Important Note
This is a summary of the more significant provisions of the Commonwealth Superannuation Scheme established by the Superannuation Act 1976 as they apply to a person joining the Scheme without having been a member of a Scheme established by the Superannuation Act 1922.
The summary has been prepared as a quick reference but it is not a substitute for the Superannuation Act 1976 and its accompanying Superannuation Regulations.
Persons who were covered by the Superannuation Act 1922 and then covered by the Superannuation Act 1976 may have transitional provisions which apply to them. This summary does not address or allow for any of those transitional provisions.
INDEX TO CSS SCHEME
Membership is no longer open to Telecom/Australia Post employees.
2.1 Contributors are medically examined on entry. Should a physical or mental condition be found to be in existence, the Commissioner may require that condition be specified on a Benefit Classification Certificate (BCC).
2.2 A BCC ceases to apply in relation to the person upon the person contributing for 20 years or attaining maximum retiring age, which ever is earlier.
2.3 If invalidity retirement or death occurs at a time when a BCC applies in relation to a person and is caused, or substantially contributed to, by a condition(s) specified in the BCC, the benefits payable are adjusted.
Salary includes allowances that are recognised in the Regulations
4.1 A member is required to pay basic contributions of 5% of salary and may elect to contribute up to an additional 5% of salary as supplementary contributions.
4.2 The fortnightly amount of contributions payable is adjusted for salary increases annually on the member's birthday.
4.3 Member's contributions are paid into the Superannuation Fund and accumulated with interest at the prescribed rate which is based on the earning rate of the Fund.
5.1 For benefit purposes, contributory service is the aggregate of full-time contributory service and, for permanent part-time employees, their part-time service converted to full-time service on a proportionate basis.
6. PERIOD OF EMPLOYMENT PERMANENT PART-TIME EMPLOYEES
For benefit purposes, period of employment is the period from the first day of membership to the last day of membership, irrespect- ive of whether a person was full-time or part-time, but excluding any period when the person was not contributing to the Scheme.
7. AGE RETIREMENT (INCLUDING EARLY RETIREMENT)
7.1 The benefits on age retirement or early retirement are:
(a) an employer-financed pension accrued on completed years of
contributory service, based on final annual salary and
discounted if retirement occurs before age 65;
and;
at the member's option, either
(b.i) a lump sum of the member's accumulated contributions
(being basic and supplementary contributions accumulated
with interest at the prescribed rates);
or
(b.ii) a member-financed additional pension based on the
amount of the member's accumulated contributions (there is
a maximum on the annual amount of additional pension that
can be taken (eg 20% of salary on retirement at age 60 or
more), excess accumulated contributions are paid as lump sum
7.2 The employer-financed pension accrues at the following %age of final annual salary for each completed year of contrib service eg: 32 years contributory service accrues an employer financed pension of 50.5% of final annual salary before any discounting for retirement before age 65.(20x2.0 + 10x1.0 + 2x0.25)
Contributory Service Per Cent of Final Salary Years 1-20 2% per year Years 21-30 1% per year Years 31-40 1/4% per year Years over 40 Nil7.3 Where a member retires before age 65, the accrued employer- financed pension is discounted by 2% for each year between 60 and 65 and 3.6% for each year prior to age 60.
Age at Retirement Discount Age at Retirement Discount 64 0.98 59 0.864 63 0.96 58 0.828 62 0.94 57 0.792 61 0.92 56 0.756 60 0.90 55 0.720 eg: a person retiring at age 57 with 32 years contributory service would receive an employer-financed pension of 39.996% of final annual salary (50.5 x 0.792).
7.4 The amount of member-financed additional annual pension is calculated by multiplying the member's accumulated contributions by a factor for the member's age at retirement. The factors are:
Age at Retirement Discount Age at Retirement Discount 65 0.110 64 0.108 59 0.0985 63 0.106 58 0.0970 62 0.104 57 0.0955 61 0.102 56 0.0940 60 0.100 55 0.0925
For example, a member retiring at age 59 with accumulated contributions of $30,000 could elect to receive an annual pension of $2,955 ($30,000 x 0.0985) instead of taking a lump sum of the accumulated contributions.
