About MilitarySuper

The accumulation phase value (APV) for a MilitarySuper members under age 55 is the total of:

• Member Benefit; and
• Ancillary Benefit;
• less any outstanding surcharge debt.

If the member is age 55 or more, it is the total of:

• Member Benefit;
• Ancillary Benefit; and
• Employer Benefit (including both accumulated productivity contributions and unfunded employer share);
• less any outstanding surcharge debt.

The transfer balance cap (TBC) is a limit on the total amount of super that can be converted into an income stream. All retirement products are valued and recorded against the cap—the cap and the impacts of exceeding it are managed by the ATO.

The general TBC is indexed by the ATO each year and may be increased in future financial years. For the 2024–25 financial year, the general TBC is $1.9 million. We explain this in more detail in Indexation of the Transfer Balance Cap.

Defined Benefit pensions are drawn from consolidated revenue. The credit calculated in respect of the pension is a notional value. Initially, pensions are valued by multiplying the annual pension entitlement by a factor of 16. The annual pension entitlement is calculated by multiplying the daily rate of pension (i.e. fortnightly pension / 14) by 365. The annual entitlement will be based on the first regular pension payable when the entitlement commences.

For existing pensioners on 1 July 2017 (when the TBC commenced), the pension payment made by CSC on 6 July 2017 was used as the basis of this calculation.

Pension value = fortnightly pension / 14 x 365 x 16

Example: Julie claimed a pension on 1 October 2019. Her first regular fortnightly pension payment was $3,116.44 gross. A value of $1.3 million ($3,116.44 x 14 x 365 x 16) was reported as a credit against Julie's transfer balance account.

Generally, a valuation will only be performed once, and this valuation will be reported to the ATO as a credit. However, a value may be recalculated if retrospective changes are made that affect the original valuation.

If a pension entitlement is permanently reduced in future, we'll report a debit to reflect this change. If a pension entitlement includes both an indexed and non-indexed pension, the combined pension amount will be used for the purpose of the TBC.

Only contributors are eligible to have contributions paid into MilitarySuper.

Non-concessional ‘member contributions’: Members must contribute a minimum of 5% of their salary, unless prohibited by fund rules or SIS. Contributions exceeding 10% are not permitted.

Concessional and non-concessional ‘ancillary contributions’: Ancillary contributions paid by the member, ATO or Department of Defence.

Concessional ‘productivity contributions’: The Department of Defence pay productivity contributions which is 3% of the member’s super salary. Productivity contributions are usually included in the Defined Benefit Contribution (DBC).

The fund will accept certain government contributions for preserved members, including LISC, LISTO and SG OTE (paid by the Department of Defence).

To make salary sacrifice contributions, they must be a current contributing MilitarySuper member. A member cannot make salary sacrifice contributions if they are a Preserved Benefit member.

Members cannot claim a personal deductable contribution with MilitarySuper as it is a Defined Benefit government fund.

Members can choose from four investment options for their Member Benefit and Ancillary Benefit. Members can invest their current balance and future contributions (excluding their Employer Benefit) in one or more of these options: Cash, Income Focused, Balanced (default) and Aggressive.

Productivity contributions must be invested in the Balanced option. Associates have investment choice for the funded portion (Associate A) of their benefit.

All contributions paid to a MilitarySuper account are invested, but the final value of their Employer Benefit is calculated using the formula FAS x EBM.

The tax components of the Employer Benefit depend on the amount of contributions paid, and the net returns from their investment in the default option over time, minus fees and costs.

The member’s benefit is valued in units. When contributions are received by MilitarySuper, the money ‘buys’ a number of units and the value of each unit is known as the unit price.

The value of their investment can change, depending on investment performance. The costs associated with the purchase or sale of units are reflected in the unit price for each investment option.

Investment fees and costs vary according to the investment option. They are applied equally to all members; the management costs are deducted before the unit price is determined.

Members are not charged for switching investment options.

Contributing, preserved, pensioner and associate MilitarySuper members, may have Death and/or Invalidity Benefits with their account. Depending on the type of membership held, Death and/or Invalidity Benefits may be an additional amount added to the existing balance held, just the balance held, or a reduced amount.

These benefits are provided at no cost to members and are not a form of insurance.

Contributing members who are retired from the military on medical grounds may be eligible to receive an Invalidity benefit. Invalidity and Death Benefits for contributors include prospective service to age 60 unless the member has elected a lower Compulsory Retiring Age (CRA)*.

