Can I still join the Contributory Scheme?
Although the Contributory Scheme was closed on 15 May 1999 to new members,
there are still some people who may join.
PERMANENT PART-TIME EMPLOYEES
Employees who have been continuously employed in a permanent part-time capacity
since before 1 July 1994 and have not previously elected to join the Contributory
Scheme, may elect in writing at any time to become a Contributory Scheme member.
MARRIED FEMALE EMPLOYEES
Married female employees who are not Contributory Scheme members and:
- were employed in a permanent capacity in the public sector before 1 July
1982; and
- have been continuously employed since that date;
may elect in writing at any time, to become a Contributory Scheme member.
EMPLOYEES NOT PERMITTED TO CONTRIBUTE ON MEDICAL GROUNDS
Permanent employees who before 1 April 1987 were not permitted to join the Contributory Scheme on
medical grounds may make written election at any time, to become a Contributory
Scheme member.
How is my Contributory Scheme entitlement calculated?
Your entitlement is calculated using the following factors:
- your final average salary over the last three years of your employment;
- your period of Contributory Scheme Membership;
- your rate of contribution (the basic rate is 5% and the maximum is 15%);
and
- your employer's contribution rate.
By increasing your contribution rate you can significantly improve your
benefit.
What contributions do I make to the Contributory Scheme?
The minimum contribution rate is 5% of salary for most members. The maximum rate is 15% of salary and members can choose to increase contributions in increments of 1%.
Your contributions are deducted from your fortnightly pay by your employer. After-tax contributions are counted towards your Non-concessional Contributions Limit.
You can choose to Salary Sacrifice your contributions to the Scheme. These contributions will count towards your annual Concessional Contributions Limit.
What are the advantages of being a Contributory Scheme member?
Your benefit is based on your final average salary over the last 3 years of your employment.
You have death and ill health cover for 24 hours a day, seven days a week. This is regardless of whether
you are injured or sick in or out of the workplace.
You can choose from a variety of income streams in retirement, including an RBF Life Pension.
Your Contributory Scheme benefits are government guaranteed.
What happens to my money if I resign?
If you resign from the Public Sector you are entitled to a benefit as calculated
above. Your benefit consists of two components:
- the member funded component (generally 30%); and
- the employer unfunded component (generally 70%).
Some of the member funded component may be payable as a cash lump sum.
The cash lump sum is equal to the member funded component of your benefit
as at 30 June 1999. On resignation this amount is transferred to the RBF Investment Account.
It will remain in that account until you advise otherwise. The
remainder of the member funded component must be preserved in a super fund
until you have attained your preservation age and fully retired or commence Transition to Retirement.
The entire employer unfunded component is preserved in the Compulsory Preservation
Account until you reach your preservation age, at which time it is funded
and is transferred into the RBF Investment Account.
If you are working outside the Public Sector, you may continue to make non-concessional (personal) contributions to the RBF Investment Account. This is subject to satisfying certain conditions. These contributions will be counted towards your Non-concessional Contributions Limit.
Once you reach your preservation age, you may choose to commence Transition to Retirement using funds in your RBF Investment Account.
What happens to my money if I retire?
When you reach preservation age
and retire, you are entitled to a benefit as calculated
above. The benefit may be used to purchase a range of retirement products. The
Planning Retirement section has some useful information on this topic. You may also be entitled
to make contributions to the RBF Investment Account.
What tax will I pay when I retire?
When you reach preservation age and choose to access your benefit, taxation will be determined by both your age, the type of benefit you choose to access and the source of the funds.
Entitlements from the Contributory Scheme contain taxed and untaxed money.
The component of your Contributory Scheme benefit funded by your employer is not paid into your scheme until you retire therefore no tax has been paid in this part of your benefit. As such, you will be required to continue to pay tax on a part of your benefit at retirement. This component can make up as much as 70% of your total benefit.
After your reach age 60, you will pay a lower rate of tax on Lump Sum withdrawals. Pension payments will receive a 10% rebate against the employer portion of the benefit.
The remaining employee-funded component of your benefit will be tax-free after age 60.
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