ComSuper Pension

The transition from military to civilian life can be a big change for you and your family – and this can be particularly daunting if you are medically discharged. Dealing with the challenges of a physical injury, the psychological impact of leaving your career and the loss of a stable income is worrying. This isn’t made any easier by the complexity of claiming compensation and accessing your ComSuper pension.

At VHC, we are ex-military and have helped countless veterans by applying for their DVA claims. Notwithstanding the challenges of injury and losing your job, the process of making a claim is stressful, confusing and frustrating.

Having been there ourselves, we understand exactly what you’re going through. So, we offer a turnkey service where you present us with all your documents, and we take up the claim on your behalf. You will not have to deal with countless people or departments, and we will keep you informed of what’s happening every step of the way.

If you are making a DVA claim prior to your discharge, or soon after, you should consider applying for your ComSuper at the same time. Here, we outline some information about the different military superannuation schemes, but you will need to speak with them directly to confirm they will allow you to claim your benefits early.

How Do I Access my ComSuper Pension Benefits Early?

Superannuation is designed to provide you with pension payments once you retire.

There are specific rules, known as conditions of release, as well as deeds or other restrictive rules your super provider may have with regard to the payment of benefits. Typically, you can access your super when you:

• Are 65 years old
• Reach your preservation age and either retire or while you are still working start a transition to a retirement income stream

However, there are circumstances where you may be able to apply for your super savings earlier if you have, for example, a specific medical condition or severe financial hardship. As there are several different schemes for military superannuation and benefits, the rules may differ for early access. So, check on the criteria for claiming your super early by contacting your super provider before your apply.

“Hybrid superannuation schemes, like CSS, provide part defined benefit and part accumulation”

Summary of Benefits – Military Superannuation Schemes

We have provided a summary of each military super scheme below – the relevant product disclosure statement of each scheme will contain more information, so make sure you have access to one for your own reference.

Commonwealth Superannuation Scheme

The Commonwealth Superannuation Scheme (CSS) is a public sector scheme established on 1 July 1976 and closed to new customers on 30 June 1990. CSS is a hybrid scheme (part defined benefit, part accumulation, part defined benefit) where benefits are from both customer and employer contributions.

Lump sums and pensions

Benefits are paid when the minimum retirement age is reached but may be paid earlier in the event that a customer is retrenched, dies or becomes totally and permanently incapacitated.

Invalidity and Death Benefits

CSS has an invalidity and death benefits scheme based on any entitlement a customer would have received had they worked to age 65 (subject to the assessment of pre-existing medical conditions). After the age of 65, benefits are based on the account balance on the date of retirement or death.

Commonwealth superannuation benefits may be paid to customers with deferred benefits. These depend upon the value of the deferred benefit and do not include prospective service

Public Sector Superannuation Scheme

The Public Sector Superannuation Scheme (PSS) is a public sector scheme established on 1 July 1990 and was closed to new customers on 30 June 2005. PSS is a defined benefit scheme where benefits derive from customer and employer components. Upon retirement, 50% or more of the final benefit accrual can be converted to a lifetime non-commutable indexed pension, paid by the Australian Government. The remaining balance can be payable as a lump sum.

Pensions and Lump Sums

In most cases, PSS benefits are paid when a customer exits the scheme at retirement. Pension benefits usually are paid once the minimum retirement age is reached and the customer has permanently retired. If the customer is retrenched, becomes totally and permanently incapacitated, or dies benefits may also become payable

Invalidity and Death Benefits

Invalidity and death benefits are provided by PSS. Additional death and invalidity cover may be purchased, subject to underwriting requirements.

Benefits are based on the entitlement the customer would have received if they had worked to age 60, subject to any benefit restrictions. At age 60 or older, benefits are based on the account balance at the date of retirement or death. Benefits may be payable for customers with preserved benefits but these are based on the value of the preserved benefit and do not include prospective service.

“The employer benefit is the defined benefit component based on a customer’s period of ADF service and their final average salary”

Defence Force Retirement and Death Benefits Scheme

The Defence Force Retirement and Death Benefits Scheme (DFRDB).

The DFRDB scheme closed to new entrants in 1991, when MilitarySuper was established. The DFRDB pension is paid to ADF members who became contributors after 1 October 1972 and for contributors to DFRB who were transferred to DFRDB on 1 October 1972

Lump Sum Payments

Customers can commute part of their pension payments to receive an upfront lump sum payment but this permanently decreases the amount they receive from their DFRDB pension.

Benefits

DFRDB pensions provide invalidity and death benefits. Invalidity payments are based on:

Class A: Significant incapacity

Class B: Moderate incapacity

Class C: Low incapacity (no entitlement to an invalidity pension)

Military Superannuation and Benefits Scheme

The Military Superannuation and Benefits Scheme (MSBS or MilitarySuper) was established on 1 October 1991 and closed to new ADF entrants on 30 June 2016. New ADF entrants are enrolled with ADF Super.

MilitarySuper is a hybrid scheme (part accumulation, part defined benefit) with benefits coming from a customer and employer component. It consists of the mandated customer contributions, any amounts brought over from DFRDB, plus fund earnings on those amounts. The employer benefit is the defined benefit component based on a customer’s period of ADF service and their final average salary.

Pensions and Lump Sums

The amount of paid benefits vary depending on each individual’s circumstances. Employer benefits are generally preserved until the age of 55 although pension payments may be paid before the age of 55 if the customer transitions under invalidity or redundancy.

Invalidity and Death Benefits

Death benefits are provided by MilitarySuper and Invalidity benefits are subject to three levels of classification:

Class A: Significant incapacity

Class B: Moderate incapacity

Class C: Low incapacity (no entitlement to an invalidity pension)

Things to Consider Before You Withdraw Your Commonwealth Superannuation Early:

The purpose of military pensions is to provide you with an income stream after you have retired from the workforce and left the ADF. If you take any of it out earlier, it can have a detrimental effect on the pension payments you receive in the future.

There may be some tax implications for super withdrawal, depending on your reasons for taking it early. There are no special tax rates due to temporary incapacity and you will pay tax as a normal super lump sum. Permanent incapacity may have a tax-free component but it depends on your specific circumstances.

Commonwealth Superannuation is linked to the Consumer Price Index – CPI. This means that as an indexed pension, it increases each year in line with the CPI rate. The percentage increase is set by the government, but it does mean that thanks to cpi indexation pensioners can expect to receive pension increases each year.

Beware of schemes that promote early release of your super benefits. These schemes are illegal and may be operated as scams to swindle you out of your retirement savings.

If your thinking about Comsuper invalidity benefits, you should be considering DVA Initial Liability Claims and potential permanent impairment.

It is important to take the appropriate steps to ensure financial protection for you and your family in the event you are medically discharged from the ADF. While it may be more desirable to not claim your ComSuper pension before the due date, ultimately your security and financial wellbeing may require that you do.

Making a claim when you have been medically discharged can be overwhelming. At a time in your life when you need support, the process is often lacking and impersonal. But, there is no reason to struggle alone.

Veterans Health Centre are here to provide you with independent advice and help on submitting DVA claims, veterans’ ongoing healthcare, permanent impairment and other areas that may be worrying to you as a veteran, such as early access to your ComSuper Pension. Contact us by calling 0429 146 039—we’re here to help.