Schools Member action wins reform

Principal class members see significant reforms to the way compulsory employer superannuation is paid in the proposed VGSA 2022. For the past 30 years, principal class salaries have been represented as a Total Remuneration Package (TRP), effectively ‘hiding’ the true value of the principal salary in a figure that includes both salaries and superannuation. This arrangement was cooked up by the Kennett Liberal government and the Victorian Principals Federation (now the APF) at a time when they were proposing the appointment of principals without education qualifications.  

The TRP has created confusion among many school staff who have not understood that principal class salary figures published in Schedule 1 of the VGSA, on pay slips and in job advertisements include compulsory superannuation. Some members have reported that they may not have applied for principal class positions if they had known the true salary.

This was complicated further last July, when the superannuation guarantee rate was increased from 9.5% to 10%. If AEU principal class members had not taken action and convinced DET to pay, these increases would have resulted in take-home pay cuts to principal class members. The new VGSA corrects this confusion for those in accumulation schemes and prevents any further erosion of principal take-home pay if the superannuation rate continues to increase to 12%, as expected, in the coming years. Schedule 1 in the new VGSA now includes a table that lists the salary figures only. Superannuation will be paid by the employer, according to legislation and entitlements, in addition to salaries.

The superannuation guarantee does not apply to defined benefit schemes, so for those still in such a scheme, earnings will depend on which scheme they are in, and the requisite contribution from their TRP for super as well as any other optional benefits.

Because the defined benefit super schemes are so varied, and because they are structured in a fundamentally different way to the accumulation schemes, a direct comparison of the defined benefit TRP versus the salary-plus-super accumulation scheme is not possible. What can be ensured, however, is that regardless of whether a principal or assistant principal continues to be remunerated through TRP, with its significant financial advantage, or the salary-plus-super scheme, both will receive a 7.55% (principals) or 2.43% (APs) structural adjustment to their annual earnings, paid from 24 December 2021, plus a 1% increase every six months. Assistant principals will also receive a 1% allowance paid each year in December.

United action by PCA members has achieved this positive outcome. Other improvements in the proposed VGSA 2022 include $11.988m to reduce the administrative burden of various OHS tasks, and the provision of external investigators to conduct complaint investigations. All of this has been possible because principal class members remain a strong and valued part of Victoria’s largest education union, the AEU. 

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