Welcome

In this edition of the Employer Newsletter, we review the effect on contract staff of the billing multiple changes in the Retirement and Defined Benefit Schemes and we provide an update on the new Public Offer arrangements, we discuss amendments designed to improve the operation of the Superannuation Guarantee late payment offset, we outline the Taxation Office’s draft ruling on Ordinary Time Earnings and as usual we provide some administration updates.

In addition, the new Superannuation Insurance Needs Calculator is now available on our website and we introduce you to the members of the Newcastle–Lismore regional team who are on hand to assist with any superannuation queries you and your employees may have. And, as usual, we update you on Local Government Super’s investment performance and our forthcoming seminar schedule.

We value your feedback, so please feel free to send us your comments or any suggestions on what articles you'd like to see in future newsletters by emailing: employerservices@lgsuper.com.au.

Contract staff and the new billing multiples for the Retirement and Defined Benefit Schemes

Peter Lambert, CEO of Local Government Super, has recently conducted a tour of Councils throughout NSW with the purpose of discussing the changes to the Retirement and Defined Benefit Scheme employer billing rates and their impact on contract staff. All councils should now be familiar with the new multiples which will become effective July 1 2009 and have discussed the changes with any staff employed on a contract or package arrangement.

We would like to remind you that it would be very helpful for us to know who your contract staff are so that we can provide them with personal advice for how best to cope with the billing rate increases. Any contract staff adversely affected by the new billing can consult a FuturePlus financial planner at no cost for assistance in exploring the various options open to them. If you have not already done so, we would appreciate it if you sent us a list of your contract staff either by email to employerservices@lgsuper.com.au, by fax to 02 9299 9321 or by post to Local Government Super, PO Box N835, Grosvenor Place, NSW, 1220.

Retirement Scheme contribution rate election deadline extended

Some of your contract staff may be contemplating reducing their contribution rate in light of the billing multiple increases and for this reason we have extended the standard period during which contribution rate elections will be accepted. We would be grateful if you would inform Retirement Scheme members that the Retirement Scheme contribution rate election deadline, which is normally the end of February, has been extended this year to June 30.

Superable salary clarification for members employed on contract/package

The revised arrangements for calculating superable salary for contract/package members came in to effect April 1 2009 and do not have any impact on salaries already notified for December 31 2008. The annual assessed cost (AAC) factor that you will need to calculate superable salary for members in this category will in future be supplied with each monthly bill. Until the next review period the only time you will need to use the AAC factor is for the exit salary for contract staff who terminate employment before April 1 2010.

Public Offer Update

As of 1 March 2009 the Accumulation division of Local Government Super introduced a public offer division, effectively offering the opportunity for ‘lifetime’ membership.

This lifetime membership capability simply means that if an employee leaves your employment, they can:

• Remain a member of the Scheme
• Nominate to have their new employer contribute into their Local Government Super account
• Continue to make personal contributions
• Rollover money from other complying superannuation funds into their account.

Staying with the Local Government Super will mean that members can have their super consolidated in one account, they will continue to receive all the benefits they currently enjoy, such as cost-effective fees and charges, financial planning advice and insurance cover (if they held it at the time of leaving employment).

It’s important therefore that any employees within the Accumulation Scheme that leave your employment understand this opportunity and we ask for your assistance with this. You will have received a number of Leaving your employer? brochures for you to give to any employee leaving your employment. This enables an exiting employee to ask us for assistance when considering what to do with their super and includes a Choice form.

You should also have received a supply of Local Government Super Your Super Choice kits whose purpose is to provide new employees with background information about Local Government Super as they commence employment. If you require any additional stock of either the Leaving your employer brochure or the Your Super Choice kits please contact your Client Relationship Manager or let Employer Services know and they will refer your request.

Improvements to the SG Late Payment Offset

The Tax Laws Amendment (2008 Measures No. 6) Bill, which includes amendments to improve the operation of the Superannuation Guarantee (SG) late payment offset, has passed through Parliament.

