Super choice is on the money

ADF members don’t need to decide which fund to bank their superannuation in.

Photo by CPL Simone Liebelt.

WITH the superannuation choice media blitz, many ADF members will be wondering “what does it mean for me?”

The answer is, it will not change anything. The Government has passed a new law giving employees the choice of superannuation fund. However, the changes will not affect members of the ADF.

Most employers have to make contributions to a super fund on behalf of their employees. Previously, the employer chose the fund; now most employees can choose, which is why the changes are called superannuation choice.

ADF members are not covered by the changes, so they do not get to choose a fund to which Defence will pay contributions. There are good reasons for this.

Defence meets its superannuation obligation to ADF members through the Defence Force Retirement and Death Benefits (DFRDB) Scheme and the Military Superannuation and Benefits Scheme (MSBS). These are funded differently from other super funds.

Most employers only pay the minimum contribution to a superannuation scheme, which is 9 per cent of salary. Defence’s contributions to the ADF schemes are equivalent on average to 33.9 per cent for DFRDB and 23.2 per cent for MSBS.

The DFRDB and MSBS were carefully designed to meet the special needs of ADF members. They contain many special provisions, such as invalidity benefits, lifetime pensions, and pensions for eligible dependants.

Most other super schemes do not provide such benefits or charge members extra for them. The Government has recognised these special circumstances and exempted Defence from the new arrangements. This is why superannuation choice does not affect members of the ADF.

While choice of superannuation scheme does not apply to the ADF, you can still make decisions about superannuation and other aspects of your personal finances that will affect your retirement income. For example, depending on which scheme you belong to, you can choose your level of personal contributions and investment strategy. These are important decisions that will influence your quality of life in retirement.

You should consult with a licensed professional, who can advise you about your financial affairs, before you make any decisions.

Information provided by the Personnel Policy and Employment Conditions Branch, DPE. More details can be found at:

www.dfrdb.gov.au (for DFRDB)
www.militarysuper.gov.au (for MSBS)
www.fido.asic.gov.au (for choosing a financial advisor).

Click “Getting Advice” on the left-hand menu.

 

 

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