Appendix F.                 International military scheme comparison

High level summary of Foreign National Military superannuation arrangements*

Scheme design features

USA

UK

Canada

NZ

Defined Contribution or Defined Benefit

DB

DB

DB

DC

Funded

No

No

No

Yes

Compulsory Membership

Yes after 15 years of service

Optional. Automatic member unless opt-out, with one opportunity to re-join.

Yes

Yes

Member Contribution

No

No

4.6% of pensionable earnings, rising to 6.4% by 2013. Reduces by 1% after age 35.

7.6% of annual salary

Employer Contribution

N/A

N/A

N/A

17.9% of salary

Retirement Pay

No benefit for less than 15 years of service (social security payable only). After 20 years of service, up to 75% of average basic pay (for highest 36 months of member’s career) payable without preservation with a limited commutation option.

Indexed pension from age 55 equal to 1/70th times years of service times FAS plus a tax-free lump sum of 3 times annual pension (convertible to additional pension).

Indexed pension from age 60 equal to 2% times pensionable service times average earnings.

Non-indexed pension to age 60 is also payable after 25 years of service.

Lump sum amount payable on leaving the NZDF or in the event of death or TPD.

Indexation

Cost of living adjustment.

Retail Price Index adjustment.

Consumer Price Index adjustment.

N/A

 

* Not including death and disability provision