ESS Super New Scheme

This is a defined benefit lump sum scheme. It was introduced in 1988 by amendments to the State Superannuation Act of 1988 and has been closed to new members since 31 December 1993. New Scheme members receive a defined benefit based on their length of recognised service and average salary. The defined benefit calculation also takes into account periods of leave without pay, part-time service and prior service.

Points to consider are:

• Are you salary packaging your New Scheme Contribution?

• Are you contributing to the maximum level allowed?

• What effect will your Time Fraction have on your final benefit?

• There is no pension benefit within the New Scheme. It is a lump sum only benefit.

• Lump sum can be rolled over into an alternate Superannuation Fund completely tax free upon resignation/retirement.

ESS SERB Scheme
The least common Defined Benefit scheme offered through the ESSS opened in 1980 and closed in June 1988. The SERB scheme was available mainly to School Support Officers and other members of staff that were not eligible to join the Revised Scheme. This scheme also comprises a pension and lump sum benefit.

Long Service Leave

Long Service Leave entitlements accrue at the rate of 1.3 weeks for each year of completed service. These entitlements accumulate and become available to the employee after 10 years of service.

These entitlements can either be taken as paid time and taxed at your marginal tax rate or as a lump sum benefit as ‘Pay in Lieu’. Due to the fact that the lump sum benefit is subject to concessional rates of tax, in many cases it may be financially beneficial to take these benefits as Pay in Lieu as opposed to paid time.

Salary Packaging

Personal Superannuation
Most employers now permit part of pre tax income to be directed into Superannuation where it is subject to a contributions tax of 15%. For annual taxable income above $35,000 the tax savings alone are equivalent to a return approximately 24%. The gains are even greater if your salary is in a higher tax bracket.

Points to consider are:

• What level of packaging can your cash flow withstand?

• What level of pre tax contributions are available to be packaged? (within the concessional contributions caps)

• Who will achieve the highest tax break through salary packaging superannuation?

• When will the funds be accessible once contributed to superannuation?

• The total Contribution Caps are $25,000 pa for persons under age 50 and, until July 2012, $50,000 pa for those over 50. These limits include Employer Contributions.

Novated Lease
Depending upon the annual distance for which a car is used, there may be financial advantage in purchasing a car through salary packaging a Novated Lease. It is essential that the correct structure be adopted particularly in relation to issues such as the Employee Contribution Method.

Points to consider are:

• Do you actually need to upgrade your car?

• How many kilometres do you travel each year?

• Do the vehicles available suit your requirements?

Social Security Benefits

Many people are unaware that their security benefits such as:

• Age Pensions

• Disability Support Pension

• New Start Allowance

• Widow Allowance

• Family Tax Benefit

• etc

may be improved by appropriate rearrangement of finances. Our planners possess the knowledge to determine which benefits you may be entitled to and how to arrange your financial affairs in order to maximise these benefits.

Points to consider are:

• How are your assets arranged and how are they assessed by Centrelink – particularly in relation to superannuation?

• What strategies are available to minimise assessable assets and income?

• What benefits are you entitled to?

• What is the real cost of continuing to work if benefits are available?

• Should you register for the Pension Bonus Scheme?

Personal Investment

Investments held outside Superannuation, provide a far greater level of flexibility and accessibility with no restrictions on when the funds can be accessed. Investments can be made using existing capital, or borrowed funds through gearing, or a combination of both.

Investment properties are the most popular choice for many investors, however personal investment portfolios can also include direct shares and managed funds. Regardless of the asset class chosen it is essential that these investments are structured correctly to minimise costs and maximise available tax breaks where available.

Points to consider are:

• In whose name should the investment be held – current tax deductibility Vs potential long term capital gains tax liabilities.

• Should funds be borrowed to invest?

• Should investment loans be paid down, or interest only?

• Possible to use deductible Super Contributions to reduce Capital Gains Tax.

Personal Super

As a result of years of experience in assisting our hundreds of clients in the education sector we have developed specialist knowledge in these important areas. We are dedicated to ensuring that all of your needs in these areas are met, getting you a step closer to your financial success.

Accumulation Fund Employees
For those employees who commenced their service on or after the 1st of January 1994 you will not be members of the Revised, New or SERB Schemes and therefore will not have the advantage of the Defined Benefits which they provide. The default Super Scheme now offered is VicSuper which is an accumulation scheme where the final benefit is determined by the amount contributed by the employer, the employee and the rate of return achieved.

Your employer makes the obligatory Superannuation Guarantee Contribution (SGC) of 9% of your annual salary and these funds are invested throughout your working life across the investment allocation chosen.

While VicSuper is the default fund, employees now have the option of choosing their preferred Superannuation Fund and, like any other aspect of your financial situation, you need to ensure that you are taking advantage of the option that best suits you and has the potential to achieve the best outcome over the long term.

Points to consider are:

• What level of income do you require in retirement?

• How much Superannuation will you require to generate this level of income?

• What steps must you take to ensure that you have enough Superannuation at retirement?

• Is your current Superannuation Fund the most appropriate for your current and future circumstances?

Michael Pappas

Bus (Mgt) Dip. FS (FP) A Fin
Authorised Representative No. 324780

Michael specialises in wealth creation, gearing and remuneration packaging and strategies. He also possesses extensive knowledge of social security benefits and retirement strategies. Michael holds a Bachelor of Business with a major in Management from Monash University, a Diploma of Financial Services (Financial Planning) and is an Associate of the Financial Services Institute of Australia. Prior to becoming a financial adviser Michael spent two and a half years working as a para-planner for Ion Whykes. Michael provides clients with comprehensive and personalised solutions designed to help and achieve financial, lifestyle and retirement goals.

Sam Ball

Dip.FS (FP) AFA
Authorised Representative No. 253742

Sam specialises in superannuation and remuneration packaging strategies, specifically tailored to meet the varying demands of his clients. He has an extensive knowledge of Victorian Government Super and specialises in Retirement Planning issues encompassing all aspects from debt management through to social security entitlements.

Ion Whykes

CFP DipFP PSM
Authorised Representative No.257922

Ion has come from an academic background and is a past president of the Victorian Principals Federation. He has been awarded a Public Service Medal for his services to Education. Ion’s expertise is in the area of Victorian state super, remuneration packaging and retirement planning.