Preserved/associate members only have access to benefits for TPI and Death and these are based on their account balance. Similar to DFRDB, Invalidity Benefits are classified as Class A, B or C (excluding associates). Death Benefits are payable to a member's eligible spouse and/or children if the member dies while they are either contributing, preserved or in receipt of a MilitarySuper pension (excluding associate pensioners). If a member dies without an eligible spouse and/or children, a benefit may be payable to the member's estate if there is any Residual Capital Value (RCV).

MilitarySuper includes automatic Death and Invalidity cover at no cost. Generally, a member is covered for an Invalidity Benefit based on their degree of incapacity for civilian employment. They will be classified as either Class A (60% or more capacity), Class B (30% or more but less than 60%), or Class C (less than 30%). If you’re classified as Class A or B, benefits are generally payable.

When a member dies, their benefit will be paid to any eligible spouse and/or eligible children. If they have no eligible beneficiaries, their benefit will be paid to their estate . MilitarySuper members cannot nominate a beneficiary.

The benefit options will depend on their age, mode of exit and retirement status. When claiming their final benefit, contributing and preserved members will generally have the option of a pension, lump sum or combination of both.

If taking a combination of pension and lump sum, the member must convert at least 50% of the Defined Benefit to pension. When claiming their Employer Benefit, a member must withdraw 100% of this component from the fund; there is no option for part preservation of their Employer Benefit. Member and Ancillary Benefits must be claimed as a lump sum, they can't be converted to pension. An associate will only have a pension if their former spouse was in receipt of a pension at the time the payment split occurred. Otherwise, only a lump sum benefit will be payable.

For contributing members, MilitarySuper pensions are usually payable from the day after the member’s separation from eligible service (permanent forces or continuous full-time service) in the Australian Defence Force.

For preserved members, pensions are usually payable from the later of either:

• the day we receive their valid application; or
• their 55th birthday.

MilitarySuper pensions are paid fortnightly on Thursdays, in the alternate weeks to ADF paydays.

MilitarySuper pensions are typically payable for life and are not impacted by income and asset tests. However, they may impact pensioners' entitlement to payments from Centrelink, Comcare and the Department of Veterans' Affairs.

Member Benefit

• Contributing members are generally required to make contributions fortnightly to their super at a rate between 5% and 10% of your super salary. They must nominate a rate as a whole percentage, or it will default to 5%. These are known as ‘member contributions’.
• A member’s super salary is their gross annual rate of pay for their rank, increment level, and pay group. It includes the annual rate of any recognised allowances that are payable to them.
• Member contributions will grow in line with investment performance.
• Once the member reaches their pension maximum benefit limit (PMBL) they won’t be permitted to make any further member contributions unless they separate and re-enter service.

Employer Benefit

This is a notional amount, determined by the following formula:

Employer Benefit = FAS x EBM

FAS = Final Average Salary. This is calculated over the last 1095 days of service, or total service if the current period of service is less than 1095 days. The super salary is the member’s gross annual rate of pay for their rank, increment level and pay group. It includes the annual rate of any recognised allowances that are payable to them.

EBM = Employer Benefit Multiple. While they’re contributing to MilitarySuper, their EBM grows with the total years of aggregated service.

Example:

FAS is $100,000 and you have contributed 8 years of service.

EBM for the first seven years is 7 x 0.18 = 1.26.

EBM for the eighth year is 1 x 0.23 = 0.23.

Total EBM is 1.26 + 0.23 = 1.49.

Employer Benefit is $100,000 x 1.49 = $149,000

Productivity contributions: The ADF will usually pay 3% of a member’s super salary as productivity contributions until they reach their pension MBL, unless they elect to stop contributing earlier. These contributions will grow in line with the default investment option—Balanced. The accumulated productivity contributions form part of their Employer Benefit, with the balance of their Employer Benefit paid from consolidated revenue.

Ancillary Benefit: Members will have an Ancillary Benefit if MilitarySuper receives contributions or rollovers that cannot be paid into their Member or Employer Benefit. This includes any additional personal contributions, transfer amounts, salary sacrifice amounts, government contributions or contributions from ADF to meet super guarantee obligations.

MilitarySuper pensions, other than some Invalidity Benefits, are subject to normal pay as you go (PAYG) tax withholding in the same way your salary is subject to regular tax withholding . However, you may be eligible to receive tax concessions or offsets.

The table outlines the tax treatment of pensions. The Medicare levy is applied where tax is withheld at your marginal tax rate.