What are the types of military superannuation schemes in Australia
In Australia, the 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).
