So Super

By Phil Charley

In the last column of So Super we examined payment of your member benefit and employer benefit from the Military Superannuation Benefits Scheme (MSBS) if you had resigned from the ADF. This time we focus on retirement benefits.

Retirement benefits are generally not payable from the MSBS until you reach 55 years of age. Members, whose compulsory retiring age is less than 55, qualify for earlier retirement benefits, but may have a reduced range of payment options.

Another consideration effecting your payment options is whether, at the time of retirement, you have reached your preservation age. You will recall from the last column that this may be between 55 and 60 years of age and is dependent on the date you were born. If you were born before July 1, 1960 your preservation age is 55. If born after June 30, 1964 it is 60. Members born between those dates will have preservation ages ranging between 55 and 60.

Since the MSBS is a regulated superannuation scheme it must comply with the Superannuation Industry (Supervision) legislation. SIS requires that retirement benefits only be paid prior to age 60 where “the trustee is reasonably satisfied that the person intends never to again become gainfully employed, either on a full-time or a part-time basis” or in other words if the person is permanently leaving the workforce.

These additional restrictions produce a number of categories of retirement discussed below.

If you retire at or after age 55, have reached your preservation age and are retiring permanently from the workforce your entire member benefit can be paid to you as a lump sum.

You have three options for receiving your employer benefit.

• You can take it all as a lump sum, convert it to an indexed pension or take a combination of lump sum and pension provided you convert at least half to pension.
• You can also choose to preserve either your member or employer benefit (or both) in MSBS to be claimed at a later date.
  
• If you retire at or after age 55, but have not reached your preservation age you can immediately take a lump sum payment of your member benefit up to the amount that had accrued (including interest) at June 30, 1999. The balance, that is, anything accruing after June 30, 1999, must remain compulsorily preserved, either in the fund or in a rollover fund.
  

Restrictions applying across the whole of the superannuation industry prevent you from taking any of your employer benefit as a lump sum until you subsequently reach your preservation age.

You do still have some options.

You can claim your entire employer benefit immediately as an indexed pension or convert at least half to a pension, (but the remaining lump sum must be compulsorily preserved). You can also choose whether any of the amounts that are compulsorily preserved remain in the MSBS or are transferred to a rollover fund.

If you retire before age 60, and have reached your preservation age but intend remaining in the workforce you have identical options to those in the preceding paragraph.

If you are entitled to retire from the ADF before age 55 you can immediately take a lump sum payment of your member benefit, up to the amount that had accrued (including interest) at June 30, 1999. The remainder can be rolled over or preserved in MSBS. In respect of your employer benefit you can claim the entire amount immediately as an indexed pension or preserve the lump sum in MSBS until at least age 55.

In all of the above instances, if you have elected to preserve amounts in MSBS they must subsequently be claimed no later than your 65th birthday. ComSuper’s Contact Centre (ph 132366) can provide you with clarification. The next article will provide working examples of converting employer lump sums to indexed pension.

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