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Understanding your superannuation

27th November, 2018

Recently, you will have received your annual superannuation statement from the Commonwealth Superannuation Corporation (CSC). CSC is the government-owned trustee company that operates the three military superannuation schemes on behalf of ADF members.

Your super statement gives you a snapshot of your account as at 30 June 2018 and serves as means of seeing how your super is tracking. The statement might look complicated and there’s no denying that superannuation can be confusing, but it’s very much worth your while taking the time to understand it.

That’s because as a member of the ADF you are a member of one of the most generous superannuation arrangements in Australia.

Most ADF people reading this article are members of the Military Superannuation and Benefits Scheme (MSBS). A small minority of our longer serving people are members of the Defence Force Retirement and Death Benefits Scheme (DFRDB).

People who joined the ADF for the first time after 30 June 2016 cannot join MSBS or DFRDB. Instead, they are part of the new military superannuation arrangement whose central feature is choice of superannuation fund. That is, they may choose ADF Super (run by CSC); or any other superannuation fund available to the general public.

Let’s look briefly at a couple of features of MSBS and ADF Super. These are the two that cover the vast majority of our people.

A key feature of MSBS is that you may choose to take a large proportion of your benefit from age 55 in the form of a government-guaranteed indexed pension for life (and then 67% of that to your spouse or partner for their life).

Remember that the ups and downs of investment markets have no impact on this benefit because the amount of the pension and its annual increases are guaranteed by the federal government and are based on your years of service and final average salary. The longer your career in the ADF, the larger will be your pension.

A key feature of ADF Super (the scheme for new entrants after 30 June 2016) is that the contribution made to your superannuation account by Defence is 16.4% p.a. of your salary and relevant allowances. Contrast this with the much smaller contribution of 9.5% p.a. made by employers for most other Australians.

At a contribution rate of 16.4% p.a. a long career in the ADF will most likely result in a lump sum benefit which will far exceed retirement benefits paid under conventional private sector superannuation arrangements.

The key messages here are:

  1. Do not undervalue or ignore the superannuation to which you’re entitled as a member of the ADF; 
  2. When you’re thinking about your career options, think clearly about how much you’ll need later in life and how your military superannuation will help to fund a comfortable lifestyle; and
  3. Remember, the longer your ADF service, the more generous those entitlements are likely to be compared to most other superannuation arrangements available in Australia.

You can learn more about your military superannuation at www.csc.gov.au. Resources include a range of fact sheets and an online calculator to work out what your eventual retirement benefits could be. Our website www.adfconsumer.gov.au also has two short videos explaining how military superannuation works.

Take on the challenge now to understand these unique benefits of your ADF service.

CHECK OUT MORE HELPFUL ARTICLES

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Your choice of superannuation

Central to the design of the new military superannuation arrangement that commenced on 1st July 2016 is the concept of member choice.
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Making extra contributions to your super

Did you know that Military Super (aka Military Superannuation and Benefits Scheme or MSBS) allows you to make extra contributions to your account?
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Superannuation changes – what ADF members need to know

You have probably heard or read recently that the Commonwealth Government has made a number of changes to the superannuation (super) system most of which come into effect on 1 July 2017. What are the changes?
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