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9.6 Military Superannuation and Benefits Scheme
The MSBS applies to members of the Permanent Forces who commenced service on or after 1 October 1991 and also is open to members of the Emergency or Reserve Forces who:
undertake full-time service for 12 months or more
undertake full-time service for 3 – 12 months and elect to join the Scheme, or
undertake full-time service in an operational area and elect to join the Scheme.
MSBS is primarily a lump sum scheme with two basic components:
- The member benefit which is made up of the member’s contributions and interest. The member can access that part of this benefit that accrued prior to 1 July 1999. The balance is compulsorily preserved in the superannuation system until their minimum retirement (preservation) age.
- The employer benefit is a multiple of the member’s final average salary over the preceding 3 years, based on the member’s length of service. The benefit is calculated as follows: 1-7 years = 18%, 8-20 years = 23%, and 20+ years = 28%.
9.6.1 Non-medical discharge benefits
The employer benefit is preserved and cannot be paid (unless in special circumstances) until the person has reached preservation age and retired permanently from the workforce. The member can access the member benefit that accrued prior to 1 July 1999 and may access ancillary benefits if certain conditions are met. Ancillary benefits are the members own voluntary contributions and are not an employer benefit.
9.6.2 Medical discharge benefits
The member will receive an invalidity pension if they are classified as either Class A or B. 100% of the pension received is an employer benefit.
The Class A benefit is calculated by establishing the benefit multiple accrued at the time of discharge, and projecting the benefit multiple that would have accrued if the member had continued to serve until age 60. This establishes the member’s notional lump sum, which is compulsorily converted to a pension by dividing the amount by 11.
The Class B pension is generally exactly half of the Class A entitlement.
The Class C benefit is the same as for a non-medical discharge. The member is immediately entitled to the member benefit that accrued prior to 1 July 1999, with the remainder of the member benefit and the accrued employer component available at their minimum retirement (preservation) age.
The Productivity Benefit
A productivity benefit has accrued on behalf of MSBS members since it commenced on 1 October 1991. The productivity benefit is not paid separately to other benefits under the MSBS, instead it forms part of the employer benefit the person receives.
Further information about MSBS can be found at https://www.militarysuper.gov.au/
9.6.3 Table of Superannuation Benefits Payable under MSBS
Method of discharge
100% of the pension.
100% of the pension.
Prior to age 55 - No employer benefit payable.
After age 55 - Can access a pension only.
After preservation age - see “Discharge at or after preservation age” below for details of benefit after preservation age reached.
Can access the member benefit that accrued prior to 1 July 1999 as a lump sum. The remaining is preserved until preservation age.
Can access ancillary benefits (voluntary contributions) as a lump sum if conditions of release satisfied.
Nil until the person meets a condition of release and receives their superannuation benefit.
Discharge under preservation age
Benefits the same as for “Class C” invalidity benefits (as above).
Discharge at or after preservation age
Lump sum. Part lump sum can be converted to a pension.
100% of employer benefit.
Member benefit not Commonwealth funded.
Ancillary benefit not Commonwealth funded.
Note: A person may also access their superannuation prior to preservation age on the grounds of financial hardship or permanent invalidity. In these cases we reduce the persons’ incapacity payment by the employer funded component of the benefit received from the date it is received.
For further infomation on when superannuation has been received, see: 9.8 Reducing incapacity payments by superannuation benefits that have been ‘received’