Super check: diverse careers require flexible funds

Career paths in the public sector are changing significantly as the traditional demarcation lines between government and private sector have blurred.  Modern public servants could find themselves exploring a range of roles and employment models during their career from a traditional departmental role to external consultant, secondment to a government-related entity, or a period gaining experience in the private sector or with a non-government organisation.

It’s all about government looking for the most effective and efficient channels to provide services to the community. A landmark study by the University of Melbourne School of Government last year found Australia was at the frontier of changes that could transform the activities of the public service and how it operates. Outsourcing of services is likely to result in a smaller public service, more focused on policy than service provision as demographics shift, new technologies emerge, and expectations of government shift.

Traditional career paths are also changing and it is unlikely many new recruits envisage a 30-year career with the same organisation. The report found traditional job boundaries were breaking down as more people seek portfolio careers and organisations look for individuals who can move from project to project rather than filling a defined role.

Like any change, this can seem alarming. But it also presents exciting opportunities for public sector employees to develop their skills and explore more varied and rewarding career options.

Rather than a traditional career path, today’s public servant could choose to move between the public and private sector to further their career. They may take a break for further study, or to carry out a specific project, then return to public sector employment, or switch between government roles to conduct projects appropriate to their expertise. They may be employed on a contract basis, rather than as a full-time employee or choose to set up as a private consultant offering expertise to government as needed.

Flexibility is the key and it will allow public sector employees to tailor their careers to their skills and areas of interest. But it will also require more consideration of the financial consequences of eschewing the old “secure-job-for-life” employment model.

Superannuation is one key consideration and will vary depending on whether you are covered by a traditional defined benefit super scheme or a newer accumulation plan.

While benefits can be preserved in both, there is generally less potential downside to leaving public service if you’re covered by an accumulation plan where your account balance continues to grow depending on investment earnings. Because defined benefit plans pay a pension based on a formula that includes factors like your service period and voluntary member contributions, consideration of how your super will be affected is a critical consideration when planning career moves outside your current employer. We’ll look at how both schemes work in more detail in a later article.

Flexible career paths can also include periods out of the traditional workforce. To develop your skills, you may want to take time out to study or to gain experience working for a lower salary at a non-government organisation. By planning ahead and maximising the benefits of things like accrued leave or special public service leave entitlements, it is possible to gain these valuable experiences without losing out financially.

On the other side of the ledger, while moving to private enterprise can often seem financially attractive, the role may involve more pressure and potentially more of your income could be at risk. Comparing private and public sector packages isn’t always easy, but to ensure you gain the maximum benefit you need to understand exactly how both are calculated and valued.

With prior planning, a flexible career path can be financially, as well as professionally, rewarding. Financial planning advice can help to make the most of the many opportunities available.

View the full article in the Mandarin here

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Nerida Cole

Investment Committee Member

Nerida has more than 20 years of industry experience. Through her expertise in strategic financial planning and advice, Nerida has helped individuals and families from diverse backgrounds to manage their finances and superannuation during their careers and into retirement. 

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