5. SUPERANNUATION – BIG DISCONNECT
35000.0
30000.0
Number of Accounts (‘000)
25000.0
20000.0
Persons in labour force (‘000)
15000.0
10000.0
5000.0
Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11
6. COOPER REVIEW
• Looked at ways to better safeguard retirement savings and
reduce cost.
• Designed super around members, not funds
• High level of disengagement
• Choice of fund had not delivered cost reductions
• Fees too high, services not used
• Too much tinkering
• Insufficient transparency
• Cannot compare funds
• Cannot see costs
7. SUPERANNUATION – CHANGING FOR EMPLOYERS
• 5 key areas of change affecting employers
• Increase to superannuation guarantee levy
• Pay slip reporting
• MySuper
• SuperStream
• TFN‟s
8. INCREASE TO SUPERANNUATION GUARANTEE
LEVY – BETTER RETIREMENT INCOME FOR THE
YOUNG
• From 1 July 2013
• 9% OTE superannuation guarantee levy increases to 9.25%
• Age limit of 70 removed
• Introduced as part of MRRT
• Should offset in bargaining (not offset in annual wage review)
• Proposed company tax reduction (not tax offset for
unincorporated businesses)
9. PROPOSED SG INCREASES
YEAR STARTING INCREASE(%) SG LEVY (%)
July 2012 - 9.0
July 2013 0.25 9.25
July 2014 0.25 9.5
July 2015 0.5 10.0
July 2016 0.5 10.5
July 2017 0.5 11.0
July 2018 0.5 11.5
July 2019 0.5 12.0
10. INCREASES TO SG LEVY
Employers should
• Be aware of increase
• Think about employees whose remuneration inclusive of
superannuation
• Think about salary sacrifice and employee contributions
11. PAY SLIP REPORTING – MORE INFORMATION TO
EMPLOYEES ABOUT THEIR SUPER
• Employers currently report contributions accrued or
contributions made on pay slips
• From 1 July 2012/January 2013/(?) employers to report
• Contributions accrued + (possibly) expected contribution date
or
• Contributions made
• From 1 July 2013,
• Employers to report contributions made
• Funds to
• Report contribution made/not made each quarter, or
• Issue member statement each 6 months
12. PAY SLIP REPORTING – GETTING MORE
INFORMATION TO EMPLOYEES ABOUT THEIR
SUPER (Cont’d):
When the new requirement is determined employers should
• Expect information about the new obligation
• Be aware of changed reporting requirements
• Talk to payroll/software provider/IT to understand
impact/upgrade, or advise person issuing manual pay slips.
13. MYSUPER – THE NEW DEFAULT
• Simpler, more member protected superannuation for those employees
who don‟t choose a fund
• From 1 October 2013 employers‟ default contributions into MySuper fund.
• For employers, “default” fund contribution is a contribution where
• Employee does not have a “chosen” fund
• The fund is not prescribed by an agreement
• Contribution not “made” into defined benefit fund
• Agreements approved from 1 October 2013 will have to prescribe
MySuper fund
14. MYSUPER – THE NEW DEFAULT (Cont’d)
• From 1 July 2013 funds authorised to offer MySuper will be
known
• Modern awards will be varied to reflect MySuper requirements
• Transitional arrangements for some large employer funds
• Current agreements continue
• Most employers should experience no change (current default will
be MySuper compliant)
• Some employers will need to change default after 1 July 2013 to
meet 1 October requirement
• Select new default
• Issue new standard choice form
• Enroll non-choice employees
15. MYSUPER – THE NEW DEFAULT (Cont’d)
Leading up to 1 July 2013, employers should expect
• Further information about this, especially from default fund(s),
ATO and NSWBC
• Employee questions – send to fund
• Fund amalgamations
If in doubt from 1 July 2013, employers should confirm that existing
defaults are MySuper compliant
• Check with current default fund(s)
• Check APRA website
• Ask NSWBC
16. SUPERSTREAM – SUPERANNUATION GOES INTO
THE E-COMMERCE WORLD
• Compulsory system wide standardised electronic
communication and transaction system. All funds will be
required accept
• Standard electronic information about new members,
contributions and transfers
• Electronic contributions
• From 1 July 2013 funds to use SuperStream for inter-fund
transactions (such as rollovers)
• From 1 July 2014 funds to use SuperStream for employer - fund
transactions (enrolments, contributions data, contributions)
• Funds will be testing and building up in 1st half of 2013
17. SUPERSTREAM – E-COMMERCE SUPER COMES
TO EMPLOYERS
Employers
• From 1 July 2014
• Medium large employers (20+ employees) employer - fund
transactions (enrolments, contributions data, contributions) to
be SuperStream compliant
• From 1 July 2015
• Small employers (<20) (subject to further consultation) to be
SuperStream compliant
• SuperStream compliant means the fund receives and sends
information, money in standard format.