TABLE 1: CSS - STANDARD AGE AND EARLY RETIREMENT PENSION RATES
20 OR MORE YEARS CONTRIBUTORY SERVICE
Age Percentage of Final Annual Salary between Ages 55 and 65
40+ 39 38 37 36 35 34 33
65 52.500 52.250 52.000 51.750 51.500 51.250 51.000 50.750
64 51.450 51.205 50.960 50.715 50.470 50.225 49.980 49.735
63 50.400 50.160 49.920 49.680 49.440 49.200 48.960 48.720
62 49.350 49.115 48.880 48.645 48.410 48.175 47.940 47.705
61 48.300 48.070 47.840 47.610 47.380 47.150 46.920 46.690
60 47.250 47.025 46.800 46.575 46.350 46.125 45.900 45.675
59 45.360 45.144 44.928 44.712 44.496 44.280 44.064 43.848
58 43.470 43.263 43.056 42.849 42.642 42.435 42.228 42.021
57 41.580 41.382 41.184 40.986 40.788 40.590 40.392 40.194
56 39.690 39.501 39.312 39.123 38.934 38.745 38.556 38.367
55 37.800 37.620 37.440 37.260 37.080 36.900 36.720 36.540
Age Percentage of Final Annual Salary between Ages 55 and 65
32 31 20-30 20-30* changed from 1/7/90
65 50.500 50.250 50.000 50.00
64 49.490 49.245 49.000 49.00 Long serving members may
63 48.480 48.240 48.000 48.00 be entitled to additional
62 47.470 47.235 47.000 47.00 1.4% of pension for each
61 46.460 46.230 46.000 46.00 year over 40 years of
60 45.450 45.225 45.000 45.00 service. See 7.2
59 43.632 43.416 43.200 43.50
58 41.814 41.607 41.400 42.00
57 39.996 39.798 39.600 40.50
56 38.178 37.989 37.800 39.00
55 36.360 36.180 36.000 37.50Note: Table 1 for former Superannuation Fund contributors cannot be used to calculate the standard age and early retirement pension rates in cases where rejected units, unit restriction or age 60 units supplement are involved.
* Last column on right is an enhancement of benefits in second last column (figures underlined).
8. INVOLUNTARY RETIREMENT OTHER THAN INVALIDITY
8.1 Involuntary retirement, provided the member has completed 1
year contributory service, is defined in sub-section 58(3) of the
Superannuation Act 1976. It includes among other things:
(a) retirement by management initiative where the member:
* is unable to perform his or her duties or other
duties appropriate to the member's classification;
* is inefficient;
* is not qualified to perform his or her duties; or
* is excess to requirements;
(b) where a member's position ceases to exist; or
(c) where a statutory office-holder whose term of office expires
seeks re-appointment but is not re-appointed.
8.2 Where a member is retired involuntarily and is over the age of 60 years, the benefits payable are those set our in paragraphs 7.1 to 7.4 inclusive.
8.3 Where a member is retired involuntarily before attaining
the age of 60 years, the benefits payable are those set out in
paras 7.1 to 7.4 with the following additional options available:
(a) to receive a total benefit of a lump sum of the accumulated
supplementary contributions plus 3 1/2 times accumulated basic
contributions; or
(b) to preserve benefits as set out in paras 21.1 to 21.8.
8.4 Where a member is retired involuntarily before attaining
age 55 years, extensions of the tables of factors in paragraphs
7.3 and 7.4 are used.
(a) The discount factor for the employer-financed pension is
adjusted by subtracting from the factor of 0.720, an amount of
0.036 for each year that the age on involuntary retirement
precedes age 55.
Note: This formula results in no employer-financed pension being
available prior to age 36 (the factor reduces to zero at age 35).
(b) Different factors for the member-financed pension apply
below age 55 (factors reduce with age).
9. PROSPECTIVE SERVICE FOR INVALIDITY BENEFIT
9.1 A full-time employee's prospective service is the sum of the employee's contributory service at the date of invalidity retirement or death in service and the remaining period to the maximum retiring age.
