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(Feb-2005): Financial flexibility for Commonwealth employees
Members of the big Commonwealth public service superannuation schemes, CSS and PSS, may soon enjoy greater flexibility in terms of investment choice, salary sacrifice and, ultimately, choice of fund.
That is the bottom line of recommendations contained within a discussion paper formulated by the Department of Finance and Administration (DoFA) which not only canvasses a formula for dealing with choice of fund, but also discusses salary sacrifice arrangements and spouse accounts.
The union representing many Commonwealth public servants, the Community and Public Sector Union, has drafted an initial response to the discussion paper and asked its members for further input.
The nature of the CSS and PSS, particularly the remaining defined benefits arrangements, makes offering members choice of fund a difficult proposition but the DoFA discussion paper makes clear that choice remains a possibility where accumulation arrangements are in place.
It said that to avoid delaying the Australian Government’s consideration of other initiatives concerning super arrangements for Australian Government employees, the issue of choice for members involved in defined benefits plans should be considered within a separate and more comprehensive review.
The question of the Government’s exposure to unfunded liabilities is also made clear in the DoFA discussion paper’s reference to public servants making contributions for children and spouses.
The paper said that provided it is possible to address the risks for the Australian Government that have been identified as related to the acceptance of additional types of contributions into the PSS and CSS, “there would appear to be a case for allowing the scheme trustees to accept spouse and child contributions”.
The DoFA paper also canvasses lifting the prohibition on members of the CSS/PSS salary packaging additional superannuation.
However, the paper suggests that these salary sacrifice contributions “could be accepted into a new accumulation sub-plan in those scheme.”
AUTHOR
Mike Taylor
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