18. SUPERSTREAM – E-COMMERCE SUPER COMES
TO EMPLOYERS (Cont’d):
Employers should expect
• Further information about SuperStream from payroll/clearing
house suppliers, their funds, ATO and NSWBC
• Upgrades to payroll/employee records systems
• Set-up with fund or clearing house
If in doubt (by early-mid 2013) employers should
• be seeking information from supplier payroll/clearing house,
software provider, or default fund
• not overlook unusual funds, such as SMSFs.
19. TAX FILE NUMBERS – MORE IMPORTANT AND
ALLOWING MORE TRACING, POLICING
• Employers required to pass employee TFN to fund by the later
of
• 14 days after the employee gives TFN
• The contribution after the employee has given TFN
• TFN pass-on employer responsibility, not clearing house/agent
responsibility
• For employees
• No-TFN contributions attract 31.5% additional tax
• Members without TFNs cannot make employee contributions,
receive co-contributions
• Employees will notice non-pass on
20. TAX FILE NUMBERS – MORE IMPORTANT AND
ALLOWING MORE TRACING, POLICING (Cont’d):
• TFNs used to
• Assess contribution cap compliance
• Support finding lost members and account consolidation
• 1 Jan 2012 funds can identify member accounts in other funds
• 1 July 2012 funds can consolidate members‟ multiple in-fund
accounts
• 1 July 2013 funds to send no-TFN contributions to ATO after 6
months
• 1 Jan 2014 auto-consolidation of amounts < $1,000
• 1 July 2014 ATO TFN validation service for employers
• In future TFNs will help identify tax payers not getting
superannuation contributions
21. TAX FILE NUMBERS – MORE IMPORTANT AND
ALLOWING MORE TRACING, POLICING (Cont’d):
• Employers should
• Check they have passed on employee TFN to fund where
employee TFN returned declaration form
• Expect greater policing of TFN pass-on
• Expect greater automation of TFN declaration and pass-on
• Growing employee awareness of no-TFN implication
• Employees will retain the right to not declare TFN or
authorise its pass-on
22. SUPER TIMING SUMMARY
01/07/ 01/01/ 01/07/ 01/01/ 01/07/ 01/01 01/07/ 01/01/ 01/07/
Time Line 2011 2012 2013 2013 /2014 2014 2015 2015
2012
Possible Contribution
"date paid" Superseeker
“payment by”
date reporting reporting on show new &
Payslip on pay slips. pay slips. Funds inactive
reporting Super Seeker to advise members account low
show active about income
accounts, ATO contributions contributions
held money. received.
From 1 October
default
My Super contributions to
My Super,
default funds to
be My Super
compliant. Information and
payment Information
transactions and payment
(1st half of
from transactions
2012) Transactions from
employers with
Super SuperStream between employers with
20+ employees
data funds to be to be Super < 20 employees
Stream standards Super Stream Stream to be Super
to be compliant compliant Stream
compliant
released
(Late 2014)
Funds to possible auto-
forward no-TFN consolidation
Funds can use Funds can contributions to Funds of balances
Funds TFNs to consolidate ATO after 6 can auto- under $10,000.New
can use TFNs seek other multiple months and consolidate emp. to consider
TFNs as primary accounts accounts report inactive balances consolidation,
locator and contact within accounts. TFN under choice on TFN form.
