This article should be read in conjunction with the 2008 D&D Award.

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1 Understanding the D&D Award. It s fair to say that our Death and Disability Award is quite complex. As a result many members are not entirely sure of the full value of their D&D cover or the range of D&D benefits available. The following article is intended as a general guide only to help members better understand their D&D entitlements, however for detailed answers it s probably advisable for members to contact the Union Office and as to speak to an Industrial Officer. This article should be read in conjunction with the 2008 D&D Award. Participation and Member Contributions Who is covered by the D&D Award? The D&D Award covers all retained firefighters. The D&D Award also covers all permanent firefighters except: a) permanent members in the old State Superannuation Scheme (SSS); and b) permanent members in State Authorities superannuation Scheme (SASS) who have Additional Benefits Cover and who choose not to be covered by the D&D Award. Do I have to covered and/or make contributions? If you are not a permanent firefighter described in either (a) or (b) above, then the answer is yes. Your contributions and your cover is compulsory throughout your employment with NSWFB. Why? The Union and the employer agree on the need for a compulsory scheme. Like car or home insurance, nobody expects (or wants) to make a claim. But they re glad they were covered if and when the need ever arises. Compulsory membership avoids any doubt as to whether a member was covered or not after something s gone wrong. Compulsory membership keeps the contribution costs lower for everyone. It also removes the ability for members to self-select against the scheme later in life, or after a medical condition has developed which in turn keeps member contributions lower than would otherwise would be the case. How much does it cost? This varies depending on whether you are retained or permanent, and on your existing superannuation scheme. If you are a retained firefighter and you are not a member of one of the defined benefit public sector superannuation schemes set out in the next point then your D&D contributions are $396 per annum or $33 per month. These contributions are automatically deducted from your monthly retainer before you are taxed and are therefore tax-free.

2 If you are a retained firefighter and you, by virtue of your primary employment, a member of one of these defined benefit public sector superannuation schemes: State Superannuation Scheme (SSS) Energy Industry Superannuation Scheme (EISS) Local Government Superannuation scheme (LGSS) Police Superannuation Scheme (PSS) Judges Pension Scheme (JPS) Parliamentary Contributory Superannuation Fund (PCSF) State Authorities Superannuation Scheme (SASS) or the EISS or LGSS Retirement Scheme and you have taken out the scheme s Additional Benefit Cover Then your employee contributions are $132 per annum or $11 per month. Again these contributions are automatically deducted from your monthly retainer and are therefore tax-free. If you are a permanent firefighter in First State Super (FSS) (or any other accumulation-type superannuation fund) then you are required to contribute 1.5% of your salary (either before or after tax). If you are a permanent firefighter in SASS without that scheme s Additional Benefit Cover, then you are also required to contribute 1.5% of your salary (either before or after tax). If you are a permanent firefighter in SASS and you have taken out Additional Benefit Cover, then you have 5 months from the date of joining the NSWFB to make a one-off election to either: 1. Drop your Additional Benefit Cover and be covered by the full D&D package, in which case you will be required to contribute 1.5% of your salary (either before or after tax); or 2. Keep your Additional Benefit Cover and be covered for the D&D award s full partial and permanent incapacity benefits, but reduced death and TPI benefits, in which case you ll be required to contribute 0.5% of your salary (either before or after tax); or 3. Stay with SASS s Additional Benefit Cover, not be covered by the D&D benefits at all and not contribute anything. What do you mean by before or after tax? All participating permanent members have the option to salary sacrifice for their contributions, and 9 out of 10 do so. Salary sacrificing simply means that your contributions are taken from your wages before your tax is calculated, thereby making those contributions effectively tax free. We ve received advice that there may be some members (albeit very few) whose personal financial circumstances will mean that salary sacrificing for these contributions will not be beneficial, which is why all members are given the

