Employer news Q and A - Summer 2017
How do I make sure my staff have the correct PSSap insurance coverage?
Finding out that your insurance cover is wrong when you need it the most would be an awful experience, so you can help your staff by ensuring that you report three things to us.
Coverage can’t commence until the member has commenced in the scheme. So it is important that you let us know when that is by sending us the commencement date in the PSSap SAFF.
This is particularly important for casual members (which includes, for insurance purposes, non-ongoing staff on a contract of less than three months) who need to opt in to cover. Casual members can’t opt in after 180 days from commencement, so if this date is not reported they may miss out.
New members have 60 days from the date they receive their welcome letter to the PSSap to reduce or opt out of lifePlus auto cover without incurring premiums for the cancelled cover. If you do not report the start date promptly, members may have to pay premiums for cover they do not want.
Members who leave the scheme can still remain insured through lifePlus Choice. The trigger for switching members over from lifePlus Auto is the termination date, so again it is important that you report this date in the SAFF so they are insured properly.
You need to provide updated insurance salaries in the SAFF each year as this sets the amount of coverage and premiums. The insurance salary is sometimes called the ‘base annual salary’. It is sometimes thought that this means the salary without any allowances, but this is not the case.
Base Annual Salary is the salary from which you would calculate any sick leave entitlements. This is different to the superannuation salary and changes whenever the member has a change in base annual salary for sick leave purposes e.g. promotion.
The insurance salary sets the amount of premiums to be paid and the amount of cover. Getting this wrong, or not reporting it, may lead to these being wrong.
For new members, in the absence of a reported insurance salary, we will assume a salary of $47 000 a year. For most people, this will mean they are under-insured any may have to pay arrears of premiums when it is corrected. For other members, we will use the last reported salary (if it exists) which can mean underpaid premiums and under-insured members.
If we are going to initiate a claim for Total and Permanent Disability (TPD) in respect of a PSSap member, when should we do this?
Many members have claimed Income Protection (IP) insurance if they have been off work or have suffered a reduction in income as a result of illness or injury.
The PSSap approach to handling cases of injury or illness is focussed on rehabilitation and getting a member back to work. This is based on evidence that shows that early intervention greatly improves the chances of a successful return to the workforce. As part of the IP insurance claim, members may be involved in rehabilitation and return to work efforts. These can last up to 24 months.
If an employer initiates a claim for TPD (and for the issuing of an Invalidity Retirement Certificate), we will assess it based on the evidence available at the time. If the member is undertaking active rehabilitation and return to work efforts for a recent illness or injury, this may mean that the claim is rejected.
You should generally wait to see what impact the outcome of these efforts has on the member’s prognosis before submitting a claim. Generally speaking, submitting within three months since the injury or illness is too soon in many cases.
There are always exceptions, particularly around certain serious conditions and those that are known to be resistant to rehabilitation. It is also true that you may not know that the member has made a claim for IP, as the member may not have chosen to reveal this information. However, in most cases you will be aware of this and any rehabilitation that is being undertaken.
When speaking to staff suffering an illness or injury that has the potential to be serious, you should encourage them to talk to their super fund. For PSSap members, we will be able to let them know what access they may have to IP insurance and also assess whether they would benefit from any rehabilitation services that we can provide.
Members can call 1300 725 171 for a confidential discussion about their options.
Do I have to pay employer contributions in the PSSap when a member is on Maternity or Parental Leave (i.e. maternity, paternity or adoption leave)?
It will depend on whether you have specified that Ordinary Time Earnings (OTE) is to be used to calculate contributions in your Enterprise Agreement (EA) or other industrial instrument. And even if you do, your agreement may make special provisions for Maternity or Parental Leave.
If your agreement does not specify a salary type, then the PSSap Trust Deed requires that you use Fortnightly Contributions Salary (FCS) just as you do for CSS or PSS members.
Paid Maternity or Parental Leave is excluded from the definition of OTE on the Australian Taxation Office website so contributions are not payable during periods of leave, whether paid or otherwise unless your EA says so.
For FCS employers, there are differences in the way that this leave is treated in the PSSap in comparison to the PSS and CSS.
If you are an FCS employer, then employer contributions are payable for PSSap members on all maternity or parental leave whether paid or otherwise.
For those of you that like the detail:
- Rule 2.2.2(b) of the PSSap Trust Deed and Rules legislation.gov.au/Details/F2017C00489 requires that FCS is to be used if OTE is not specified.
- If FCS is used, then the definition of ‘pay day’ in Rule 1.2.1 specifies that a pay day falling in a period of unpaid maternity or parental leave counts as a ‘pay day’ for contributions purposes. Periods of paid leave will naturally also count for this purpose.
- Because of this, employer contributions are payable under Rule 2.2.1, which requires contributions to be made for each pay day.