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Preserved Benefit Members

What is Preservation?

Preservation means holding a superannuation benefit in the MilitarySuper scheme (or another regulated superannuation fund) until such time as it can be paid.

So, when can it be paid? When I retire?

Membership of MilitarySuper guarantees you a superannuation benefit. Only when you retire from the workforce will you have unrestricted access to that benefit.

In the language of superannuation, retirement from the workforce means:

  1. you have reached age 60 and ceased employment; or
  2. you have reached your preservation age (if that is less than 60), ceased employment and intend never to be gainfully employed again.

Your preservation age is determined by your date of birth as shown below:

Preservation Age Table

Date of Birth Preservation Age
Before July 1960 55
July 1960 - June 1961 56
July 1961- June 1962 57
July 1962 - June 1963 58
July 1963 - June 1964 59
After July 1964 60

The Australian Government introduced these rules in 1999. They apply to all regulated superannuation schemes in Australia.

Why is Preservation Necessary?

Superannuation is a long-term investment to provide for you in retirement. Australian law does not generally allow superannuation benefits to be paid out until retirement.

Most MilitarySuper Members will leave the Australian Defence Force (ADF) before retirement, often to join the civilian workforce, and will consequently have some or all of their superannuation benefit preserved until such time as they retire from work altogether. You can see this from the main scheme benefit summary diagram.

If you are retired from the ADF on invalidity grounds, some or all of your Member Benefit will remain preserved, either in MilitarySuper or another superannuation scheme of your choice.

In the past, leaving long-term employment before retirement meant you may not have received full credit for the superannuation benefits you accrued. However, since inception in October 1999 the MilitarySuper scheme has included preservation arrangements for all Members leaving the ADF before retirement.

In short, preservation ensures that:

  • you receive full credit for any superannuation benefits you accrue whilst a Member of the ADF;
  • the value of those benefits is maintained according to changes in the CPI or MilitarySuper Fund investment performance until such time as you do retire; and
  • should you rejoin the ADF after a period elsewhere, you can again accrue superannuation benefits, more or less from the point you left.

How does this affect access to my lump sum?

The main effect of these retirement rules is to gradually increase the age at which MilitarySuper benefits can be taken entirely as lump sum from 55 to 60.

You can be paid the employer component of your MilitarySuper benefit as an indexed pension from age 55 but you cannot receive it as a lump sum until retirement (as defined above). Similarly you cannot be paid that part of your Member Benefit that accrued after 30 June 1999 (or any of it if you joined after that date) until you reach age 60 (or your preservation age) and retire permanently from the workforce.

How is my preserved benefit updated?

Your preserved benefit comprises:

  • a Member Benefit;
  • a taxed Productivity Benefit;
  • an untaxed Productivity Benefit (if you transferred from DFRDB); and
  • an untaxed Employer Benefit

Member Benefit

When you leave the ADF you have the option of taking the Member Benefit you had accrued to 30 June 1999 as a lump sum, preserving it in the MilitarySuper Fund or rolling it over to another scheme.

However, the part of your Member Benefit that accrues after 30 June 1999, which is all of it if you joined after that date, must be preserved either in the MilitarySuper Fund or another scheme of your choice.

Your preserved Member Benefit is updated according to the investment performance of the MilitarySuper Fund. Until financial year 2001 - 02 it was the annual crediting rate of the Fund that determined this. Since July 2002 the investment performance has been represented by the daily unit price of the investment strategies applicable to your Member Benefit. More information about your MilitarySuper investment choices can be found in the publication Take control of your future - Your Guide to Investment Choice (PDF, 2.52MB).

Your preserved Member Benefit is shown on your annual Member statement as a fixed number of units, as you are no longer contributing to the Fund. When you retire and claim your preserved Member Benefit, its value will be calculated at the prevailing unit price on the date of claim.

Taxed productivity benefit

Your productivity benefit forms part of the employer component of your preserved MilitarySuper benefit. Since the MilitarySuper scheme began your employer has 'funded' this benefit whilst you were in the ADF. This means that productivity contributions were actually paid by your employer into the MilitarySuper Fund for you.

Similarly to your Member Benefit, the relevant MilitarySuper earnings over time are reflected in the daily unit price of the default investment strategy. This is applied to the number of units corresponding to the value of your taxed productivity benefit at the time you left the ADF. The number of units does not change because productivity contributions are not being paid into the Fund whilst you are a Preserved Benefit Member.

Untaxed productivity benefit

Members of MilitarySuper who transferred from the now closed DFRDB scheme have a component of their productivity benefit not taxed. This part of a preserved productivity benefit is increased annually by the March-to-March Consumer Price Index

Untaxed Employer Benefit

The bulk of your preserved Employer Benefit is untaxed, meaning that your employer provides it at the time the benefit is paid rather than by paying regular contributions.

This part of your preserved MilitarySuper benefit, which is equal to the total Employer Benefit less the value of the productivity benefit at the time you left the ADF, is also increased annually by the CPI.

When and how can I access my preserved benefit?

For information on accessing your Preserved Benefit please see Your Benefit Options and Claiming Your Super.

Death Benefits

Can I roll over my preserved Employer Benefit?

Yes, to any Fund of your choice from age 55 onwards. For more information on rolling over benefits to another superannuation Fund see Your Benefit Options.

More Information

Customer Service Centre

For information about your superannuation entitlement, the payment of your benefit or about any other superannuation related matter, see the Customer Service Centre.

Forms

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