|
|
|
|
 |
||
 |
| |
||||||
| The truth about MSBS By CMDR Kate Gilmore, SCIT Edition 5008, 17 May, 2007 |
||||||
The truth is that either scheme has its positives and its negatives depending on individual circumstances. It is not possible for new members to enter and contribute to DFRDB but that is not all bad news, here are a few of the facts about MSBS: -The minimum compulsory contribution is 5% of salary, however additional options include: - Contributions up to 10% (an additional 5%) of salary after tax - Able to make contributions on behalf of your spouse - Under ancillary benefit arrangements members can salary sacrifice up to 100% of salary before tax - Able to roll in lump sum amounts from other Super funds. -The contributions that a member makes are fully invested with five options ranging from low risk (cash) to high volatility (high growth – invested in Australian and overseas shares and property). -The contributions that Defence makes are a generous percentage of average salary increasing with total years of service: - 0-7 years 18% of salary - 8-20 years 23% of salary - 20+ years 28 % of salary - This compares most favourably with the minimum civilian employer contribution of 9% (of actual salary) - The employer benefit is a ‘Defined Benefit’ based only on years of service and final average salary (over 3 years). The member takes no risk compared to civilians in accumulation schemes where the member takes the market risk that their superannuation could decrease, this in fact happened in the period 2001-2003 due to the poor investment climate. -MSBS allows members to take a pension for life based on excellent conversion factors. If a member takes an MSBS pension, the effect is if the superannuation had been 50% greater than the equivalent amount in a civilian scheme. Most external superannuation schemes are based on payments until the funds run out – the MSBS pension is for life regardless of how long that might be. Another good feature of MSBS is that in the event of your death as a pensioner, because it is reversionary benefit it will continue to be paid to any recognized dependents, unlike other super funds (life insurance is the only way a similar entitlement may be bought). -Recognising the uniqueness of long military service, the MSBS pension option is available from 55 years of age regardless of the higher preservation ages regulated for the rest of the community. -MSBS has excellent reversionary benefits for dependents. In civilian schemes, death or total disability will result in the payout of the current value of the superannuation entitlement (which could be quite small for young people) unless additional insurance has been purchased. In the MSBS, the reversionary benefits for dependents is based on prospective service as it the member had continued in service at the current rank to age 55 – resulting in a much larger benefit. There are also excellent death benefits for serving members, the spouse payment is calculated as if the member served to age 55. This benefit may be taken as a lump sum, a pension or a combination of both, members without any recognised dependents have any benefit paid to their estate. -The limitations of MSBS (choice of scheme, etc) result from the ‘defined benefit’ nature of the scheme which provides the surety of final payout (at no risk to the member) and prospective service reversionary benefits for surviving dependents. Further MSBS members cannot have employer contributions paid into another scheme and it must be preserved until at least age 55. From a Navy Sea Change perspective there are several advantages for retention in the MSBS Scheme that acknowledges the different career horizons that Navy people have. Defence formally recognizes service after 7 years by a 5% increase in contributions and a further 5% for service greater than 20 years. This is not ‘cash in hand’ and superannuation may not be on the ‘top of your list’ now as a young member of the Navy, but it is an important aspect of your employment that equates to sizeable sums of money later in life. The contents of this article should not be construed as financial advice, as always members should seek advice from licensed financial advisers from COMSUPER on 1300 001 877. | ||||||
DCN seeks your input Deputy Chief of Navy is seeking input from the wider Navy community and individual members, as well as their families, regarding the recent performance of both the Defence Housing Authority (DHA) & TOLL Transitions. In addition, Sea Change Implementation Team (SCIT) has received a number of unsolicited expressions of dissatisfaction via both SCIMARS feedback and during SCIT road show presentations that would suggest that Navy may needs to address the problem of service delivery more formally. Initially, this will occur in the form of an on-line survey and through a local Sea Change Focus Group which will seek member’s views of their most recent removal, looking at both good and bad aspects of the experience. To participate in the survey, please follow the link from the Library Notices at the SCIMARS page at http://navy.defence.gov.au/SCIMARS/index.asp. | ||||||
| Sea Change out on the road again By LCDR Annette Nelson There has been a significant amount of work that has been progressed by many Branches and Directorates within Navy as part of the Sea Change Program since the last Sea Change road show late last year. To communicate all this good work to you, the next Sea Change road show will be conducted through May and July throughout the country. The most important things you should know about Sea Change are: - It is all about retention. It specifically targets issues that Navy people have identified as needing to be addressed. - It is for everyone in the Permanent and Reserve Navy; Officers, Senior Sailors, Junior Sailors and to some extent families. - It is an ongoing program across Navy. - People are CN’s highest priority (together with Operations). Check with your local Visit Coordinator or Ship’s Office to get exact dates, times and venues. The road show is usually conducted in two parts: a formal presentation to large groups and a number of smaller discussion groups in the workplace. Some of the topics in the road show include: - Recruiting and Retention ImplementationStrategy (DEFGRAM 697/06) - Remuneration Reform Program - Retention/Completion bonuses/allowances - ADF Reviews (superannuation, Strategic Career Management Framework Project, Review of conditions of service for Australian Defence Force Members who have shared parental responsibility, Housing Review, etc). - Reserve Policy So, come along, get involved and learn more about the retention initiatives of your Navy. If you want to know more about the Sea Change Program, have a look at the Sea Change Management and Reporting System (SCIMARS) website: http://navy.defence.gov.au/SCIMARS/index.asp
| ||||||