9.2 For permanent part-time employees, the remaining period to maximum retiring age is reduced by the proportion that actual hours worked bear to the full-time hours of their position.
10. PERIOD OF PROSPECTIVE EMPLOYMENT
10.1 A member's period of prospective employment is the sum of the member's period of employment at the date of invalidity retirement or death in service and the remaining period to the member's maximum retiring age, irrespective of whether the member is a full-time or part-time employee.
11. INVALIDITY BENEFITS NOT ADJUSTED MEDICAL GROUNDS
11.1 Where a member retires on invalidity with at least 1 years prospective service and the benefits are not adjusted on medical grounds (see paragraph 2.3), the member will receive a lump sum of accumulated supplementary contributions (if any) and the benefits described in paragraphs 11.2 to 11.5.
11.2 Pension benefits at the following percentages of final
annual salary for each year of prospective service are payable:
Prospective Service Employer Financed % of final salary
Years 1-20 2% per year 0.8% per year
Years 21-30 1% per year 0.4% per year
Years over 30 Nil (but refer paragraph 11.4)
eg: 27 years prospective service gives an employer-financed
pension of 47% of final salary (20x2 + 7x1) and an additional
pension of 18.8% of final salary. (20x0.8 + 7x0.4).
11.3 A member may elect to take a lump sum of accumulated basic contributions instead of the additional pension in paragraph
11.4 The employer-financed pension in paragraph 11.2 will be increased by 1/4 per cent of final annual salary for each complete year of contributory service above 30 years, up to a maximum employer-financed pension of 52.5 per cent for 40 years contributory service.
11.5 If a member's period of prospective employment is less
than 8 years, the member may elect to receive, instead of the
total benefits set out in paragraph 11.2, a lump sum which is the
greater of:
(a) 3 1/2 times accumulated basic contributions;
or (b) half final annual salary.
Note: Where a person has been a permanent part-time employee, the
benefit of half final annual salary is reduced in the proportion
that completed years of contributory service bear to the
completed years in the period of employment.
12. INVALIDITY RETIREMENT BENEFITS ADJUSTED ON MEDICAL GROUNDS
12.1 Invalidity benefits are adjusted on medical grounds where the invalidity was caused, or was substantially contributed to, by a condition specified in a BCC and the member's period of employment is less than 20 years (BCCs cease to apply after 20 years). Provided the member has at least 1 years prospective service, such a member will receive a lump sum of accumulated supplementary contributions (if any) and the benefits described in paragraphs 12.2 to 12.6.
12.2 Where a member's period of employment is 8 or more years and the member's prospective service is at least 20 years, pension benefits at the following percentages of final annual salary for each year of prospective service discounted by 5 per cent for each year that contributory service falls short of 20 years are payable.
Prospective Service Employer Financed % of final salary Years 1-20 2% per year 0.8% per year Years 21-30 1% per year 0.4% per year Years over 31 Nil Nileg:27 years prospective service and 16 years contributory service gives an employer-financed pension of 37.6% (47x0.8) and an additional pension of 15.04% of final salary (18.8 x 0.8).
12.3 Where a member's period of employment is 8 or more years and the member's prospective service is less than 20 years, pension benefits are payable as follows:
Contributory Service Employer Financed Additional Pension
19 38.0 15.2
18 36.0 14.4
17 34.0 13.6
16 32.0 12.8
15 30.0 12.0
14 28.0 11.2
13 26.0 10.4
12 24.0 9.6
11 22.0 8.8
10 20.0 8.0
9 18.0 7.2
8 16.0 6.4
12.4 A member may elect to take a lump sum of accumulated basic
contributions instead of the additional pension in paragraph 12.2
or 12.3.
12.5 If a member's period of employment is less than 8 years,
the total benefit payable is a lump sum which is the greater of:
(a) 3 1/2 times accumulated basic contributions; or
(b) half final annual salary.
12.6 A member with a period of employment of at least 8 but less
than 15 years may elect to receive benefits in accordance with
paragraph 12.5 instead of the benefits in paragraph 12.2 or 12.3.
