GESB- what does it all mean?
Over recently times we have had a large volume of astute questions from clients regarding GESB Superannuation. Due to the nature of the GESB funds, it can be difficult to locate accurate information in books or on the internet. We have compiled list of the questions (and answers!) that we deal with on a day to day basis. If you did require specific advice regarding your GESB superannuation or you are just looking for more information, please contact our office on 08 9327 6438.
What are the foremost differences between the main 3 GESB products?
Gold State: is a defined benefit fund meaning your superannuation benefit is calculated by a formula. Gold State is not market linked and is backed by the Western Australian Government. Being an untaxed scheme, you do not pay tax until you rollover or access your benefit. Gold State Super also has no extra fees and includes some minimal Death & TPD insurance at no cost. Gold State Super is closed to new members.
West State: is a market linked, constitutionally protected untaxed fund. This means that you do not pay contributions tax when making concessional contributions. You do however pay tax when accessing your benefit or rolling out to an alternative super fund. West State is also not restricted to annual concessional caps. Instead, West State has a lifetime limit. West State Super is closed to new members.
GESB Super: is market linked and is a taxed super fund. This means that concessional contributions are taxed upon entry to the fund. GESB Super has contribution limits in line with ‘regular’ superannuation funds. GESB Super has been open since 16/04/2007.
How is my Gold State benefit calculated?
Your Gold State benefit is calculated by multiplying your final remuneration and service multiple.
Final remuneration x Service multiple = Final Benefit
What is a service multiple?
The service multiple is relevant to Gold State superannuation. The service multiple takes into account your months of service and average contribution rate. Generally speaking the longer you have worked for your employer, the higher your service multiple is which results in a larger Gold State balance.
What happens to my Gold State Super if I retire from the Government & work somewhere else?
If you are not of perseveration age your benefit is deferred. In this instance GESB calculate your Gold State benefit & transfer it a deferred account where it is held until you are eligible to access your superannuation.
If you are over perseveration age you can rollover, withdraw or transfer your superannuation benefit to pension phase.
What is a transition to retirement pension?
A transition to retirement pension allows you to transfer your superannuation to an income stream. This can allow you to save on tax or supplement your income. Either or a combination both of these strategies can be tailored to your specific scenario. To implement a Transition to Retirement strategy you must be aged at least 56.
Am I able to do a transition to retirement pension with my GESB?
Gold State, West State & GESB super can all be used for a transition to retirement pension but how the funds are accessed differs between the funds. It is recommended you seek financial advice if you are considering a transition to retirement pension.
Can I contribute extra to my GESB Gold State?
Gold State Super contributions are capped at 5% of your salary. If your average contribution falls below 5% you are entitled to increase your contribution to 7.5% effective ‘catch-up’. Once your average reaches 5% you must reduce the contribution rate back.
Police Officers, Magistrates & Industrial Commissioners have the ability to contribute more than 5% from the age of 55. We would encourage you to contact our office if you think you would be able to take advantage of this as you must meet certain conditions.
What is an un-taxed fund?
The term, ‘un-taxed fund’ refers to the taxation of contributions and earnings in the fund. Taxation does occur in the fund but the tax is deferred until the funds are accessed.
Whilst the above questions were general in nature, we do also deal with complex & more specific questions. Examples that we can assist with include:
- My position at work is changing and will result in a decrease in salary. Can I retain this higher salary for my Gold State benefit calculation?
- I have a ‘pre 1983’ component, what extra benefits does this afford me?
- As a result of separation, my ex-spouse is entitled to a portion of my Gold State Super- how does this affect my multiple?
- Under what conditions can I access my GESB benefit early?
If you would like to discuss your GESB Super further, our GESB specialists can be contacted on 08 9327 6438.
General Advice Warning
In preparing any advice in this article Les Mumme Pty Ltd, ABN 96 992 086 755, trading as Les Mumme & Associates has not taken into account any particular persons objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any financial investment or insurance decision.