If you joined the ADF as a full-time member for the first time on or after 1 July 2016, you’re likely to be a member of ADF Super. This is a so-called “accumulation scheme”, operated by the Commonwealth Superannuation Corporation (CSC). It attracts an employer contribution of 16.4% per annum.
From that date, the old scheme, called the Military Superannuation and Benefits Scheme (MSBS or sometimes simply referred to as “MilitarySuper”), was closed to new members. The exception to this rule is for a member rejoining the ADF, having served as a full-time member prior to that date.
When we say “you’re likely to be a member of ADF Super”, we mean that the majority of new ADF members are in ADF Super from 1 July 2016. However, it’s important to note that as a result of recent superannuation choice legislation, members of the ADF may choose to be a member of any approved superannuation scheme into which the above-mentioned 16.4% per annum contribution will be made by the employer (Defence).
As a result, it’s not uncommon for newer ADF members to nominate a scheme other than ADF Super or to retain the scheme which they had with their previous employer (the latter process is often referred to as “stapling”). It’s also an option to change your nominated superannuation scheme during your career.
This certainly does not imply that ADF Super is uncompetitive. On the contrary, all we’re saying is that the choice is yours. So you should do yourself a favour by researching what’s on offer in the highly competitive superannuation marketplace to make sure that your scheme suits your needs and expectations.
If you’re a member of ADF Super (and even if you’re not) a catalyst for your research could be the fee changes that are happening in ADF Super from 1st March 2024. The impact of these changes (lower or higher) will depend upon your current balance in the scheme. Below is a short extract, direct from the relevant CSC document which we urge you to read in full:
“We’re reducing the current $7 per month ($84 per year) flat dollar Administration fee to $4 per month ($48 per year), and introducing an asset-based Administration fee of 0.05% per year. The total combined Administration fee will be capped at $25 per month ($300 per year)”.
Technically, the full document is called a Significant Event Notice and is required to be sent to members of a superannuation funds when making important changes of this nature.
Of course, superannuation is not just about fees, although they may have a significant effect on your eventual outcome. You should also consider investment returns, not just year on year, but over time. A poor performance in one year doesn’t necessarily mean a bad result forever. And then there are tax and financial strategies which, especially if adopted early on, can make a significant difference at retirement.
Here are some useful and trusted educational resources to get you started in your research:
ADF Financial Services Consumer Centre website page on superannuation, especially our FAQs: adfconsumer.gov.au/superannuation/
Australian Tax Office Superannuation Comparison Tool: ato.gov.au/calculators-and-tools/super-yoursuper-comparison-tool
Australian Securities and Investments Commission website page on choosing a superannuation fund: moneysmart.gov.au/how-super-works/choosing-a-super-fund
You may prefer to seek professional advice on your options, in which case the Centre’s website contains comprehensive information on seeking advice and choosing an adviser: adfconsumer.gov.au/getting-financial-advice/.
The Centre also hosts the ADF Financial Advice Referral Program: adfconsumer.gov.au/find-a-financial-adviser/. Importantly, the Centre is an education body. We do not provide personal financial advice, but we refer our members to licensed financial advisers who declare to us that they operate on a “fee for service” basis only (no commissions or percentage-based fees).
Remember that financial advice can be expensive, so before you appoint an adviser, we recommend that you understand the scope of the advice and its cost (and make sure you get that information in writing).
If you do your homework properly, take an ongoing active interest in your superannuation and choose your provider/s wisely (perhaps with some professional guidance), chances are that your retirement will be a much more financially comfortable experience than it would have been if you’d merely been a disinterested bystander. It’s never too late to start, but given the “magic” of compound interest on your savings, the earlier you start the better.
Super can be much harder to quantify if you are a member of MSBS or DFRDB, known as defined benefit schemes. This is because the bulk of your super benefit will likely be in the form of a lifetime indexed pension, based on your years of service and final average salary. The longer you stay in Defence, the larger your lifetime pension. This cannot easily be compared to a standard accumulation super fund. Please contact the Commonwealth Superannuation Corporation (CSC) for an estimate or your current benefit.
If you have an accumulation super fund, like ADF Super, it’s much easier to compare the superannuation you get from Defence with that of a civilian employer. Generally employers pay super at a rate of 9.5% of your ordinary salary and allowances, Defence pays super to accumulation fund members at a rate of 16.4%, well above the minimum requirement.
You may not appreciate the value of your generous superannuation benefits now, but you certainly will in years to come.
ADF members receive, statutory death and invalidity cover, and rehabilitation services if needed. To replace this cover in civilian employment, you may need to take out personal insurance, such as death, disability, trauma and income protection. The cost would depend on your age and personal circumstances but could cost thousands of dollars a year.
The ADF offers free education and training and/or study assistance schemes. If you’ve been receiving tertiary education at no cost or received any form of study assistance, consider what it might cost to continue your education outside Defence.
Take some time to think about these and any other benefits provided to you by Defence to get a better understanding of the real value of your employment package.
As an ADF member you will usually receive subsidised housing or rental assistance if you are not living in your own home. If you buy a home to live in you may be eligible for a range of other assistance schemes.
If you are receiving rental assistance you can calculate the value by multiplying the fortnightly assistance amount by 26 to get an approximate annual benefit.
