What are the types of military superannuation schemes in Australia
In Australia, Types of Military Superannuation arrangements for military personnel have evolved over time, with different schemes applying to members based on when they joined the Australian Defence Force (ADF). The main schemes are:
1. ADF Super
For: New ADF entrants from 1 July 2016.
Type: An accumulation scheme, which means the retirement benefit is the total of contributions (from the member and the employer) plus investment earnings, minus fees and taxes.
Key Features:
Employer contributions from the Department of Defence are a high percentage of salary (currently 16.4%).
Members can also make their own voluntary contributions.
This is the default fund for new members, but they can choose to have their super paid into a different fund (known as a “Choice fund”).
2. Military Superannuation and Benefits Scheme (MSBS)
For: Members who joined the ADF between 1 October 1991 and 30 June 2016. This scheme is now closed to new members.
Type: A hybrid scheme, combining a defined benefit component and an accumulation component.
Key Features:
Member Benefit: This is an accumulation component, consisting of the member’s fortnightly contributions (a minimum of 5% of their salary) plus investment earnings.
Employer Benefit: This is a defined benefit component, which is a lump sum calculated based on a member’s final average salary and their length of service.
MSBS members can choose to remain in the scheme or transfer to ADF Super or a different fund.
3. Defence Force Retirement and Death Benefits Scheme (DFRDB)
For: Members who joined the ADF between 1 October 1972 and 30 September 1991. This scheme is closed to new members.
Type: A defined benefit scheme.
Key Features:
Benefits are calculated by a formula based on the member’s final salary and years of service.
The primary retirement benefit is a lifetime, CPI-indexed pension.
Members can choose to commute a portion of their pension for a lump sum.
4. Defence Forces Retirement Benefits Scheme (DFRB)
For: A very old scheme that commenced in 1948 and closed when DFRDB was introduced. It now only covers a small number of people who were already receiving a pension from the scheme at that time, or their surviving dependents.
In addition to these main schemes, there is also ADF Cover, a separate scheme that provides death and invalidity insurance benefits for all serving ADF personnel, regardless of whether they are in ADF Super, MSBS, or a Choice fund. This recognizes the unique risks associated with military service.
The superannuation schemes for the ADF are administered by the Commonwealth Superannuation Corporation (CSC).
The Splitting Process : How it Varies with Types of Military Superannuation.
Standard super splitting usually involves a simple dollar transfer. Military splitting requires an actuarial valuation because the “Annual Statement” value is often much lower than the “Family Law Value.”
Step 1: Request Information (Form 6)
You or your lawyer must lodge a Form 6 with CSC. This compels the fund to provide a Superannuation Information Form (SIF). You cannot rely on a standard member statement for court orders.
Step 2: Actuarial Valuation
Since MSBS and DFRDB are “Defined Benefits,” a specialised actuary must use the SIF data to calculate the present-day value of the future pension.
MSBS: Usually split as a “Base Amount” (a fixed dollar figure).
DFRDB: Often split as a “Percentage” of each pension payment (a “payment split”) or a percentage of the total interest.
Step 3: Procedural Fairness (The Critical Step)
Before you file for Court Orders, you must send the draft orders to CSC for review.
CSC is legally entitled to “Procedural Fairness.” They have 28 days to review the wording.
If your lawyer uses “standard” wording, CSC will often reject it. They require specific legal phrases (e.g., addressing Associate A and Associate B components in MSBS).
Once happy, CSC issues a Letter of Procedural Fairness, which you then file with the Court.
Step 4: Implementation
After the Court seals the orders, a certified copy is served on CSC.
Growth Phase: If the member is still serving, a separate “Associate” account is created for the ex-spouse. This money remains preserved until the ex-spouse reaches their own preservation age (usually 60).
Payment Phase: If the member is already receiving a pension, the pension is “split” at the source, and the ex-spouse begins receiving their portion directly from CSC as a lifetime pension. Types of Military Superannuation will be affected by this Phase.