other funds. the fund. validation $1,000 TFN validation
service for between funds.service available to
funds. employers
24. BACKGROUND TO THE REVIEWS – FAIR WORK
ACT
• No OBPR assessment of fair work legislation
• Post-implementation review required after year of operation
• Process
• Background paper issued 18 January
• Submissions by 17 February (200+ submissions)
• Responses by 2 March (30+ submissions)
• Panel conducted consultations
• Report due to the Minister by 31 May with OBPR assessment
25. BACKGROUND TO THE REVIEWS – MODERN
AWARDS
• Required by transitional legislation
• FWA must consider whether modern awards
• Achieve the modern awards objective
• Operate without anomalies or technical problems arising from
modernisation
26. BACK GROUND TO THE REVIEWS – MODERN
AWARDS (Cont’d)
• Process
• Applications to vary (280+ applications)
• Yet to be listed
• Some matters of general application may go to full bench
• penalty rates
• apprentices, trainees + junior rates
• Award flexibility
• Annual leave
• Public holidays
• Remainder of applications likely to be single member
27. FAIR WORK ACT REVIEW
Members Report
• Too much time spent to understand and achieve
compliance
• Act based on wrong presumptions
• departures from Mon-Fri full time undesirable
• adversarial relations, does not allow for, foster
collaborative relations
Key areas raised in employer submissions were
• Dismissals and employee protections
• Inflexibility and increased employment costs
• Bargaining and agreement making
• Aspects of the National Employment Standards
• Union rights
28. UNFAIR DISMISSAL – GROWING NUMBERS
Unfair dismissal - No of applications and their fate - quarterly
3700
3500 Application for ufd remedy
3300
3100
2900
2700
Number finalised by FWA Number settled without a decision
2500
Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12
29. UNFAIR DISMISSAL – PROCESS AND COSTS
• Problems
• Go away money
• Costs and difficulty in disciplining and terminating
• Costs and difficulty in defending
• Procedural fairness and personal harshness
• Proposals
• Small business exemption
• Greater onus on employee to demonstrate unfairness
• Higher fees, penalties for frivolous claims and costs where
application dismissed
31. GENERAL PROTECTIONS – COSTS, CONFUSION
AND MANAGEMENT THREAT
• Problems
• Difficult to apply with certainty
• Costs, cause inhibition in disciplining, terminating
• Reverse onus, “a reason”, objective test
• 60 days, 6 years to lodge
• Proposals
• Remove “adverse action” or “workplace rights”
• Remove reverse onus, require a substantial reason
• Timeframe for application same as unfair dismissal
32. FLEXIBILITY – DIFFICULT TO STAFF TO NEED
• Flexibility – not many avenues
• Numbers of individual flexibility agreements (IFAs) unknown
• Numbers of flexible working arrangements (FWAs) unknown
• Problems - IFAs
• Uncertainty – Operation of BOOT
• Can‟t be offered as term of employment
• Can only alter a narrow range of award terms
• Can be unilaterally terminated with 4 weeks‟ notice
33. FLEXIBILITY – DIFFICULT TO STAFF TO NEED
(Cont):
• Problems – FWAs
• Managing employee expectations
• Employee understanding there is a “right” to flexibility
• Flexible arrangements set precedents
• Proposals
• Make IFAs more certain:
• Clarify non–monetary benefits for BOOT
• Registration
• Extend unilateral termination time
• Expand award/agreement terms which can be addressed
34. WHAT CAN EMPLOYERS EXPECT?
• Report release: Govt. response to review in June/July
• Can expect at best modest proposals for change
• Other lobbying might be important
• Where might the government move?
• Flexibility
• General protections
• Agreement making
• Where is the government most likely to move?
• It may rename Fair Work Australia
35. REVIEW OF MODERN AWARDS
• ABI applied to vary 25 different modern awards
• P/T additional hours
• Annual leave paid in normal cycle
• Allow employer to direct excess A/L cash-out
• Restaurants - penalties small business wage, caterer's
coverage
• Major application in Restaurants award
• Penalties
• Small business wage rate
• Caterers‟ coverage
36. REVIEW OF MODERN AWARD (Cont’d)
• Several applications with general effect
• Use of IFA provisions for cashing out A/L
• Training
• Payments to trainees when training
• Increased apprentice rates
• 1st year to 60%
• Adult lowest award classification
• Federal government application to facilitate competency
based-progression
• Public holidays: non Monday-Friday (non-casual) employees
to get compensation when rostered off on PH
37. ANNUAL WAGE REVIEW DECISION - JUNE
• Awarded 2.9% increase to
• National Minimum wage (to $606.40 pw, $15.96ph)
• Special NMW for trainees, apprentices
• Special NMW for employees with disability ($606.40 pw no
disability impact; minimum where there is an impact not yet
moved)
• Default casual loading from 22% to 23%
• Modern award wages
38. ANNUAL WAGE REVIEW DECISION – JUNE (Cont’d)
• For awards from 1st pay period starting on or after 1 July
• Classification rate increase
• Next phase-in step (wages +/- 40% transitional amounts)
• Next penalty, loading phase-in step (MA penalty, loading
+/- 40% transitional percentage)
• Work-related allowances increase by 2.9%
• Reimbursement allowances increase by CPI component
• For agreements
• Minimum award wage (MA classification rate or
transitional rate) is minimum for agreement
• Allowances, penalties, loadings as per agreement
40. WHS HARMONISATION - SORT OF MAYBE SOME
DAY?