If you’re in service housing you can estimate your benefit by deducting the rent contribution taken out of your pay, from the amount of rent you would pay each fortnight for a similar property in the same area. Multiply the result by 26 to estimate your annual benefit.
Housing assistance schemes for members buying a property include the Defence Home Ownership Assistance Scheme (DHOAS), Home purchase assistance scheme (HPAS) and Home purchase or sale expenses allowance (HPSEA)
Serving ADF members receive a range of healthcare benefits, including free medical and dental treatments, rehabilitation services, psychological support and access to fitness facilities like gyms, pools and sporting fields.
To put a value on these benefits, think about what you might be paying for if you were not an ADF member. For example, what would it cost you for private health insurance, prescriptions, physiotherapist, dentist, specialist visits, gym membership or other fitness related costs?
Medicare covers the costs of being admitted to hospital as a public patient, some of the fees charged by GPs and other medical professionals, and subsidised prescription costs for medicines listed on the Pharmaceutical Benefits Scheme (PBS). ADF members don’t pay the Medicare levy, currently 2% of taxable income.
Private health insurance covers some or all of the cost of a range of services not covered by Medicare, for example, a private hospital and the doctor of your choice, as well as ancillary services such as dental, optical and physiotherapy, not covered by Medicare.
Your pay consists of a base salary, with the addition of employment-related allowances. Your base salary can be found at the top of your payslip on the right, listed as ‘Annual salary’. If you need help reading your payslip, see the ADF guide on Pay and Allowances.
Note: From 13 May 2021, service, trainee, reserve and uniform allowances will be rolled into a single ‘Military salary’.
The earnings section of your payslip lists any allowances you receive. The amount in the ‘Current’ column is the amount you get every fortnight for each allowance. You can add allowances by typing in the name of the allowance in the ‘Add allowance’ box and clicking the + symbol.
A deployment provides some ADF members with additional allowances that are not part of regular pay. We have not included these allowances in the calculation of your remuneration package, however, you may want to take the additional deployment allowances into account if you are comparing your ADF remuneration with civilian employment.
Medium-term goals are those that you want to achieve in 3-6 years. This could include saving for a home deposit, paying off your car or paying down all your loan debts. Having a budget and your goals written down.
Long-term goals are plans you want to achieve in around 7 years or more. This could include buying a home or paying off your mortgage, paying for your children’s education or saving for retirement.
For long-term goals think about investing some of your money. Get some financial advice to work out a good investment strategy to reach your goals.
MSBS is a hybrid defined benefit and accumulation super scheme which closed to new members on 30 June 2016. If you are an MSBS member, your benefit will consist of a lifetime indexed pension (employer component) based on your final average salary and years of service. Some or all of this benefit can be taken as a lump sum when you have met a condition of release (the defined benefit). The scheme also has a member component made up of your compulsory and voluntary personal contributions, ancillary contributions and investment returns, that you will also receive as a lump sum when you have met a condition of release (the accumulation benefit).
The pension component can be taken from age 55. If you are retiring or resigning from the ADF after reaching age 55 or are entitled to a Class A or Class B invalidity pension, you will be eligible for a pension when you leave the Service. For all other members, your employer benefit will freeze and be preserved, increasing with CPI each year, until you are eligible to receive it.
The member component of your benefit may be left in MSBS, where it will increase with investment returns each year until you access it, or it can be rolled over to another complying super fund.
For more information contact the Commonwealth Superannuation Corporation (CSC).
If you joined the ADF for the first time after 30 June 2016, you will fall under the ADF superannuation arrangement, and will be a member of an accumulation fund, such as ADF Super. If you had previously served, and are a member of MSBS, you will be re-entered into MSBS on rejoining the Service.
For accumulation fund (eg. ADF Super) members, your benefit will be a lump sum based on contributions and investment returns. When you leave Defence, your money can be left in the fund, where it will continue to grow with investment returns until you meet a condition of release, or it can be rolled into another super fund.
If you’ve been in the Service for more than 12 consecutive months, you can keep your ADF Super account when you transition out and your new employer can contribute to ADF Super. In this case your insurance cover will change so contact the Commonwealth Superannuation Corporation (CSC) to find out what you need to know.
DFRDB is a defined benefit super scheme which closed to new members on 30 September 1991. If you are a DFRDB member, you will receive a lifetime indexed pension based on your final salary and years of service. Part of your benefit may be commuted into a lump sum, and you may receive an additional lump sum from your MSBS ancillary account, made up of voluntary personal contributions, amounts transferred in from other funds and other contributions, plus investment returns.
For more information contact the Commonwealth Superannuation Corporation (CSC).
Short-term goals are things you want to achieve within the next couple of years. These goals could be to pay off your credit card debt, buy a new TV, go on a holiday or buy a car. Whatever you have in mind, set yourself a realistic timeframe. The best way to save for short-term goals is to reduce your spending on non-essential items, like entertainment, dining out, memberships or subscriptions. It is often easier to stay on top of your spending if you use cash, EFTPOS or a debit card when shopping instead of using your credit card.
Make your savings work for you by putting your money into an account where it will grow. Savings accounts are great because you can earn compound interest on your savings. If you’re on a low income, you may qualify for one of the savings programs offered by some charitable organisations.