3 option. If you are in any doubt then you should seek independent advice from a suitably qualified accountant or financial planner. (Note: All retained members contributions are automatically deducted before tax. Unlike permanent members, there is no need for retained members to make a contribution election.) Does salary sacrificing affect my income in any other way? No. Your rates of pay, allowances and overtime all remain the same. Further, the Department continues to make its compulsory employer contributions to your SASS, FSS or personal superannuation account based on your Old (pre-salary sacrifice ) income. Why do we have to pay 1.5% for something that the Government should be supplying to us? Members do not contribute to the cost of the on duty cover at all. The D&D Award provides death, TPI and PPI cover both on and off duty 24 hours a day, 7 days a week, 365 days per year. There are 168 hours in a week, of which permanent members work 42 hours. That leaves 126 hours per week of off duty cover. Permanent or retained, the government is paying for the cost of all of your on duty cover as well as the balance (if any) between your contributions and the cost of your off-duty cover. Isn t this insurance instead of superannuation? The D&D Award s death and TPI benefits are delivered through a specifically established Death and Disability Superannuation Fun. On the other hand the PPI benefits are lump sum payments that are made directly by the NSWFB upon your exit from the Brigades. Why the difference? The D&D Super Fund was established for two primary reasons: 1. Whilst you can salary sacrifice for superannuation you can t salary sacrifice for insurance. By delivering the death and TPI benefits through a special D&D Super Fund, members could salary sacrifice their contributions (see What do you mean by before or after tax? above); and 2. By delivering the death and TPI on-duty pensions through the D&D Super Fund, we ensured that members (and/or their dependents) would enjoy the tax break schemes available through superannuation schemes. The PPI benefits would probably have been delivered through the D&D Super Fund too, however Commonwealth superannuation laws freeze most employees benefits until they reach a certain age. These laws, known as preservation rules, mean that most employees cannot get their hands on their superannuation accounts until they reach 60, they die or they re found totally and permanently incapacitated (TPI). The PPI lump sums are therefore paid by the NSWFB, not the D&D Super Fund, so members can receive their PPI benefits immediately.

4 What about my D&D Super Fund Statement? The D&D Super Fund is (like all superannuation funds) required to post an annual statement and report to each member of the fund. This statement shows your personal details and the benefit that would payable from the Fund upon your death (both on and off duty) or your total and permanent incapacity (both on and off duty). This statement also shows your account balance, which is always $0. Why? Because 100% of contributions are used to fund the cost of your D&D cover. Is issuing an annual statement that continually shows your account balance as $0 strikes you as a bit silly then we agree, but it s a requirement of the rules for annual statements from superannuation funds and there s no way around it. Another important point to note. Because the PPI lump sums are paid for the NSWFB and the D&D Super Fund pays the death and TPI benefits, there is no mention of your PPI benefits on you annual statement from the fund. We agree that this unhelpful and confusing, but we are advised that current superannuation laws prevent super funds from showing (or even mentioning) any external benefit. Why doesn t the D&D Super Fund offer any investment options? Many members have asked why the Fund doesn t offer members the ability to choose different investment options. Some members (who are to be admired for having obviously read the fund s latest annual report in some detail) have also queried the fund s administration fees, which they thought high. The simple answer to both is that the D&D Super Fund is what is known as a defined benefit super fund. Almost all super funds operate these days as accumulation schemes where members benefits are directly dependent upon, and proportional to, the performance of their fund s investments and it s costs. If the fund makes a profit then members accounts go up, and if the fund records a loss then members accounts go down. FSS is an accumulation scheme (which, happily for members continues to perform very well). Members of defined benefit funds (like SSS and the D&D Super Fund) do not need to worry about investment strategies or costs because their benefits are guaranteed. The D&D Super Fund is underwritten by the NSW Government and is guaranteed to pay the D&D Award s pensions and lump sums regardless of how the market is (or isn t) performing, or however much it costs to administer the Fund. Definitions How is my salary determined? For permanent members, your salary for the purposes of D&D is the rate shown for your rank in the Total Weekly Rate column shown at Part D of our main

