When is my super payable?

When is my super payable?

Superannuation is one of the best forms of saving for retirement. I think we can all agree on that one. So how would you feel if you were approaching your retirement only to find out that you have been shortchanged by hundreds of thousands of dollars in the value of your super fund entitlement.

This is exactly what happened to employees of the transport authority who joined the ESSSuper Transport Superannuation Fund between 1st July 1988 and 31st December 1993.

If you think that was a long time ago, why are we talking about it now?

Well, all those people who joint the ESSSuper at that time, are getting ready to retire now, and only now they discover that ESSSuper allegedly miscalculated superannuation entitlement up to $300,000 per member with the estimated total owning of more than $40mil in unpaid super.

Therefore now, Gordon Legal together with the Rail Tram and Bus Union run a class action against the Emergency and State Services Super (ESSSuper).

Let’s hope the outcome will be positive for all employed workers affected.

If you wish to read more about this case, please refer to the link of the article from Financial Review: Click here 

Why am I mentioning this then?

1. Let’s make sure that every person affected is well informed and participates in the class action.
2. We assume that our employer does the right thing, and honestly most do, but in case you are unlucky working for a company that is trying to get away from their superannuation obligations, do you really know what types of your earnings are subject to super guarantee payments?

Is super paid on your overtime? What about casual work, or allowances or bonuses? If you don’t know what type of payment is subject to SG, how would you check it?

Therefore today, we are getting deeper into super guarantee payments, so you can fully understand and differentiate payments where your employer should pay the SG, and those that are not subject to the SG obligation.

Employer can use two types of payments for work completed by employees:

1. OTE – Ordinary time earnings – which means employees are paid for their ordinary hours of work, which could include commissions or shift loadings.
2. Salary and wages – they are similar to OTE, but also include any overtime payments.

So we all understand that our agreed time of work is subject to 11% SG contribution rate in 2023/24. This will increase to 11.5% next financial year 2024/25 and again to 12% in 2025/26 and will remain at that level until we have any other changes.

Overtime

Generally the employer is liable for SG under both payment agreements, unless the overtime hours are over and above the ordinary hours stated in an award or agreement. If this is the case, then under your OTE payment option the employer does not pay SG.

Allowances

If in your work agreement you have an allowance to offset particular expenses, or you have a discretion how to spend the allowance or like a doctor you have an hourly on-call allowance the SG is payable on those allowances.

If however, you have an expense allowance that is expected to be used in full, for example a salesman receives an allowance of $10,000pa for travel to visit clients, phone expenses or then this allowance is expected to be fully used over the year and no SG is paid on this type of an allowance.

Casual work and commissions

All casual employees are supported with full SG contributions, that also applies to commission payments, however be aware that not all overtime is subject to SG obligation. If you are paid under the ordinary time earnings OTE then you will not receive any super for your worked overtime.

Expenses

Reimbursement of work-related expenses for example travel costs, are not subject to SG. If we are looking at expenses such as Worker’s compensation, it depends. If it is paid and you returned to work, then yes, SG is payable, if you are not working, then there is not super paid.

Bonuses

Most bonuses are subject to SG liability, however if the bonus is paid in respect of overtime only and you are paid under the OTE system, then no SG is paid on this type of a bonus.

Leave

• Annual leave including annual leave loading are all subject to SG contribution
• Sick leave – SG is paid on your Sick Leave
• Long service leave – yes SG is paid on long service leave
• Family and Domestic violence leave – I didn’t even know this type of leave existed, but it is good to see that there is, and yes SG is paid of this leave as well.
• Parental leave – such as maternity leave, paternity leave or adoption leave, are all with no SG liability for your employer
• Ancillary leave – such as jury duty, defense reserve service – no SG is paid on this type of leave

Termination payments

• Termination payments in lieu of notice – are all subject to SG payments
• Termination payment for your unused annual leave, long service leave or sick leave – SG is paid if you are on salary or wages, but no if your payment is as per ordinary time earnings OTE.

This article is a bit technical, but at the end of the day, your super is your super. You should not rely on your employer to be correct, on your super fund (well, they would not have a clue what you are talking about anyway), this is your entitlement, and you have to know what it is you are supposed to be receiving.

If ever in doubt, get the independent advice. And please give the video a LIKE and subscribe to the channel if you would like to support it and you believe this is a valuable information.

Yes, super as you can see can be complicated, and it does not get any easier the older we get. If you rely on generic information and general advice, you will most certainly get the average outcome. I cannot tell you how often I see clients that after our conversation they say, if I only spoke with you few years ago, I would be in a different place now.

The level of knowledge accumulated over the years is very important, but mainly it is an experience in putting together complex strategies to get the most beneficial outcome for you, your life, your retirement, your money. Nothing can replace experience in anything we do.

So if you are thinking of preparing for retirement, or if you wonder if your current set up is the optimum or like most people, you are wondering:

• will my money last my lifetime, will I be OK?
• Should I keep that investment property?
• how to deal with tax if I sell it?
• Do I have a good super fund?
• What about ongoing fees within my super?
• How to structure my income?
• Is Age Pension on a horizon for me at all?

Those are all the questions I get every day from clients during our meetings, via emails, and many messages.

If you have those questions, please just organise a meeting, I am unable to answer those questions via email. Not only time does not permit, but legally we are going into a personal advice, and that requires a meeting and my getting to know you and your actual situation. So visit my calendar to book your preferred time for our meeting.  

To do this, visit my website AboutRetirement.com.au on each page there is a button BOOK A MEETING that will take you to that calendar, where you can choose a day and time for us to meet and discuss your personal situation and how you would like to see it improved.

By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement