Moving to state public service - assessing your total remuneration package
Your total remuneration package (TRP) represents the sum of your:
- base salary
- employer productivity superannuation contribution or
- the superannuation guarantee
- annual remuneration value of any motor vehicles
- other fixed benefit items including fringe benefits tax (FBT) where applicable.
It’s imperative you understand each component of your current total package as well as the TRP under offer.
For example, existing federal public servants who are members of the CSS or PSS may have a larger employer superannuation benefit than notionally accounted for in their TRP, depending on their specific circumstances.
Conversely, NSW executive officers are required to pay employer superannuation contributions from their TRP.
Your TRP does not include any bonus payments. You should find out how any bonus may be calculated and the chances of receiving the full amount.
How best to structure your TRP
Motor vehicles are a common feature of executive salaries in Australia. SES officers typically have two options to package a motor vehicle:
- 100% private use vehicle
- a business/private vehicle where the private portion is funded by the executive officer through salary sacrifice.
Most employers offer cash in lieu of a motor vehicle. In some instances, this may have a positive impact on your superannuation salary and, in turn, your final superannuation payout.
In the 2011/2012 Federal Budget, from 10 May 2011 the Government has focused on simplifying fringe benefits tax (FBT) on motor vehicles, making it more beneficial for drivers travelling low annual kilometres, as it will result in a single statutory rate of 20% being applied regardless of the distance travelled during the FBT year.
Before deciding whether to package a motor vehicle, you should consider:
- that some packages may not provide you with full private and unrestricted use of the car
- your requirement for car/s for yourself and within your immediate family
- public transport access in your new location
- whether the packaged vehicle is of more value than you would be willing to purchase outright and, if so, whether you’re saving any money.
An executive who accesses a government-owned motor vehicle may be provided with an official car park at the agency’s expense. However, this vehicle may be available to other employees for business use during normal business hours.
Generally, 100% private use vehicles (including 100% private use leased vehicles and novated lease vehicles) are not entitled to a parking space on government leased premises. Nevertheless, car parking is a packaged benefit provided to most SES employees. The FBT implication of car parking arrangements are complex and you should determine the overall impact on your salary with your personnel department before entering into such an agreement.
Other benefits to consider as part of your TRP may include:
- home personal computer
- allowance in lieu of mobile phone
- airline lounge memberships
- job specific allowance
- study expenses
- living allowance such as accommodation and meals
- spouse-accompanied travel
- cash in lieu of spouse travelprofessional membership fees.
Some of these may attract FBT of up to 46.5% while others are tax exempt so you should seek financial advice to determine whether you’ll benefit from packaging these items.
You may want to consider the options available for salary sacrificing some of your wage into superannuation to take advantage of the available tax savings and build up your retirement benefit. The suitability of salary sacrifice will depend on your age, salary and current level of superannuation. Obtain personal financial advice to ensure you’re not penalised by breaching the contribution caps, but also consider salary sacrificing the maximum available much earlier in your career than you may have considered previously because the limits on annual contributions have been reduced.
Confirm the impact of a move to the state public service on any accrued leave entitlements and whether these can be carried over into your new role. Some state government bodies have agreed to the transfer of liability for recreation leave, long service leave and sick leave credits. You’re required to put your case forward to the receiving department to negotiate such a transfer.
Some employers may offer purchased leave programs that allow you to purchase additional leave. You should read the policy to identify how the leave is paid for, whether the leave has to be taken in a certain time frame, and the order that leave is applied.
Your superannuation salary may be different to your base salary. In some circumstances, you may be able to negotiate a higher superannuation salary to obtain a higher superannuation benefit.