How is a PEO’s superannuation salary determined? How is the value of the Employer Superannuation Contribution calculated?

For each Principal Executive Office (PEO) the Tribunal sets a total remuneration reference rate establishing the parameters within which the relevant employing body determines total remuneration (TR).

The employing body also determines the superannuation salary for a PEO who is a member of a defined benefits scheme. This may be up to 73% of TR (unless the Tribunal has consented to other arrangements for a specific office holder).

The Employer Superannuation Contribution is a compulsory component of TR and the amount actually contributed must comply with the employer's legal obligations under relevant legislation.

Defined benefit scheme members

For a PEO who is member of a defined benefit scheme, the Employer Superannuation Contribution, for the purpose of calculating the cash salary component of TR, is usually a notional amount calculated as 15.4% of the office holder’s superannuation salary. The value of the Employer Superannuation Contribution may be less than 15.4% of superannuation salary if there is actuarial evidence that the cost to the agency (including the cost of the productivity component) is lower that 15.4%.

The value of the notional Employer Superannuation Contribution changes whenever an office holder’s TR is adjusted.

However, contributions salary, on which personal contributions are based, generally does not change until the office holder’s birthday and should be administered according to the rules of the scheme.

Note that actual employer payments made by a Department or agency to the superannuation scheme in respect of office holders’ superannuation (based on advice from the Superannuation Branch of the Department of Finance) vary according to demographics and scheme membership in the particular Department or agency.  Because of this the Tribunal has determined that a standard notional contribution rate (15.4%) should apply to all office holders who are members of defined benefit funds.

Accumulation Fund members

See the FAQ “How is the Employer Superannuation Contribution calculated for an office holder who is a member of an accumulation scheme such as the PSSAP?”