About PSS

The accumulation phase value (APV) for a PSS benefit is the total of:

• accumulated member contributions;
• accumulated productivity contributions;
• notional employer contributions; and
• any transferred amounts.

Because APV is based on the withdrawal value of the fund, it must be based on a benefit option, i.e. the amount the member would receive if they withdrew their benefit from the fund. For PSS we use the option of Transfer Value to an eligible fund, hence why it is effectively just their total equity.

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 PSS, unless they make repayments for contribution arrears.

Non-concessional ‘member contributions’: Members can contribute at a whole rate of 2%–10% (or elect 0%) of their super salary, unless prohibited by fund rules or SIS. 5% is the default rate if no election is made. Contributions exceeding 10% are not permitted.

Concessional ‘productivity contributions’: Employers pay productivity contributions, which in most cases are 3% of the member’s super salary. Productivity contributions are usually included in the Defined Benefit Contribution (DBC).

Concessional ‘notional employer contributions’: The unfunded portion of a member’s employer benefit. A DBC will be calculated and reported to the ATO in respect of the employer component.

PSS members can make salary sacrifice contributions to PSSap as an Ancillary member but not directly to PSS. PSS members are unable to claim personal deductible contributions (PDC) in PSS, however, they can in PSSap. Members should consider the impact of additional member contributions versus salary sacrifice.

There are two investment options available to preserved and associate PSS members.

Cash Option: All funded equity is invested in cash assets. This option generally fluctuates less than the Default Fund, carries less risk, and is less likely to provide negative returns.

Default Fund: Funds are invested in a diverse group of assets. This option generally provides higher returns than the Cash Option over the medium- to long-term, but carries greater risk. It is the default option for members who do not elect the Cash Option. The earnings applicable to each option are calculated by comparing the value of the assets in the investment option at the start and end of a quoted performance period (e.g. month).

Contributing PSS members cannot choose an investment option. While contributing, they can only be in the Default Fund. If they preserve their benefit, they will usually have the opportunity to switch.

While members do not pay administration or direct fees (except for certain services), they do incur the costs associated with investing their funds. These costs are known as indirect costs and may arise due to fees paid to investment managers, custodian costs, investment consulting costs and internal investment costs. Members do not pay indirect costs; rather these costs are deducted from the value of income or assets of each investment option, before determining the earning rates for each business day. In simple terms, these costs have the effect of reducing the earning rates that are declared. The amount members pay as indirect costs depends on the cost of investments and performance of their elected investment option.

Contributing, preserved, pensioner and associate PSS 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. The benefits available typically depend on the membership status, length of membership, and claim circumstances. These benefits are provided at no cost to members, and are not a form of insurance.

Death and Invalidity Benefits for contributing members who are not Limited Benefits members (LBM) are based on prospective benefit accrual, as though the member had worked up to age 60. For some members, particularly those who joined PSS later in their careers and therefore have a lower prospective accrual, this coverage may not be sufficient.

Contributing PSS members who are under the age of 60 at the time of application have the option to apply for Additional Death and Invalidity Cover (ADIC). This is a form of top-up, making up the difference between their current benefit accrual and the maximum payable under PSS. As a member’s actual accrual grows, their ADIC may reduce to ensure they do not exceed their maximum benefit limit.

ADIC is underwritten cover accessed via a full application and health declaration. Applicants will need to provide a personal medical statement and may be required to undergo a medical examination or provide medical reports from their doctor(s) to establish their level of fitness to obtain cover. The insurer may accept or decline an application and may apply special conditions, exclusions, and/or premium loadings, depending on a member’s risk profile (e.g. if they have a pre-existing medical condition).

Employers pay half of the standard premium, while the remaining half of the standard premium plus any additional premium loadings are paid by the member from their pay each fortnight.

Members may also access Death; Total and Permanent Disablement; and Income Protection insurance through a PSSap Ancillary membership.