The existing late payment offset allows employers who make late SG contributions into a superannuation fund to reduce their SG charge liability for a quarter. This ensures employers are not required to pay the SG contribution twice (once to the fund and once to the Australian Taxation Office).

"The amendments in this Bill ensure that an employer will only be able to use the offset if they make SG contributions before they are assessed with the superannuation guarantee charge liability,” notes the Minister for Superannuation and Corporate Law, Nick Sherry.

"This measure provides an incentive for employers to make their super contributions in a more timely manner while still providing employers with the option of using the offset to reduce their Superannuation Guarantee charge liability."

The amendments also improve the operation of the general interest charge (GIC) applying to SG payments so that it will accrue on the remaining amount of any unpaid SG liability after the offset has been applied. This ensures the GIC calculation takes into account the fact that the employer has made a contribution to the fund for the employee.

These amendments will commence from the date the Bill receives Royal Assent.

New Ordinary Time Earnings (OTE) ruling drafted

The Australian Taxation Office (ATO) has released its draft ruling on Ordinary Time Earnings (OTE) for Superannuation Guarantee purposes - (SGR 2008/D2).

The new draft ruling is more comprehensive than before and clarifies the ATO’s view on the following key issues:

• overtime, and when work hours labelled as overtime, may actually fall within an employee’s ordinary hours of work; and
• the inclusion of parental leave in OTE.

The ATO’s view is that where the overtime is worked regularly then Superannuation Guarantee (SG) applies.

The ATO notes: “Where it is manifestly evident from an objective evaluation of the regular work pattern of an employee that the span of hours actually worked are consistently different to the standard working hours provided in an award or an agreement, the employee’s ‘ordinary hours of work’ for the purposes of the definition of OTE are established by that regular work pattern. These hours are considered the employee’s regular, normal, customary and usual hours, even if these hours may be remunerated at overtime or penalty rates.”

The ATO also proposes to consider all paid leave as ‘earnings in respect of ordinary hours of work’. Leave payments form an entitlement that arises from an employee’s overall service, provided during ordinary hours of work, and the rate of pay applicable to leave payments reflect these ordinary hours of service. All forms of paid leave will therefore count as service by the employee and will be considered OTE.

For example, this would mean maternity, paternity or adoptive leave payments would be OTE for the purposes of the SG liability. Local Government Super employers were previously advised to include parental leave in OTE in accordance with the State Government employment provisions. As such, employers should already be meeting their SG obligations in this respect.

However, it is suggested that Local Government Super employers look at existing overtime payments to ensure that where they come under these new provisions that an SG contribution is made.

When finalised, the new draft ruling will replace the existing rulings covering OTE (SGR 94/4) and Salary or Wages (SGR 94/5). The final Ruling is expected to be issued in May 2009 but there is as yet no advice as to when the changes will take effect. Further information can be obtained from the ATO website at www.ato.gov.au

“Superannuation Insurance Needs Calculator”

A “Superannuation Insurance Needs Calculator” is now available on our website to help employees assess whether they have adequate Death, Total and Permanent Disablement (TPD) or Salary Continuance cover to protect themselves and their families if the unexpected happens.

All new eligible members of the Local Government Super Accumulation Scheme automatically receive three units of Basic Insurance cover for Death and TPD. New Executive Scheme members receive five units.

But the amount of insurance cover members actually need will depend on their age and personal circumstances and may be much greater than the level of cover Basic Insurance provides. The calculator will help members identify whether the cover they already have will be enough to help their families discharge their outstanding debts and provide them with an income to live on if they are no longer around or unable to work.

If further insurance is required there are a number of advantages in taking out additional voluntary insurance cover through a Local Government Super account. The premiums are paid for from their superannuation contributions, meaning that members don't pay for the cost directly nor do they have to pay for premiums out of their post-tax income. They also get to take advantage of the group wholesale insurance rates we have negotiated using our large bulk purchasing power with our rates being among the lowest in the industry.

To find out more or to trial the calculator yourself go to the” Superannuation Insurance Needs Calculator” by clicking here.

Would you like to see more of us?