5 Award. In other words your salary in your rate of pay and your roster allowance (if applicable), but does not include any allowances or overtime. If you are in an Operational Support position then your salary is based on your operational rank s Total Weekly Rate, not your Operational Support rate. The D&D benefits and employee contributions are both based on this Salary. For retained members there are two definitions that determine your D&D benefit depending on the circumstance actual retained earnings or deemed salary. Your actual earnings are just that, and are made quite clear under the D&D Award s definitions. Your deemed salary is a notional annual salary for all retained members based on a Captain s hourly rate of pay x 2088 hours which is basically a 40 hour week spread over a year. From 1 April 2010 the deemed salary is set at $66, 440 per annum. What is total and permanent incapacity (TPI)? TPI, which is clearly a serious injury, is defined under the Award as meaning that the firefighter is unlikely, by reason of ill-health (whether physical or mental) to ever again engage in gainful employment for which the firefighter is reasonably qualified by education, training or experience. What is partial and permanent incapacity (PPI)? PPI is denied under the Award as meaning that a firefighter is no longer fit to carry out the full range of his/her pre-injury duties with the NSW Fire Brigades. This definition includes members on permanent alternate or light duties. Clause 9 of the Award covers the redeployment to alternate duties of permanent members who are deemed to be PPI. TPI, PPI what s the different? Basically, if you re deemed PPI hen you can t be TPI, in which case it will be considered likely that you ll be able to gain another job of similar skills and wages. But if it s judged unlikely that your injury is syuch that you ll be able to find such a job then you ll be deemed TPI. The distinction between the two is really whether or not you ll be able to find comparable work elsewhere. The use of the work unlikely rather than simply unable is significant because it means practical issues (like the state of the local job market) should be considered. The distinction between TPI and PPI is often a fine line and can be the subject of a dispute between the Department and the Union. The Award provides that any dispute as to a member s entitlements which cannot be resolved can be referred to the Industrial Relations Commission of NSW for a final determination. What do on duty and off duty mean? Both terms are explained in detail in the Definitions clause of the Award, but the basic different is that on duty includes any death or injury which occurs either whilst working as a firefighter or as a result of your work as a firefighter. This

6 expressly includes any disease which is contracted as a result of your firefighting duties. It follows that all other occasions are considered to be off duty, including death or injury sustained whilst traveling to or from work the only exception being retained members, who are deemed on duty from the time they receive notice of the call. Why doesn t the D&D Award cover travel to and from work as on duty? The Government flatly refused to recognize travel to or from work on the grounds that there is no special risk for firefighters in doing so i.e. everyone does it. That being said, the 24/7 scope of the D&D cover means that if you re not covered for on duty, then you re still covered for off duty so a member killed whilst driving to work will still receive the $310,000 lump sum payment in addition to their superannuation and workers compensation entitlements. Who are my dependents? A member s spouse includes a wife or husband or a de-facto partner (including a same sex partner.) Children include your children up to and including age 18, or up to 25 years if they are undertaking tertiary studies. D&D Benefits Death or Total and Permanent Incapacity (TPI) The type and scale of the D&D benefits are determined by a number of questions. For death, the only question is whether death was sustained on duty (including death as a result of your work n duty) or off duty. In the case of an injury which leaves you permanently incapacitated then there is not only the on duty/off duty question but also whether the injury is a total and permanent incapacity ( TPI ) or a partial and permanent incapacity ( PPI ). There is a further question for retained members (only) who are injured on duty, which is whether the injury caused you to lose both your primary and your retained job, or your retained job only. It is important to note that these benefits are in addition to the superannuation and/or workers compensation benefits that you or your dependants might be entitled to. It s also worth remembering that unlike almost all commercially available insurance arrangements, there are no qualifications, penalties or exclusions to your cover. About D&D pensions

7 The bottom line is that the pensions payable under the D&D Award are exactly the same as the old SSS pensions. The same rules also apply to children s pensions and to your ability to commute these pensions to a lump sum. There is, however, an offset under the D&D Award which you (or your spouse) will be asked to pay before the full D&D pension can be paid. Alternately, you (or your spouse) can elect to keep the offset and receive a reduced pension. The choice is yours. The offset is detailed in the Award itself, but can generally be described as the total amount of contributions that the NSWFB has made to your (SASS, FSS or private) superannuation account, plus interest and is calculated from the time you joined the NSWFB to the date of your death or TPI requirement. Why the offset? Put simple, SSS members who die or who are medically retired reveve a pension not a pension and a lump sum. It s worth noting, though, that even with the offset the D&D pensions are still equal to, if not better than the comparable SSS benefit. Death on Duty? A two-thirds pension will be paid to your spouse (and dependent children, if applicable). If you are a permanent member, this pension will be based on your final salary and if you are a retained member, then it will be based on the current deemed salary. In both cases the pension will continue to be paid (and indexed to the Sydney CPI) for the remainder of your souse s life. If you don t have a spouse at the time of your death, then your estate will receive a lump sum payment equivalent to the off duty lump sum death benefit. TPI on Duty A full pension will be paid to you (and to your dependant children, if applicable). If you are a permanent member, this pension will be based on your final salary, and if you are a retained member it will based on the current deemed salary. In both cases the pension will continue to be paid (and indexed to the Sydney CPI) to you for the remainder of your life. Upon your death, a reversionary pension of two-thirds of your pension will then be paid to your spouse for the remainder of your spouse s life. Death or TPI off duty? A one-off lump sum payment will be paid to your estate, with the amount payable being determined by your age at the time of death. Age Lump Sum Less than 61 $310,000 years of age At age 61 to less $248,000