Contributor benefits include prospective service to age 60, unless the member is a Limited Benefits Member (LBM) with less than 3 years contributory service. LBM and preserved/associate Invalidity Benefits are based on their account balance. 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 PSS 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).

If a member dies, their dependants (usually their surviving spouse or eligible children) will receive a lump sum that’s calculated on the percentage of the pension they would have been paid if they retired on invalidity grounds.

Benefits are payable to eligible spouse and/or children if a member dies:

• when they’re a contributing or a preserved member; or
• after they’ve retired, if they were receiving a PSS pension.

If a member dies, and they are a:

• full benefits member, their dependants can choose to take the benefit as a pension, a lump sum or a combination of both; or
• limited benefits member, their dependants will receive a lump sum based on the benefit accrued up to the date of death. A pension is not payable.

For detailed information and examples of Death Benefit calculations, download the Death and Invalidity Benefits booklet.

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. However, a member can only elect to take a pension if they have not accessed any part of their Defined Benefit (excluding contributor early releases).

Associates have similar benefit options, however between age 55 and their preservation age they will only be eligible to claim their entire benefit as a rollover (with the exception of an early release claim) when they have reached their preservation age. If they elect to take a combination of lump sum and pension, at least 50% of the benefit must be taken as a pension.

If an eligible PSS member has elected a PSS pension, payments are usually payable from:

• the day after a contributing member’s cease date; or
• a preserved benefit member’s claim date. If the chosen claim date has passed, we may use the date the application was received.

If pension payments commence after the cease or claim date, arrears may be payable. PSS pensions are paid fortnightly on Thursdays, in the alternate week to APS paydays. PSS pensions are typically payable for life and are not impacted by income and assets tests. However, they may impact pensioners’ entitlement to payments from Centrelink, Comcare and the Department of Veterans’ Affairs.

If a member has not reached preservation age but has permanently retired from the workforce, they can apply for a lifetime pension, lump sum or a combination of both. However, any cash paid before their preservation age cannot exceed their SIS upper limit. If they have reached preservation age, they can apply for their whole Preserved Benefit from the earliest of these ages:

• minimum retiring age (generally age 55) and they have permanently retired from the workforce (i.e. not gainfully employed for more than 10 hours per week);
• age 60 and they have ceased an employment arrangement or changed gainful employment (e.g. they might have two part-time jobs and cease one but still continue in the remaining job) on or after that age; or
• age 65.

Claiming a benefit ^{(member link)}

PSS pensions are calculated by applying the relevant pension conversion factor (PCF) to their Defined Benefit amount. PCFs are expressed as a percentage. We multiply the Defined Benefit amount being converted to pension by the PCF. The table sets out the PCF at each full birthday.

Defined Benefit pensions are subject to normal pay as you go (PAYG) tax withholding obligations in the same way their salary is subject to regular tax withholding. However, they 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 deducted at your marginal tax rate.

Upon claiming their whole benefit, a member can elect to rollover:

Under preservation age

• their Post 95 transfer amount (if applicable)
• their Pre-96 transfer value (if applicable)
• up to their SIS upper limit (if applicable)
• their entire benefit (if they are over age 55 and retired from the workforce).

Over preservation age

• their Post 95 transfer amount (if applicable)
• their Pre-96 transfer value (if applicable)
• the member can rollover their entire benefit to another super fund
• Or up to 50% of their defined benefit (depending on their benefit choice)

Transfer whole benefit: Upon claiming their PSS benefit, if the member is also a member of one of the nine eligible super funds they can claim their benefit as a transfer value to an eligible scheme. A member must be contributing to an eligible fund as a result of public employment, it must be the employer's default fund, and currently receiving contributions from their employer. Further, the trustee or administrator of the eligible super fund must agree in writing to accept the transfer amount.

Benefits rolled over from another super fund are not taxed at the time of the rollover—unless the amount includes components form an untaxed source. Untaxed components up to the untaxed plan cap amount of $1,705,000 are taxed at 15% for the 2023–24 financial year.