Free pre-retirement planning seminars

Pre-retirement seminars are targeted at people who are over 50 years of age and provide information on the following:

• Maximising Super Benefits
• Decision Time
      - Income Streams in Retirement
• Centrelink
      - Age Pension & Allowances
      - Asset and Income Tests
• Financial Planning
      - The importance of qualified Financial Planning advice
      - Estate Planning
  Refreshments are provided.

For details of the forthcoming Retirement Seminars, click here.

Seminars at worksites

Some employers have recently expressed interest in holding pre-retirement seminars at their worksite. As part of our service to you we can offer additional pre-retirement seminars to your employees, either on your site or at a venue close to you as required. If you would like to organise a free seminar for employees, please call 1800 636 441.

Administration Update

To ensure that contributions are processed as quickly and efficiently as possible, the administration team has the following reminders for you:

• Contributions are only allocated to the member’s account when we have received both the money for the contribution and the allocation paperwork. This means if you send the money today, but don't send the allocation paperwork for two weeks, the money will be allocated to the member's account in two weeks’ time because we require both pieces of information before we can process the contribution.



• When you provide the Accumulation Scheme contribution file, please ensure there are only Accumulation Scheme members in the file and when you provide the Retirement Scheme file, that there are only Retirement Scheme members in the file.



• Please note that Accumulation Scheme files should not include negative contributions. If you have made an error and need money to be refunded, please email the details separately to employerservices@lgsuper.com.au.



• Please also remember that you are required to pay contributions for the Accumulation Scheme (Div A), Retirement Scheme (Div B) and the Defined Benefit Scheme (Div D) separately.

Meet our Lismore Office team

The Lismore office opened in February 2002 at its present site in Molesworth Street to provide members in northern NSW with an accessible regional office. In July 2008, Newcastle office combined with Lismore office to form the Newcastle-Lismore Region with the regional office based in Newcastle.

The regional office services an area from Port Macquarie in the South to Tweed Heads in the North and the New England and above, up to Moree in the North West. The team is on hand to assist you with any superannuation or financial planning issues you may have.

Lismore Office:

Neville Griffiths was recently appointed as the Financial Planner in Lismore. Prior to joining FuturePlus, Neville’s career was primarily spent advising the retiree market in north-west Victoria. Neville is able to provide specialised financial planning advice to members who are close to retirement. He is excited by the move to northern NSW as he sees this as a unique region offering a great lifestyle.

Michael Harris is the Client Relationship Manager for the Lismore and the northern region of NSW. He conducts retirement seminars, personal interviews and group presentations to a wide range of employees. Michael has worked in the financial services Industry for the past 18 years, in both superannuation and retail banking.

Janine McClelland is the Lismore Member Services Manager. She ensures member and employer enquiries are answered in a prompt and efficient manner. Janine comes from a background in financial services, having worked in the Industry over the last 22 years. Janine is also a Justice of the Peace.

Leanne Cowan is a Member Services Officer in the Lismore office. She happily assists members and employers with their enquiries in a professional and timely manner. Leanne successfully completed a traineeship with the company in 2004 and is continuing to further her studies in the financial service Industry.

Investment returns

Quarterly returns for Contributor Financed Benefit - Retirement Scheme
As at March 2009

Strategy	Returns
High Growth	-6.5%
Trustee Selection*	-5.4%
Diversified	-5.1%
Balanced	-4.0%
Capital Guarded	-2.6%
Cash Plus	1.2%

All figures are shown to one decimal place. Returns may vary slightly between Divisions of the Scheme.
* Available to Retirement Scheme members only.

Quarterly returns for Accumulation Scheme
As at March 2009

Strategy	Returns
High Growth	-6.2%
Diversified	-5.0%
Balanced	-4.0%
Capital Guarded	-2.6%
Cash Plus	1.1%

All figures are shown to one decimal place. Returns may vary slightly between Divisions of the Scheme.

Quarterly Superannuation Guarantee (SG) Contributions

All employers under the SG scheme must contribute the minimum level of 9% of each eligible employee's earning base in super support for each financial year. The SG contribution is required to be contributed on at least a quarterly basis. From 1 July 2008, your employees' earning base is their ordinary times earnings (OTE).

