Military salary is made up of various components, although, for some the only figure of importance is the total amount. Notwithstanding this, there are two aspects to a salary that need to be emphasised. They are:

• Military Factor. Compensates for your commitment to service; liabilities rising out of the oath of allegiance; subjection to Military discipline and control of lifestyle; and other intangible aspects of Service life
• Seven-Day Liability. As a member of the RF, you are paid for a seven-day working week. This is because under the Defence Act all members of the RF are liable for service 24/7.

Pay In the New Zealand Army

The NZ Defence Force has recently changed the way that service personnel are remunerated. The NZ Defence Force has adopted a total remuneration philosophy which is designed to show service personnel their Gross Total Fixed Remuneration at a glance. There are three phases required to fully implement the new remuneration philosophy. We are currently in Phase Two with Phase Three expected to be implemented by 1 Jul 09.

The new salary philosophy comprises:

• Base salary, which has been benchmarked or Market Indexed, plus
• Superannuation – both the employers and the employee’s contributions, plus
• Military Factor.

The three components listed make up the Total Fixed Remuneration (TFR) for all service personnel. The TFR is not salary but to get the salary amount, the employer’s superannuation component must be removed.

In addition to the components listed above, service personnel who are not tenants of a married quarter will receive a Universal Accommodation Component which is a taxable allowance paid in addition to the TFR.

The starting TFR for each rank is indicated below, however, this can vary depending on what trade and specialisation you join as and it includes all components listed above, including the UAC. Pay progression within each rank is likely to be influenced by the number of years in the rank, skills gained and the courses individuals have completed. Promotion between ranks is based on competencies, courses completed and satisfactory performance.

Regular Force Officers (General List) – This means that the officer has graduated from Officer Cadet School.

	TFR Including UAC
Officer Cadet	$31,894
Second Lieutenant	$46,190
Lieutenant	$57,350
Captain	$69,888
Major	$93,222

Regular Force Officers (Special List) – This list contains officers with specialist educational, technical or trade skills and qualifications who are required to support the operational, training and sustainment outputs of the New Zealand Army. Examples of Special List Officers are: Legal, Medical, Dental, Education, Nursing Officers as well as Chaplains. The starting TFR listed below is the lowest applicable to any one of the trades listed (less Medical and Dental, which have yet to be finalised).

	TFR Including UAC
Second Lieutenant	$46,190
Lieutenant	$57,350
Captain	$65,328
Major	$80,057

Regular Force Soldiers – Soldiers TFR will depend on your trade. The starting TFR listed below is lowest applicable to any of the Soldier trades.

	TFR Including UAC
Recruit	$31,894
Private	$40,646
Lance Corporal	$42,011
Sergeant	$50,188
Staff Sergeant	$60,611
Warrant Officer Class Two	$64,739
Warrant Officer Class One	$74,044

Superannuation

The NZDF offer two approved superannuation schemes for new enlistments.

KiwiSaver, and

Defence Force Superannuation Scheme Category B (DFSS Cat B).

KiwiSaver

With the implementation of the KiwiSaver regime and the start of compulsory employer contributions from 1 Apr 08, NZDF, like many other organisations that offer superannuation schemes, has had to make changes. Government policy is to make KiwiSaver the main vehicle for state sector superannuation in the future. Additionally, there has been concern that the current superannuation arrangements are not attractive to many and do not effectively contribute to NZDF’s strategic goals.

With effect 1 Apr 08, legislation stated that employers were to contribute to their employee’s KiwiSaver scheme at a rate of 1% in 2008, increasing to 4% in 2011. The CDF determined that NZDF would contribute to employees schemes at 4% wef 1 Apr 08.

With effect 1 Jul 08, the NZDF were granted exempt employer status which means that new employees do not need to be compulsory enrolled into KiwiSaver. This was due to the NZDF offering a KiwiSaver compliant alternate super scheme – DFSS Cat B.

DFSS Cat B

The Defence Force Superannuation Scheme is a complying superannuation fund with similar rules to a KiwiSaver scheme (for example, KiwiSaver lock in rules and contribution obligations).

Members will largely gain the same benefits from joining Category B - Defence Class as joining a KiwiSaver scheme such as member tax credits from the Government to supplement their contributions and compulsory employer contributions. They will not receive the:

• $1,000 kick-start contribution and
• they will not receive the fee subsidy payable for membership of a KiwiSaver scheme (currently $40 per annum).

Members who join KiwiSaver or Cat B will receive in their Total Fixed Remuneration the CDF’s employer contribution towards their superannuation, of 4%, plus they will receive a taxable allowance paid at 13.9% of the Service member’s TFR. This allowance will be received proportionately each fortnight as part of ordinary pay.

New personnel who chose not to belong to either KiwiSaver or DFSS Cat B will receive a taxable allowance paid at 13.9% of their TFR. This allowance is set at 13.9% to encourage service members to join KiwiSaver or DFSS Cat B.