Super in focus
Inside the PSS for contributing members: contributions decide final benefit
The PSS is a defined benefit scheme. This means your final defined benefit is largely unaffected by the fund’s investment performance. Instead, your member contribution rate ultimately determines the size of your final benefit.
How is my final benefit calculated?
If you’re a contributing member, your final benefit is worked out according to a formula, rather than by how much money has accrued in your account.
Your final average salary (FAS) x Your accrued benefit multiple (ABM) = Your benefit
Why are my contributions so important?
The contribution rate, and the length of time that you contribute for, determines your accrued benefit multiple. When you contribute more, you increase your final accrued benefit multiple, and this means that your final benefit will be higher.
| Contribution rate and years of membership = ABM |
FAS ($58,000) x ABM = lump sum OR CPI-indexed pension at 60 |
|
| Greg | 20 years @ 2% 10 years @ 5% = ABM of 5.10 |
$58,000 x 5.10 = $295,800 lump sum OR $26,890 p.a. |
| Kate | 10 years @ 5% 12 years @ 10% 8 years @ 2% = ABM of 7.02 |
$58,000 x 7.02 = $407,160 lump sum OR $37,014 p.a. |
| Dan | 20 years @ 10% 10 years @ 5% = ABM of 8.3 |
$58,000 x 8.3 = $481,400 lump sum OR $43,763 p.a. |
Note: Greg, Kate and Dan started on the same day and earned the same salaries for their working lives.
You can choose to contribute between 2% and 10% of your after-tax salary, or you may choose not to contribute at all. If you haven’t changed your contribution rate since you joined the PSS, your contributions will be set at the default rate of 5%.
To find out more about your PSS contributions read the Contributing to the PSS fact sheet.
If you would like to change your contribution rate you can download the Change your contribution rate form or call 1300 000 377.
What are the different components of my benefit?
| Member component | This is made up of the member contributions you make while you are a contributing member, plus ongoing fund earnings (positive or negative). |
| Productivity component | This is made up of the fortnightly contributions your employer makes while you are a contributing member, plus ongoing fund earnings (positive or negative). |
| Employer component | This is a defined amount financed by your employer, which is payable when you leave the workforce. |
| Additional contributions | This is made up of super you have transferred from other funds and government co-contributions you have received, along with any ongoing fund earnings (positive or negative). |
How do I benefit from the PSS?
Being part of the PSS has many benefits, and as a contributing member you get:
- a high value employer component that is well above the superannuation guarantee
- no administration fees – your employer pays these
- the choice to change your contribution rate at any time to suit your financial needs
- automatic death and invalidity cover at no extra cost to you
- a range of flexible retirement options, including a CPI-indexed pension for life.
To find out more about the PSS see the PSS Product Disclosure Statement or register for one of our upcoming At Work for You workshops.
Eligible rollover fund
If you don’t claim your PSS benefit within 90 days of stopping work, it will be preserved in the PSS and you may lose your right to choose to receive a benefit other than preservation. If you’ve made an election to receive a lump sum benefit, but have not provided details of where the lump sum is to be paid, it can be paid into an eligible rollover fund. The fund selected by ARIA is AUSfund – Australia’s Unclaimed Super Fund. The contact details are:
AUSfund
PO Box 2468
Kent Town SA 5071
Phone: 1300 361 798
If your benefit has been transferred, you must claim it from the rollover fund and you’ll be subject to its terms and conditions.
Superannuation surcharge tax
The Australian Government abolished the superannuation surcharge from 1 July 2005 but you may still have to pay it in certain circumstances. For example, if your adjusted taxable income for any years when the surcharge applied, was higher than the annual thresholds, you may have some outstanding tax to pay. Also, if you didn’t provide your tax file number to the PSS, you may have a surcharge debt in relation to certain employer contributions reported to the ATO up to and including the 2004/05 financial year.
The ATO determines whether you’ve incurred a surcharge debt and if you have, the amount will be shown in the surcharge debt table on your Member Statement. If you have a surcharge debt, you don’t have to pay it now – it will be deducted from your PSS benefit when it’s paid to you. If you want to, you can reduce your surcharge debt by making early payments.
Interest calculated at the 10-year Treasury Bond Rate will be applied to any outstanding balance of your surcharge debt account as on 30 June each year. If the surcharge amount shown on your Member Statement varies from the amount you were advised by the ATO, please contact them on 13 10 20.
To find out more about your PSS super and being a contributing member, download the PSS Product Disclosure Statement.