The following describes the ATO deadlines for employer contributions and the penalties that may apply if employers do not meet them. Local Government Super employers who make monthly contributions in accordance with the Scheme rules will more than satisfy these minimum requirements and will therefore avoid any of the penalties listed.

The ATO imposes penalties if SG contributions are not made by the quarterly cut-off date by applying an SG Charge (SGC)* which is made up of three parts:

• SG shortfall amounts based on OTE
• Nominal interest on that amount (10% per annum)
• Administration fee of $20 per employee per quarter.

If the SGC and the SGC statement are not submitted by the due date for lodgement additional penalties may apply and these are:

• General Interest Charge (GIC) from the SGC due date will be incurred. GIC compounds daily until SGC and accrued GIC is paid in full. The ATO can reduce the penalty. GIC is tax deductible in the year it is incurred.



• An amendment in the SG legislation, from 24 June 2008, means that if an employer makes an SG contribution to a superannuation fund which is late the employer can elect to have this contribution used to offset against the amount of SG charge they have to pay to the ATO for not meeting their superannuation obligations. Please refer to the ATO website for further information at www.ato.gov.au.



• Penalties may also apply for false or misleading statements, avoidance, failure to provide information or failure to keep SG records.

The following table obtained from the ATO lists the standard cut-off and lodgement dates.

Superannuation Guarantee quarter ended	Cut-off date for Superannuation Guarantee Contributions	Due date for lodgement of an SG statement and payment of the SG charge if contributions are not made on time
1 July - 30 Sept	28 October	28 November
1 Oct - 31 Dec	28 January	28 February
1 Jan - 31 March	28 April	28 May
1 April - 30 June	28 July	28 August

* The SGC is not tax deductible and cannot be reduced by the ATO.

Office locations

Lismore
81-83 Molesworth Street
Fax: 02 6621 3368

Newcastle
161 King Street
Fax: 02 4929 8210

Orange
187 Summer Street
Fax: 02 6360 8910

Sydney
28 Margaret Street
Fax: 02 9279 4131

Parramatta
10-14 Smith Street
Fax: 02 9354 1410

Wagga Wagga
2/209 Baylis Street
Fax: 02 6926 8010

Wollongong
Shop 2/60 Burelli Street
Fax: 02 4224 8010

Albury* 621 Dean Street
*Note: Bookings are essential.

Keep us up to date

Please keep us informed about any changes to your employer contact details or about any changes in personnel. We need to keep our contact information up to date (especially for payroll, SLOs, HR/Finance Managers, General Managers and Mayors) so that we can communicate any important information regarding Scheme or administrative changes efficiently and to the right people. Any updates can be emailed to employerservices@lgsuper.com.au

Are you sending your communications to the right place?

The following is a one-stop reference guide to all the relevant contact numbers and addresses through which employers are to send communications.

Fax
All employer faxes are to be sent to: 02 9299 9321

Contribution Return Emails
All Contribution Return e-mails are to go to the following e-mail address: employeronline@lgsuper.com.au

All Other E-mails
employerservices@lgsuper.com.au

Telephone
For all employer inquiries, please call 1800 636 441

Writing
If you are writing to Local Government Super, please address the letter as follows:
Local Government Super
PO Box N835 Grosvenor Place
NSW 1220

Please note that the information contained in this document is of a general nature only and does not constitute personal advice and has not taken into account any particular person’s personal objectives, financial situation or needs. Any advice in this document is provided by FuturePlus Financial Services Pty Ltd (ABN 90 080 972 630) as an Australian Financial Services Licensee (AFSL 238445) on behalf of the Trustee of the Local Government Superannuation Scheme, LGSS Pty Ltd (ABN 68 078 003 497) (ABN Pool A - 74 925 979 278 and ABN Pool B - 28 901 371 321). Members should not rely solely on this information and should consider their own personal objectives, financial situation and needs before acting on this information. Prior to making any decision you should obtain and consider the relevant Product Disclosure Statement (PDS) pertaining to your Scheme membership.