8 than 62 years of age At age 62 to less than 63 years of age At age 63 to less than 64 years of age At age 64 to less than 65 years of age $168,000 $112,000 $56,000 Unlike on duty pensions there is no offset and your estate will also be entitled to receive your full superannuation balance D&D Benefits Partial and Permanent Incapacity (PPI) Rehabilitation and Retraining for permanent members? For permanent members, clause 9 of the D&D Award sets out the process for rehabilitation and retraining in fairly clear terms. Whilst the objective will always be redeployment to alternative duties rather than medical retirement, there may be occasions where redeployment is either not possible or indeed where the member concerned might actually prefer to be medically retired. Nevertheless, the D&D Award makes it abundantly plain and clear that redeployment of PPI permanent members within the Brigades remains the rule rather than the exception. Some of the more obvious safeguards for members within clause 9 are: a. It s not ambiguous. The Department must make all reasonable efforts to place every permanent firefighter who suffers partial and permanent incapacity in a suitable position within [the] NSW Fire Brigades ; b. It s not just about existing job vacancies the Department is required to look at both current and potential employment opportunities ; and c. The Department can t leave it until the last minute to say sorry there s no job available. The member and the Union must both be informed at the earliest possible opportunity if the Department, believe that a suitable position may not be found ; at which point the Union can (and will) put that opinion into dispute provided of course that you re an FBEU member. There is no rehabilitation and retraining provision for retained members because the nature of retained employment doesn t allow for alternative duties. That s not to say that there aren t any PP benefits for retained though. PPI on duty?

9 For permanent members who exit from Brigades, a one off lump sum payment will be made to you based on your final salary and your age as per the table at page 16 of the Award. By way of example: Recruit Firefighter PPI Lump Sum At age 20 $430, 149 At age 30 $365, 084 At age 40 $276, 782 At age 50 $159,046 Senior Firefighter At age 30 $489,270 At age 40 $370, 931 At age 50 $213, 147 Station Officer Lvl 2 At age 30 $588, 073 At age 40 $445, 837 At age 50 $256, 190 For retained members, your level of benefit is determined by the same table, but the level of benefit will depend on whether your PP injury caused you to lose both your primary job and your retained job, or your retained job only. If your injury caused you to lose both jobs then your benefit would be based on the retained deemed salary, as shown in the following examples: Retained Member PPI Lump Sum At age , 446 At age , 731 At age , 119 At age , 635 However, if your injury leads to you losing your retained employment but not your primary employment, then your benefit would be based on your actual retained earnings. For example (using a statewide average earning of approx $8,500 pa. Retained Member PPI Lump Sum At age 20 $70, 805 At age 30 $60, 095 At age 40 $45, 560 At age 50 $28, 180 PPI off duty? For permanent members who exit from the Brigades, a one off lump sum payment will be made you based on your final salary and the balance of your two years of rehabilitation and retraining. Using a Senior Firefighter as an example:

10 Senior Firefighter PPI Lump Sum No rehab $138, months rehab $103, months rehab $69, years rehab $0 For retained members who exit from the Brigades, a one off lump sum payment will be made to you based on two years of your actual retained earnings. So using the statewide average annual earnings of approximately $8,500 pa, your lump sum payment would be $17,000. Summary The D&D Award provides comprehensive, affordable and tax-effective cover for firefighters and their families 247 year in year out. Unlike commercial life insurance, which either shrink the benefits and/or increase n cost the older you get, the D&D Award s contributions and benefits remain fixed (other than for increases in line with wage rises) throughout your career. In other words, your D&D cover effectively gets cheaper, not dearer, the older you get. Unlike commercial insurance policies, you can salary sacrifice for your D&D contributions. And unlike commercial policies which usually only provide for death and TPI cover, the D&D Award also provides PPI cover, both on and off duty. The D&D Award has already paid over $20,000,000 it to injured and deceased former firefighters and their families. That s $20,000,000 in much needed support that simple wasn t there before the Union secured our first D&D Award in You can t buy the sort of cover provided through the D&D Award out in the open market. It simply isn t available but if it was you probably couldn t afford it. As published in the Union s Summer 2009 Journal