The GESB Gold State Super Fund is a ‘defined benefit fund’, meaning your superannuation benefit is not ‘market linked’ and is backed by the Western Australian Government. The benefit amount is calculated on a formula, which equates to your ‘final remuneration’ x your ‘service multiple’. Gold State is now closed to new members.
As a Constitutionally Protected Fund (CPF), the fund is considered an ‘untaxed scheme’. This means that contributions tax (typically 15%-30%, depending on your salary) is not payable until you rollover or access your benefit.
Unlike the Gold State Fund, West State is a ‘market linked’ account, meaning the balance is linked to its underlying investment strategy (see below). This fund was closed to new members in April 2007, with all new members being placed into the ‘GESB Super’ fund – a taxed, market linked fund with ATO imposed contribution caps in line with ordinary superannuation funds.
Like Gold State, West State is also a CPF and is untaxed, meaning that contributions tax is not immediately payable on concessional contributions (ie employer or salary sacrificed contributions) at the time of contributing. Instead, tax is payable when you access your benefit or rollover to another fund.
A significant benefit of the GESB West State fund is the opportunity to take advantage of the $1.445 million untaxed benefit limit (indexed annually). This effectively allows you to concessionally contribute any amount up to this limit, rather than being limited to the usual ‘contributions caps’ (currently up to $25,000 pa). Balances beyond the $1.445 million limit are taxed at 47% on accessing the benefit or rollover to a new fund.
This fund replaces both Gold State & West State for all new state government employees since April 2007. Much like other market-linked superannuation funds, this is a taxed accumulation fund with a variety of investment options available. As a taxed fund, concessional contributions are taxed upon entry to the fund and have imposed contribution limits (currently $25,000 per year).
...But Tread Carefully.
GESB funds, particularly the older Gold State and West State funds, include unique features, like lower fees, higher contribution limits and greater certainty of retirement outcomes.
The benefits should be clear, but are all too often misunderstood.
So when assessing your superannuation options, its extremely important to get a firm grasp on your particular fund's benefits before taking action you might regret later. If in doubt, call GESB directly, or find a financial advisor that is familiar with the 'ins and outs' of the GESB environment - we'll be happy to answer your questions and set you on the right path.