Am I about to be sent broke so I can retire in style?
July 27, 2011 1:54 AM Subscribe
Australian superannuation question. I'm a member of Unisuper. I've just received a letter saying that that due to the length of my continued employment, my employer contributions are going from 9% to 17%. Help me understand what this means...
This is definitely the sort of thing I should talk to HR about tomorrow, but I'm kind of concerned.
(a) In essence, does this mean that instead of taking 9% of my salary from me and putting it in super, they are now taking 17% from me, reducing my take-home pay and meaning I'll struggle to pay my mortgage?
(b) Or does this mean that instead of the 9% on top of my salary they are putting in super, they will now put 17%...yay for me, I'll be able to afford to retire one day!
I ask this, because when I read up on this stuff several years ago, the impression I got was that it was the first case, and I was thinking "Oh shit, hope I can avoid that." But the letter I received has a very cheerful "Good for you!" vibe about it, without actually helping me understand where the money is coming from.
Please help this pathetic scientist understand money.
This is definitely the sort of thing I should talk to HR about tomorrow, but I'm kind of concerned.
(a) In essence, does this mean that instead of taking 9% of my salary from me and putting it in super, they are now taking 17% from me, reducing my take-home pay and meaning I'll struggle to pay my mortgage?
(b) Or does this mean that instead of the 9% on top of my salary they are putting in super, they will now put 17%...yay for me, I'll be able to afford to retire one day!
I ask this, because when I read up on this stuff several years ago, the impression I got was that it was the first case, and I was thinking "Oh shit, hope I can avoid that." But the letter I received has a very cheerful "Good for you!" vibe about it, without actually helping me understand where the money is coming from.
Please help this pathetic scientist understand money.
In theory the 9% they've been contributing is over the top of your salary. Whether or not you would ever have been paid that directly, absent mandatory super contribution laws, is an interesting question.
But it now looks like both you and your employer will now be diverting more money to super. They're requiring you to contribute more, and matching that themselves.
posted by flabdablet at 2:35 AM on July 27, 2011
But it now looks like both you and your employer will now be diverting more money to super. They're requiring you to contribute more, and matching that themselves.
posted by flabdablet at 2:35 AM on July 27, 2011
As I understand it from general background & the super statement I got from them other week…
If you've on a contract of less than 2 years duration, the employer contribution is 9% into the UniSuper "Accumulation 1" plan. If your contract is longer than 2 years (or your shorter term contract is extended or renewed beyond two years in most circumstances), that changes to a 3% employer contribution to the "Accumulation 1" plan plus a 14% employer contribution to the "Accumulation 2" plan.
AFAIK, the difference between the two plans is the first one is a normal run-of-the-mill all-praise-the-Hawke/Keating-government superannuation guarantee plan, while the second is a defined benefit plan (i.e. you get a fixed amount, usually defined as a multiple of your FAS at whatever age you retire from a UniSuper employer).
Both of those are on top of any personal "top up" contributions you may be making (i.e. up to 7%), and independent of your actual taxable income. In other words, congratulations - you just cost your employer 3% more to employ you!
I'm not at home so I haven't got the mail with the details and link for mime, but here's JCU's.
(I am not a financial advisor; this is not financial advice; you've just had it explained to you by a poor grad student with $23 in the bank. "Accumulation 1" is not to be confused with "Akumulátor 1"…)
posted by Pinback at 2:36 AM on July 27, 2011
If you've on a contract of less than 2 years duration, the employer contribution is 9% into the UniSuper "Accumulation 1" plan. If your contract is longer than 2 years (or your shorter term contract is extended or renewed beyond two years in most circumstances), that changes to a 3% employer contribution to the "Accumulation 1" plan plus a 14% employer contribution to the "Accumulation 2" plan.
AFAIK, the difference between the two plans is the first one is a normal run-of-the-mill all-praise-the-Hawke/Keating-government superannuation guarantee plan, while the second is a defined benefit plan (i.e. you get a fixed amount, usually defined as a multiple of your FAS at whatever age you retire from a UniSuper employer).
Both of those are on top of any personal "top up" contributions you may be making (i.e. up to 7%), and independent of your actual taxable income. In other words, congratulations - you just cost your employer 3% more to employ you!
I'm not at home so I haven't got the mail with the details and link for mime, but here's JCU's.
(I am not a financial advisor; this is not financial advice; you've just had it explained to you by a poor grad student with $23 in the bank. "Accumulation 1" is not to be confused with "Akumulátor 1"…)
posted by Pinback at 2:36 AM on July 27, 2011
Response by poster: I know I'm living in the present and all, but so if I get this right, under the default arrangement, I will go from 9% of my salary going to super, to 17% of my salary going to super (from employer) plus a default 7% "contribution" of my own... 9% to 24%...a 15% decrease in my salary? (Quite aware I haven't calculated those percentages correctly and I'm exaggerating, but still).
Reading more, I can elect to have the employer contribution change from 17% to 14%, and I can reduce my own "contribution". So in best-case (living in the present...climate change or Hendra is going to kill us all anyway...) I change from 9% to ~14%, which won't kick me out of my home, but will probably mean my son has to put up with fake knock-off Transformers for Christmas...
Seem to recall the previous government deregulating super so you can now have a choice of fund. Is this whole 17% thing associated directly with Unisuper, or would I achieve a different arrangement if I switched to a different fund? Is that possible in the university sector?
