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9.7 ADF Super and ADF Cover
ADF Super has replaced MSBS as of 1 July 2016. ADF Super is the default fund for anyone joining the permanent ADF for the first time, however members will be able to choose a different fund if they wish (though MSBS has been closed to new members from 1 July 2016). ADF Super is underpinned by a death and invalidity scheme called ADF Cover.
The amount of cover a former member receives is related to the period of time from the date of discharge to age 60. Under ADF Cover, a temporary ‘top up pension’ will be paid to invalidity pensioners until they turn 60 when they can then access their accumulated superannuation. Two rates of pension are calculated and the ‘basic’ pension plus ‘top-up’ pension is paid until the member turns 60, after which they will only receive the ‘basic’ pension.
The invalidity pension (both basic and top-up components) is 100% Commonwealth-funded.
ADF Cover is managed by the Commonwealth Superannuation Corporation.
As per the MSBS and DFRDB a member can be classified following a medical discharge as either Class A, B or C. A person will receive a pension if they are classified as either Class A or B.
9.7.1 Basic Rate of Invalidity pension
The Basic Rate of Invalidity Pension is based on the prospective years of service to age 60.
Basic rate = prospective years of service to age 60 x Salary at Discharge x Incapacity Factor (where the incapacity factor is Class A - 2.2% or Class B - 1.1%).
9.7.2 Top-Up Rate of Invalidity pension
The Top-up Rate of Invalidity pension is based on the member’s actual years of service for the current period of service.
Top-Up Rate = Actual years of service for the current period x Salary at Discharge x Incapacity Factor (where the incapacity factor is Class A - 2.2% or Class B - 1.1%).
Example – Calculation of ADF Cover benefits
A former member enlisted on 1/9/2015 and discharged on 13/9/2016 and therefore has 1 year of qualifying service. The member is classified as Class A and has a discharge salary of $80,000.
A. Top-up rate = 1 x $80,000 x 2.2% = $1,760.00 per annum (divide by 26 to calculate the fortnightly pension = $67.69)
The member’s prospective years of service start from the date after discharge i.e. 14/11/2016 to the date of their 60th birthday. In this case the member turns 60 on 3/6/2047 i.e. has 30 years of prospective service.
Basic rate = 30 x $80,000 x 2.2% = $52,800 per annum ($2,030.77 per fortnight).
The member would receive a total pension of $54,560 per annum until age 60 after which the top-up pension would cease and they will receive a pension of $52,800 per annum.