwards 4 For Award covered Salaried Payroll, Date 1 is 15 November 2006 and Date 2 is 15 November For Award free Salaried Payroll, Date 1 is 10 April 2006 and Date 2 is 10 April This component is simply the current balance in the member s Supplementary Superannuation Account.

4 Component 4 The balance of the notional Employer Contributions since 1 July 1992 This component allows for the Supplementary Superannuation Contributions made by the Employer in Component 3. It is the sum of two amounts as follows: (A) The first amount relates to the period 1 July 1992 to 30 June 2008 and is calculated according to the following formula: TNECR (up to 30 June 2008) x F x Current Base Salary (capped) TNECR (up to 30 June 2008) is the total of the applicable NECR multiplied by the applicable years of membership. NECR (Notional Employer Contribution Rate) is the Superannuation Guarantee rate less the Employer s Supplementary Superannuation Contribution rate, as per the following table: Period of membership NECR as a % GM Holden GMAC 1/7/92 31/12/ /1/93 30/6/ /7/95 30/6/ /7/98 30/6/ /7/00 30/6/ /7/02 Date Date 1 Date Date 2 30/6/ F, Current Base Salary (capped) are as defined under Component 2 and Date 1, Date 2 are as defined under Component 3 on previous page. PLUS (B) The second amount relates to the period 1 July 2008 onwards and is calculated according to the following formula: TNECR (from 1 July 2008) x F x x OTE TNECR (from 1 July 2008) is 5% for each year of membership from 1 July 2008 for GM Holden employees and 6% for each year of membership from 1 July 2008 for GMAC employees. F is as defined under Component 2 on previous page is an actuarial factor used to reflect the use of OTE. OTE is the amount of a member s Ordinary Time Earnings in the year ending 30 June prior to the calculation date (capped at the legislative Maximum Superannuation Contribution Base as specified by the Australian Taxation Office from time to time ($152,720 for 2008/2009 financial year).

5 EXAMPLE Joan is an Award free GM Holden Salaried Payroll member who joined the Fund on 1 July She has made Basic Contributions at the rate of 5% of Base Salary since she joined the Fund. At 30 June 2009 she is aged 50 and her annual Base Salary is $100,000 and her OTE is $105,000. Her SG Minimum Benefit at 30 June 2009 is calculated as the sum of the following four components: Component 1 Membership in the Fund pre 1 July 1992 At 30 June 1992, let s say Joan s resignation benefit (excluding Additional Accounts) was $5,000, and her Base Salary at that time was $40,000. The formula for this component is: Member s resignation benefit at 30 June 1992 x Current Base Salary Member s Base Salary at 30 June 1992 Joan s Component 1 = $5,000/$40,000 x $100,000 = $12,500 Component 2 Basic Contributions by the member since 1 July 1992 The formula for this component is TMCR/0.85 x F x Current Base Salary (capped) The period of membership since 1 July 1992 while contributing at 5% was 17 years as at 30 June Her TMCR = 17 years x 5% = 85% The factor F for someone aged 50 years is Joan s Component 2 = 85%/0.85 x x $100,000 = $77,500 Component 3 Supplementary Superannuation Contributions by the Employer since 1 July 1992 Let s say Joan s Supplementary Superannuation Account balance at 30 June 2009 is $60,000. Joan s Component 3 = $60,000

6 Component 4 The balance of the notional Employer Contributions since 1 July 1992 This component is made up of two amounts: (A) The formula for this amount is TNECR (up to 30 June 2008) x F x Current Base Salary (capped) Her TNECR (up to 30 June 2008) is calculated as follows: Period of Membership No. of years NECR TNECR for period 1/7/92 31/12/ % 0.5% 1/1/93 30/6/ % 5% 1/7/95 30/6/ % 9% 1/7/98 30/6/ % 8% 1/7/00 30/6/ % 10% 1/7/02 9/4/ % 22.7% 10/4/06 10/4/ % 5.5% 10/4/07 30/6/ % 6.1% Total % PLUS Joan s Component 4(A) = 66.8% x x $100,000 = $51,770 (B) The formula for this amount is TNECR (from 1 July 2008) x F x x OTE Joan s Component 4(B) = 5% x x x $105,000 = $4,292 Joan s SG Minimum Benefit as at 30 June 2009 = $206,062