AUSTRALIA - Many companies are unaware of a legislative change that could spike their superannuation contribution costs by more than 10%, Mercer Human Resource Consulting has warned.
The legislation, passed in 2004 and set to come into effect in 2008, rules that employers must use ordinary time earnings (OTE) as the earnings base for calculating the 9% Superannuation Guarantee (SG) contribution. But Mercer said: "Many employers currently contributing at 9% levels for employees in a DC plan could face an increase of up to 10% in the level of superannuation contributions... [while] for some employers the costs could even be higher."
Peter Promnitz, Mercer CEO in Australia, said many of the firm's clients "did not have this issue on their agenda", and added: "While they may not necessarily have to make significant adjustments, at the moment they simply don’t know whether they will be compliant or what the potential cost impact might be.”
Promnitz said the new requirements would also create a need for many employers to review their remuneration policies, amend their payroll systems and increase their superannuation contributions.
The "surprise" cost could arise because employers will have to make superannuation contributions on items such as performance bonuses, commissions and shift loadings, he said.
"These items are included in the definition of ordinary time earnings, but currently they may not be including them in the earnings based used for superannuation purposes."
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.