In - Commonwealth
- Queensland
- Northern Territory
- ACT
- NSW ( with changes)
Coming – but not until 2013 - Tasmania
Trying - South Australia
Never were in fully - WA
Changed our minds – Vic
COAG – Lets take another look in 2014
41. WORKER’S COMPENSATION
• Alignment v Harmonisation
• Less ambitious program
• 7 working groups
• Definitions
• Permanent incapacity
• Death benefits
• Return to work
• Self Insurers
• Multi state employers
• Dust Diseases
DON’T EXPECT TO SEE TOO MUCH BEFORE 2013
43. WHS HARMONISATION –NSW
• WHS Act 2011 came into force 1/1 2012
• Conforms with Model Act except for the retention of union rights
to prosecute in very limited circumstances.
• Jurisdiction with the most to gain
• Best prepared of all jurisdictions
• Transition team moving back to BAU
• Focus on help not enforcement?
45. IMPROVING SAFETY PERFORMANCE
16
15
Claims per 1,000 workers
14
13
12
11
10
9
8
base 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
period
Achieved Reduction required to meet target
46. 10/5/5 – TOP 10 INDUSTRIES
• Site Preparation Services – Demolition
• Sheep and Beef Cattle Farming
• Other Wood Product Manufacturing - Wooden Structural
Component Manufacturing
• Road Freight Transport
• Building Structure Services – Concrete Construction Services
• Other Construction Services – Landscaping Services
• Non-Building Construction – Road and Bridge Construction
• Building Construction – House Construction
• Plastic Product Manufacturing
• Horticulture and Fruit Growing – Plant nurseries and grape
growing.
47. FOCUSING ON RISK - 10/5/5 – TOP 5 INJURIES &
ILLNESSES
• Manual handling • Mental disorders (including
• Falls on same level stress);
• Falls from heights • Nervous system and senses
• Struck by falling or diseases (including hearing
moving object loss);
• Striking moving or • Occupational cancers;
stationery objects • Respiratory system
diseases; and
• Musculoskeletal system
diseases.
49. IT DOESN’T BALANCE
Assets $14,719 m
Liabilities $18,802 m
Deficit -$ 4,083 m
Funding ratio 78%
Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011
50. WHY DOESN’T IT BALANCE?
• Impact and flow on from GFC - reduced yields on investments -
50%
• Deteriorating claims management experience – 50%
51. WHAT THE ACTUARY SAYS ABOUT HOW TO FIX
THE PROBLEM
Increase premiums
and/or
Reduce benefits
and/or
Improve injury management
52. PREMIUM INCREASES
Within 5 years 28%
Within 10 years 10%
BUT
NSW already lags Victoria and Queensland so premium increases
will only exacerbate our competitive disadvantage and lead to jobs
losses. Vic premiums down another 3% from 1/7/12
Premium increases might balance the books but do
not address the cost drivers
53. PREMIUM INCREASES – NOT ON
28% premium increase – 84% said there will be job reductions -
12,600 jobs
10% premium increase - 59% said there will be job reductions -
8,000 jobs
Reductions will be achieved by termination, natural
attrition and not filling vacancies
54. EXTRA PREMIUM ($M)
ILLAWARRA 28.1
SYD NW 136.0
SYD SW 91.9
SYD SE 173.9
SYD NE 104.6
RIVERINA 18.6
NORTH… 99.0
NORTHERN… 17.5
NEW… 15.0
MURRAY 12.1
MID NORTH 19.6
HUNTER 53.2
FAR WEST 27.1
CENTRAL… 15.5
CENTRAL… 18.5
SOUTH EAST 13.2
55. JOBS IMPACT BY REGION
ILLAWARRA 610
SYD NW 1922
SYD SW 1570
SYD SE 2924
SYD NE 1906
RIVERINA 359
NORTH WEST 229
NORTHERN RIVERS 426
NEW ENGLAND 352
MURRAY 233
MID NORTH 405
HUNTER 902
FAR WEST 31
CENTRAL WEST 308
CENTRAL COAST 461
SOUTH EAST 358
56. COLLECTION > BREAK EVEN
3.5
3.0
2.5
2.0
Collected Rate
1.5
(% Wages)
1.0
Break Even
Rate(% Wages)
