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9.10 Notional Superannuation Contributions ('SC' amount) - DRCA only
The ‘SC’ amount is only applicable to incapacity payment calculations under S20, 21 and 21A i.e. calculations where a person has received a Commonwealth superannuation amount.
The SC amount is “the amount of superannuation contributions that would have been required to be paid by the employee in that week if he or she were still contributing to the superannuation scheme”.
The SC amount is added to the superannuation amount (the ‘SA’) and reduced from the incapacity payment.
As a result of amendments contained in the Safety Rehabilitation and Compensation And Other Legislation Amendment Act 2007 (SRCOLA) the SC amount is 5% of NWE for all clients who discharge/retire on and from 27 April 2007.
The intent of SRCOLA was to restore the original policy intent of the Act, so that eligible retired employees would receive a combined compensation and superannuation weekly benefit of no more than 70% of NWE.
The subtraction of the 5% is merely one step in establishing the entitlement amount. It is not a deduction in the same sense as taxation or debt recovery. There is a distinction between taking something away from a compensation entitlement (as occurs with taxation and debt recovery) and a compensation entitlement that is less than some fictional quantity. One implication of this is that, unlike a person's tax deductions, the '5% notional amount' is not allocated somewhere. Specifically, it is not money that would otherwise end up in a superannuation account.
9.10.1 Establishing the SC amount – DRCA only
The minimum contribution rates (i.e. the 'SC' amount) for the two military superannuation schemes are:
Defence Force Retirement and Death Benefits (DFRDB)
Military Superannuation and Benefits Scheme (MSBS)
9.10.2 Establishing the SC amount – Reservists - DRCA only
Generally Reservists will not be in receipt of superannuation under the DFRDB or MSBS military superannuation schemes unless they have undertaken a period of Continuous Full-Time Service (CFTS). However, it is possible that a Reservist may be in receipt of superannuation under another Commonwealth Government superannuation scheme and in some circumstances be subject to the superannuation rules (Ss20, 21 and 21A).
Where superannuation benefits are being received from a relevant Commonwealth Government scheme, it is necessary to establish the appropriate SC amount by contacting the Commonwealth Superannuation Corporation (for the CSS and PSS schemes) or the relevant Fund Administrator for other schemes or private funds to which the Commonwealth is making contributions to on behalf of the member.
Under some Commonwealth superannuation schemes, the rate of employee contribution is set by the member within a specified range (e.g. 2%-10% for the PSS Scheme), rather than being set at a uniform rate for all members of the scheme. The SC amount should be based on the minimum contribution rate at which the Reservist member was permitted to contribute (e.g 2% under the PSS), not on any higher actual rate at which the Reservist member was actually contributing.
Where a Reservist retired from the ADF before 27 April 2007 (the commencement of SRCOLA), the SC amount is the amount they would have been required to pay in a week if they were still contributing to their civilian superannuation scheme i.e. a percentage (as confirmed by the relevant scheme) of the civilian component of NWE.
If the Reservist retired from the ADF on or after 27 April 2007, the SC amount is 5% of total NWE (Reserve + civilian component).
Example - Calculating the SC amount
Q. Member was part of the DFRDB Scheme, how much ‘SC’ should be held in calculations?
A. If the person retired from ADF employment prior to 27 April 2007 the SC amount is 5.5% as that is the amount they were required to contribute. If the person retired on or after 27 April 2007 the SC amount is 5%.
Example - Calculating the SC amount for a person with ADF Reserve service and civilian Commonwealth employment
Q. A person who was a Reservist with civilian Commonwealth employment (i.e. APS) retired from the ADF in December 1999, but continued in civilian Commonwealth employment (APS) until December 2009. The person was in the PSS superannuation scheme; how much 'SC' should be held in calculations?
A. As the person retired from ADF employment before 27 April 2007, the SC amount is 2% (minimum required under the PSS) of the civilian component only.
If the person had retired from ADF employment after 27 April 2007, the SC amount would be 5% of the total NWE, as per the SRCOLA amendment.