How is cash salary calculated for a PEO?
Total remuneration (TR) is defined in the PEO determination. It represents the total value of all cash and non-cash benefits available to the office holder (excluding performance pay, relocation allowances, travelling allowances and compensation for early loss of office). An office holder’s cash salary is the component of TR that remains when all other payments and benefits, including the Employer Superannuation Contribution, are honoured. Cash salary should not be confused with the superannuation salary determined by the employing body for office holders who are members of defined benefit schemes.
To determine cash salary
The Employer's Superannuation Contribution*
Other benefits e.g. motor vehicle and parking, fringe benefits tax and any salary sacrifice payments, such as additional superannuation contributions.
equals: Cash Salary
* The Employer's Superannuation Contribution is defined in the Tribunal's PEO Determination.
Essentially it is:
- for members of PSSAP - 15.4% of ordinary time earnings (OTE);
- for members of other accumulation schemes - the compulsory employer superannuation contribution that must be made to the fund; and
- for members of a Commonwealth defined benefit schemes (e.g. CSS/PSS) - a notional value calculated as 15.4% of the Superannuation Salary (i.e. normally 15.4% of 73% of TR.Notes re Superannuation Salary:
- The employing body is responsible for determining superannuation salary for office holders who are members of defined benefit schemes. The PEO determination provides that the maximum superannuation salary that may be determined by an employing body is 73% of TR. An exception can occur where the Tribunal has given express written consent to an alternative ‘grandfathered’ arrangement for an individual office holder who has a (pre-existing) higher salary for superannuation purposes under the defined benefit scheme rules (see FAQ “What happens if an office holder has an existing superannuation salary that is higher than the superannuation salary that applies to the office?”).
- For PEOs who are defined benefit members 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%