Surcharge News

Some CSS members who have recently received surcharge assessments from the ATO may have noticed a significant increase compared to their previous assessments.

These increases are due, in the main, to revised surchargeable contribution factors for CSS members that took effect from 1 July 2001.

These revised factors, provided by the Australian Government Actuary, have changed from those previously in place for a number of reasons.

The Australian Government Actuary has advised that the most important contributor was the change to the assumptions about the number of 54 year olds resigning to take advantage of the preserved benefit option.

When the previous set of factors was produced, the Australian Government Actuary assumed that virtually all 54 year olds would remain to at least age 55 and take the standard retirement benefit.
In recent years, taking a preserved benefit at age 54 has become an attractive option for many CSS members as a result of the high crediting rates applying to CSS member accounts and this has been reflected in the exit rates at this age.

Under the surcharge legislation, the actuary calculating the surcharge factors is required to have regard to the scheme experience in setting the assumptions. Accordingly, when this feature became apparent, the Australian Government Actuary changed the assumptions regarding resignations at age 54 to reflect this changed exit experience.

The impact of the change in assumptions is most noticeable for members who are accruing minimal retirement benefits; that is, for those on the 0% or 0.25% accrual rates.

[The Australian Government Actuary has advised that resignation rates for those age 54 still appear to be increasing. If this trend continues, a higher assumption again will need to be adopted in preparing the next set of factors. These factors are due to apply from the 2003/04 contribution reporting year.]

28 February, 2002