Kind of feeling the reward for maintaining long-term contracts with my employer shouldn't be a sudden kick in the teeth...
posted by Jimbob at 3:08 AM on July 27, 2011
Reading more, I can elect to have the employer contribution change from 17% to 14%, and I can reduce my own "contribution". So in best-case (living in the present...climate change or Hendra is going to kill us all anyway...) I change from 9% to ~14%, which won't kick me out of my home, but will probably mean my son has to put up with fake knock-off Transformers for Christmas...
Seem to recall the previous government deregulating super so you can now have a choice of fund. Is this whole 17% thing associated directly with Unisuper, or would I achieve a different arrangement if I switched to a different fund? Is that possible in the university sector?
Kind of feeling the reward for maintaining long-term contracts with my employer shouldn't be a sudden kick in the teeth...
posted by Jimbob at 3:08 AM on July 27, 2011
Response by poster: Aha..."University Enterprise Agreement (EA) specifies that UniSuper is the superannuation fund of choice for the University. Under the Choice of Fund legislation, where an EA specifies a superannuation fund, staff are not eligible for Choice of Superannuation Fund. "
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posted by Jimbob at 3:10 AM on July 27, 2011
.
posted by Jimbob at 3:10 AM on July 27, 2011
Best answer: if I get this right, under the default arrangement, I will go from 9% of my salary going to super, to 17% of my salary going to super (from employer)
I don't think you have got that right. At present you're paid 100% of your salary, and an additional 9% of that amount is going to super as an employer's contribution. If I read the policy document correctly you're about to be paid 93% of your salary directly, with 7% diverted to super as your contribution, and your employer's contribution is going to increase from 9% to 17%. So in fact you will cost your employer an additional 8%.
There are provisions in the policy that may let you claw back some of that 7%, but exercising those will result in the employer also clawing back some of its 17%.
Promise your kid a genuine Transformer* when you retire.
*if he still wants one; offer not transferable to other goods or redeemable for cash
posted by flabdablet at 3:18 AM on July 27, 2011
I don't think you have got that right. At present you're paid 100% of your salary, and an additional 9% of that amount is going to super as an employer's contribution. If I read the policy document correctly you're about to be paid 93% of your salary directly, with 7% diverted to super as your contribution, and your employer's contribution is going to increase from 9% to 17%. So in fact you will cost your employer an additional 8%.
There are provisions in the policy that may let you claw back some of that 7%, but exercising those will result in the employer also clawing back some of its 17%.
Promise your kid a genuine Transformer* when you retire.
*if he still wants one; offer not transferable to other goods or redeemable for cash
posted by flabdablet at 3:18 AM on July 27, 2011
Response by poster: Okay, see that's the confusion. When I hear the term "Gross Salary", I think the amount the employer has set aside for me. So when I apply for a job, it will be advertised as "$60,000 ($54,600 after super)", so I'd always assumed "This job pays $60,000, and some of that is taken and put into super, I get $54,600".
The way you describe it, which is how I hope it works, is that the 9%/17% is a percentage of the amount my salary is, but it's not actually taken out of the money I'm paid each week. So the University's contribution increases from 9% to ~17%, and my own contribution goes from 0% to ~3%. Is that right? If so, Optimus Prime may still be on the cards...
posted by Jimbob at 3:23 AM on July 27, 2011
The way you describe it, which is how I hope it works, is that the 9%/17% is a percentage of the amount my salary is, but it's not actually taken out of the money I'm paid each week. So the University's contribution increases from 9% to ~17%, and my own contribution goes from 0% to ~3%. Is that right? If so, Optimus Prime may still be on the cards...
posted by Jimbob at 3:23 AM on July 27, 2011
I got signed up with unisuper- it's the default super account that universities sign you up for. You don't have to be with unisuper though, and you can totally shift your super if you like.
Just be aware of change of benefits/insurance (blah blah blah). The other thing to note is that unisuper isn't an 'industry super fund' (which seems to be a brand, but those ads with people on escalators etc really stick with you)
(I shifted, because I wasn't that impressed with unisuper. But hey, don't want to do the whole "diss a company online" thing.)
Sorry I can't help with the percentages thing- I haven't been at any one company long enough!
posted by titanium_geek at 3:31 AM on July 27, 2011
Just be aware of change of benefits/insurance (blah blah blah). The other thing to note is that unisuper isn't an 'industry super fund' (which seems to be a brand, but those ads with people on escalators etc really stick with you)
(I shifted, because I wasn't that impressed with unisuper. But hey, don't want to do the whole "diss a company online" thing.)
Sorry I can't help with the percentages thing- I haven't been at any one company long enough!
posted by titanium_geek at 3:31 AM on July 27, 2011
Hi there! I work at an Australian Uni and have UniSuper too. If yours works like mine, it's made up of money from the employer, compulsory money from you, and, crucially, non-compulsory contributions from you. You can opt out of the non-compulsory contributions. My Uni has a dedicated superannuation officer who provided forecasts for me with a heap of different super contribution configurations, showing how each would affect my fortnightly pay. I'd reccomend that. Also, if you haven't already, find out about salary sacrifice and make sure your contributions come out of your pre-tax dollars. This helps ease the pain quite a bit.
posted by t0astie at 3:36 AM on July 27, 2011
posted by t0astie at 3:36 AM on July 27, 2011
When I hear the term "Gross Salary", I think the amount the employer has set aside for me.
Yeah, that's wrong. Gross salary is whatever the employer pays you before the Tax Office gets its cut. Employer super contributions are additional to gross salary.
posted by flabdablet at 7:51 PM on July 27, 2011 [1 favorite]
Yeah, that's wrong. Gross salary is whatever the employer pays you before the Tax Office gets its cut. Employer super contributions are additional to gross salary.
posted by flabdablet at 7:51 PM on July 27, 2011 [1 favorite]
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