So
Super
MILITARY Superannuation Benefits Scheme (MSBS) members discharged
from the ADF as medically unfit are entitled to invalidity benefits.
The entitlement will not apply if the discharge:
- occurs
within the first two years of service and is attributable to
a pre-existing condition not materially aggravated by the member’s
service;
- was
due to an injury that occurred while on absence without leave
for more than 21 days; or
- was
the result of a wilful action to obtain invalidity benefits.
The level of invalidity benefit will depend on the degree to
which the member is incapacitated from undertaking appropriate
civilian employment because of the medical condition responsible
for discharge.
Whether civilian employment is available or the member is employed
are not necessarily relevant considerations.
What constitutes appropriate civilian employment is determined
on the basis of education and working experience. Generally,
medical opinion is obtained regarding the level of the member’s
incapacity to perform that employment.
The
three levels of invalidity benefits are:
- Class
C – where incapacity is less than 30%;
- Class
B – where incapacity is from 30% up to 59%; and
- Class
A – where incapacity is more than 60%.
Members
classified as either Class A or B invalidity beneficiaries are
entitled to receive a pension (indexed to CPI increases), a lump
sum payment of their pre-July 1999 member benefit and preservation
of the remainder of the member benefit, which can be claimed at
the applicable preservation age.
| EXAMPLE
OF AN INVALIDITY PENSION CALCULATION |
|
A
sergeant who joined the ADF at 18 is discharged as medically
unfit at 35. To determine the rate of invalidity pension
the following calculations are taken.
Determine the period of service that would have been
achieved had the sergeant remained in the scheme until
55. Actual service is 17 years and prospective service
from age 35 to 55 is 20 years, providing a total period
of expected service of 37 years. The employer benefit
is
calculated as follows:
7 years @ 18% = 1.26 x FAS*
13 years @ 23% = 2.99 x FAS
17 years @ 28% = 4.76 x FAS
Total = 9.01 x FAS
And using an FAS of $47,200 at the time of discharge
the employer benefit becomes: 9.01 x $47,200 = $425,272
To determine the Class A pension rate applicable for
invalidity benefits, that employer benefit is divided
by 12 (the pension conversion factor for age 55) –
$425,272 ÷ 12 = $35439.33.
In this example, if classified Class A, the sergeant’s
invalidity pension would be $35439.33 a year. If classified
Class B, the pension would be half that amount; that
is $17,719.67 a year. |
|
The
pension payable in both cases is based on the lump sum employer
benefit calculated by multiplying the member’s Final Average
Salary by the benefit multiple that would have applied had the
member remained in the scheme until age 55. The Class A pension
rate is then determined by using the age 55 pension conversion
factor. Class B pension is half that rate.
Class C beneficiaries are only entitled to a lump sum refund of
their pre-July 1999 member benefit with preservation of the remainder
of the member benefit until preservation age. The employer benefit
accrued up to the time of discharge is also compulsorily preserved
until age 55 (or preservation age).
Members initially classified Class A or B will periodically have
their classification reviewed. This process recognises that medical
conditions can improve or deteriorate over time. It recognises
that the member’s appropriate civilian employment changes
over time and influences the member’s level of incapacity
for that employment.
In the event a member’s degree of incapacity has altered,
the level of benefits payable will be reclassified (to Class A,
B or C) and be paid at that new rate.
Members need to be aware that this may mean an increase or decrease
in the level of benefits.
Members initially classified Class C are not subject to future
reviews.
ADF members discharged as medically unfit may also qualify for
additional benefits provided through Department of Veterans’
Affairs and the Military Compensation and Rehabilitation Service.
Members need to be aware that the basis of assessing these benefits
is different to the assessment of superannuation invalidity benefits.
The So Super column provides factual information about scheme
entitlements and is not intended to provide advice on an individual’s
particular circumstances. Further information can be obtained
from ComSuper on 132 366.
