How super scheme works

THIS is the first of an occasional series of columns that will present important information regarding the benefits you derive from membership of the Military Superannuation Benefits Scheme (MSBS), also referred to as Military Super, and seek to correct some widely held misconceptions about the scheme.

Before we embark on that process it is important that you understand the basic structure of the scheme. The scheme has two components:

• A member benefit – the accumulation of your personal contributions plus the earnings received through investment of those contributions in the MSB Fund. You are required to contribute at 5 per cent of your salary, but you can elect to pay up to 10 per cent. (In superannuation industry terms this component is “funded” because it is real money and attracts earnings from investment).
  
• An employer benefit – this is the Government’s contribution to your benefits. Your total employer benefit is derived from a calculation taking account of your length of service and final average salary (FAS). That calculation is FAS x length of service multiple = total employer benefit.
  

Your FAS is the average of your superannuation salary over the past three years of your ADF service. The length of service multiple is derived from the total period you contribute to the MSBS.

For each year up to the first seven years service: 0.18; for each year from seven years, one day up to 20 years: 0.23; for each year over 20 years: 0.28

For example, if you had just completed your 14th year of ADF contributory service, your length of service multiple would be 2.87. That is: 7 x 0.18 = 1.26 plus 7 x 0.23 = 1.61.

In this example, if your FAS was $49859, then your total employer benefit would be calculated as 2.87 x $49859 = $143,095.33

A portion of this benefit, the productivity component (3 per cent of fortnightly salary) is funded while the remainder is unfunded.

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