Slowly getting somewhere on “superable salary” dispute

 

depa’s dispute with LGNSW on behalf of New South Wales councils about whether or not councils have been including a value for private use of a car in the Superable salary of those in the two closed defined benefit schemes within LGS rolls on but, getting closer to a solution.

This has been a massive research exercise preceded by significant information and assistance to councils earlier this year to ensure that councils did include a figure for private use of a Council car in superannuation calculations. Now that everyone was focused on the question, it was important to get 2018 right.

The dispute will resume in the IRC before Chief Commissioner Kite on 5 November where we will be able to advise the Commission of progress, in particular, with those 153 members of ours who provided an authority for depa to pursue the matter for them and have access to what might be regarded by either LGS or councils as private information.

It’s true to say that LGS, after changes to the Trust Deed in 2003, didn’t pursue councils to ensure that they were calculating a proper value to be included in the salary of employees in these two closed defined benefit schemes. We all make our best decisions with hindsight, and it would have helped for LGS to have been more vigilant to ensure councils were complying with obligations under the Trust Deed, LGNSW should have pursued it to ensure councils were doing the right thing, so should the unions and importantly, members of the defined benefit schemes have learned an important lesson about individual responsibilities.

Everyone else was assuming that it would all be done properly but it would have been a good idea for members of those schemes to pay attention to what was written into their annual superannuation statement and to check for themselves.

What we now know is that a minority of our 153 members (and therefore other relevant employees at those councils) received a positive value in their superable salary calculations for 2018. Ranging from an improbable low of $41 up to a luxurious figure beyond $14,000. We don’t yet know whether those councils did similarly in preceding years, and this is still being pursued.

But because all a council needs to do is to put a figure on the value, most councils which have considered the position have concluded that the value is net zero dollars, the private value to the employee of the car being equivalent to pre-tax leaseback payments made for the use of the car.

We have emailed all our 153 members in this group so they all know where they fit in the three options: namely, a positive dollar value to increase the superable salary, a “net zero dollar” value based upon calculations cancelling out the leaseback fee and sadly, a do-nothing group of councils which didn’t bother to do anything. And because it’s a discretion for the employer to put in a figure, putting in zero counts.

And there’s really no point running a dispute to move members from the category where councils ignored it entirely and concluded it was zero dollars into the category of “net zero dollars”.

The dispute continues, LGS is continuing to pursue whether those councils that did include a positive net value in 2018 have also done it in the past and are moving onto reviewing those who may have left the fund to see if there are implications for them.

(Please note this dispute applies only to members of the defined benefit schemes that have been closed for close to two decades.)

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