Not only are the members of the ADF dubbed as real-time heroes; they’re also considered as employees.
But unlike workers in a regular office set up, militaries have a greater responsibility that they need to comply with for the rest of their lives.
That’s the simple reason they are also well-deserving of a superannuation benefit when it’s time for them to retire.
The Military Superannuation and Benefits Scheme (MSBS) is a partly funded, defined benefit superannuation scheme that was established under the Military Superannuation and Benefits Act 1991 to replace the Defence Force Retirement and Death Benefits (DFRDB) Scheme.
The fund has approximately $8.5 billion in funds under management and is managed by the Commonwealth Superannuation Corporation.
Eligibility to Join MSBS
MilSuper offers super accounts exclusively to members of the Permanent Forces and Reservists who began service on or after 1 October 1991.
Military Super was closed to new members in 2016. The new ADF Super was created to supersede it. Current Military Super members have a choice to transfer to ADF Super. Nonetheless, MilSuper is still active and continues to invest and grow its member’s retirement savings.
How MSBS Works
Since it’s a hybrid defined contribution and benefits scheme, Military Super doesn’t have traditional retail super account options.
MSBS is essentially a lump sum scheme with 2 basic components:
1. Member benefit. This includes contributions and their investment returns. If that part of this benefit accrued before 1 July 1999, members can access it. The balance is compulsorily kept in the super system until the minimum preservation (retirement) age.
2. The employer benefit. The Australian government provides an unfunded employer component that’s not linked to investment performance. This is a multiple of the member’s final average wages over the preceding three years. It is based on the length of service of the member.
Investment options
MilSuper offers members 4 different investment options, from which they can pick the mix they prefer.
• Cash
• Balanced
• Income Focused
• Aggressive
When selecting an investment option, it’s vital to consider your risk tolerance for market fluctuations and your investment time frames and goals.
MilSuper has a dedicated online portal for super fund members. Here, you can access statements for your account, view your account balance online and download super fund information.
Member Contributions
5 per cent of salary is the basic contribution rate and includes superannuate allowances as deemed by the Department of Defence.
As a member, you can elect to contribute up to 10 per cent of your superannuation salary.
Ancillary contributions (both pre-tax and post-tax) are also accepted. They include spouse contributions and salary sacrifice.
Benefit Payments
MilSuper members exiting the scheme are entitled to wide-ranging benefits depending on their circumstances.
Typically, a member’s employer benefit is preserved until age 55. If the member exits MSBS under redundancy or invalidity, the employer benefit may be paid as a pension. Members may access their super before preservation age on the grounds of financial suffering, compassionate, or permanent invalidity.
Invalidity And Death Benefits
MilSuper provides partial invalidity, full invalidity and death benefits. Members who become disabled and cannot continue their ADF service can use invalidity benefits to resettle into civilian employment.
Benefits of Military Super Accounts
Here are some of the benefits of MilSuper:
- Zero establishment and administration fees
- Flexible investment options
- Competitive investment performance
- Easy online account access
- Built-in death and invalidity benefits for your family
Things to Check on Your Annual Statement From Military Super?
When you receive your MilSuper statement, confirm that:
- Tax File Number (TFN) is recorded
- Personal details and nominated beneficiaries are up-to-date
- Voluntary and/or MilSuper contributions from your employer are correct
- Amount paid in fees is reasonable
- Investment asset class choices reflect your life stage
Contact Us
To give you the best financial advice, we need to hear your story. We realize it’s vital that you feel comfortable sharing your story.
You can call us on 07 3172 8671 or drop us an email at COREY@VETERANWEALTH.COM.AU.