0.5
0.0
Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011
57. Claims per Premium Year
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
58. WHERE DO THE COSTS LIE?
$M
Weekly 5912
WID 1771
Legal 433
Permanent injury & pain & suffering 827
Medical 3339
Commutations 290
Investigation 383
Rehabilitation 236
Death 81
Asbestos 155
ULIS 106
Other 144
59. MAIN CHANGES IN COSTS FROM 2008
1200
Weekly
1000
Workplace Injury
800 Damages
Legal
600
$m
S66/67
400
Medical
200
Commutations
0
Investigations
-200
Asbestos
Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011
60. WHAT ARE THE NUMBERS SAYING ABOUT THE
SYSTEM ?
• Re-emergence of a lump sum culture within the system
• Injured workers are staying off work longer
• Some areas of medical expenses are going up at a hyper-
inflated rate
• The injury management system isn‟t working as it was intended.
61. WHAT IS THE PURPOSE OF THE WORKERS
COMPENSATION SYSTEM ?– WPIM & WC Act S3
a) to assist securing the health, safety and welfare of workers and preventing work-
related injury.
b) to provide: prompt treatment of injuries, and effective and proactive management of
injuries, and necessary medical and vocational rehabilitation following injuries, in
order to assist injured workers and to promote their return to work as soon as
possible,
c) to provide injured workers and their dependants with income support during
incapacity, payment for permanent impairment or death, reasonable treatment and
other related expenses,
d) to be fair, affordable, and financially viable,
e) to ensure contributions by employers are commensurate with the risks faced, taking
into account strategies and performance in injury prevention, injury management,
and return to work, „
f) to deliver the above objectives efficiently and effectively.
62. ISSUES PAPER/COSTINGS
WEEKLY BENEFITS TO 130 WEEKS
Average weekly earnings to the basis for calculating weekly benefits ,
not award or agreement rates
Up to 13 weeks – 95% AWE
13 -130 weeks
Total Incapacity – 80% AWE
Partial Incapacity & working
• make up to 95% AWE if working > 15 hrs pw
• make up to 80% AWE if working 15 or less hrs
pw
Partial Incapacity & not working
• 80% AWE less deemed earning capacity
Vocational rehabilitation
• Total or partial incapacity rules apply
63. ISSUES PAPER/COSTINGS
WEEKLY BENEFITS POST 130 WEEKS
Weekly benefits cease at 130 weeks unless >30% WPI or working
more than 15 hrs per week – benefit 80% AWE
All weekly benefit claimants benefits to cease at 5,7,9 or 11* years
unless > 30% WPI
Work Capacity testing at 78 and 130 weeks
*Four cut-of options 5,7,9 and 11 years have been costed
64. ISSUES PAPER/COSTINGS
Work Injury Damages (Common Law)
• No top up payments
• Stronger defences
• Stronger statute of limitations ( 3 years)
Permanent Impairment & Pain & Suffering
• 10% threshold
• No top up payment
• New higher scale incorporating pain & suffering
• Legal representation will not be required except for
disputed claims
65. ISSUES PAPER/COSTINGS
• Journey claims- except for work, worker‟s
compensation and training related journeys excluded
• Heart Attacks/ Strokes excluded
• Medical expenses 1 year after weekly benefits cease
• Commutations programme
67. WHAT ELSE?
WorkCover performance/structure/management of agents
Agent performance
Workers Compensation Commission
Effective injury management support for employers and injured workers
Premium system design & communications (premium notices that can be
understood)
Data collection/quality & impact on scheme management (a centralised
computer system)
68. WHAT NEXT?
• Joint Parliamentary Committee to report by 13 June
• Legislation by 30 June?
• Non-legislative changes
• Expect deficit to get bigger in the immediate term
69. WHS & WORKERS COMPENSATION SUMMARY
NATIONALLY
• WHS Harmonisation still some way off
• Workers Compensation harmonisation most unlikely but some better
alignments possible
NSW
• WHS Act in and operating
• NSW WHS performance is improving
• WorkCover refocused
• Workers Compensation Scheme in trouble
• Premium increases not the solution
• Legislative and other changes needed with legislation before 30 June