13. PARTIAL INVALIDITY PENSIONS
13.1 Where a member suffers a reduction in salary attributable to physical or mental incapacity, a partial invalidity pension may be payable in respect of the member.
13.2 In broad terms, the amount of partial invalidity pension is determined by multiplying the amount of reduction in salary by the ratio that the employer-financed invalidity pension payable had the member been invalided out at that date bears to former salary.
14. INVALIDITY PENSIONS SUBJECT TO TEST OF EARNINGS
14.1 Invalidity pensions payable may be reduced if the pensioner's earnings from personal exertion exceed a certain limit. This provision only applies prior to age 65 and pensions that have been reduced would be restored when the earnings from personal exertion fall below the limit.
14.2 Invalidity pensions will only be reduced where the total of earnings from personal exertion, the Commonwealth Scheme invalidity pension payable and, if applicable, the additional pension payable that would have been payable had a member not chosen to receive a lump sum refund of contribution plus interest, exceeds a certain limit.
14.3 The limit is the greater of an amount of $22095 (at 1/7/88 updated in line with movements in the CPI) and 75 per cent of the salary that the former member would be earning if he or she had continued to occupy the position held when invalided out.
15. ELIGIBILITY FOR SURVIVING SPOUSE'S BENEFITS
15.1 Spouse's benefits are payable to a legal spouse who is living with or dependent on the member at the time of death or a de facto spouse who has lived with the member for 3 years or, if the de facto spouse is dependent upon the member, for any continuous period preceding the member's death, on a permanent and bona fide domestic basis.
15.2 Benefits are payable to spouses of male and female members.
16.ELIGIBILITY FOR CHILDRENS' ORPHANS' BENEFITS
16.1 Childrens' and orphans' benefits may be paid to children under 16 years of age, and student children under 25, who are living with or dependent upon the member.
16.2 Generally, pension is payable to legal children, ex-nuptial children, adopted children, foster children and wards of the member or of the member's spouse.
16.3 Benefits are payable to children of male or female members.
17.1 The benefits payable on the death of a contributor before the contributor attains maximum retiring age (usually 65) are:
(A) Survived by an eligible spouse
17.2 The spouse has available the same options that would have been available to the deceased had the contributor retired on invalidity grounds at the date of death.
17.3 Where a pension would be payable, the rate is 67% of the rate of invalidity pension that would have been payable to the deceased plus 11% of the rate of invalidity pension for each eligible child, up to 3, ie 100% for a spouse with 3 or more.
(B) Not survived by an eligible spouse but by eligible children
17.4 The pension payable to orphans, expressed as a %age of the maximum invalidity pension that would have been payable to the deceased had the member retired on invalidity grounds is:
1 child 45% of invalidity pension
2 children 80% of invalidity pension
3 children 90% of invalidity pension
4 children 100% of invalidity pension
Notes:
1. (A) and (B) above: a lump sum of accumulated supplementary
contributions is also payable.
2. Upon the death of a spouse entitled to a pension under (A),
pension is payable to eligible children in accordance with (B).
3. (A) or (B): where the invalidity benefit would not have been
adjusted on medical grounds, and the deceased member's period
of prospective service was less than 8 years, a lump sum of which
-ever is the greater of 3 1/2 times accumulated basic contribs or
1/2 final annual salary may, at the surviving spouse's option,
be paid in lieu of pension.
4. In respect of (A) or (B), where the invalidity benefit would
have been adjusted on medical grounds and the deceased member's
period of contributory service was at least 8 years but less than
15 years, a lump of whichever is the greater of 3 1/2 times
accumulated basic contributions or 1/2 final annual salary may,
at the surviving spouse's option, be paid in lieu of pension.
(C) Not survived by an eligible spouse or eligible children
17.5 In the event of a contributor dying and leaving no eligible spouse or eligible children, a lump sum of accumulated contributions is payable to the personal representatives of the deceased.
18.1 On the death of a pensioner, the pension payable to an eligible spouse in respect of the spouse and any eligible children is calculated in accordance with the same percentages that apply in respect of the death of a contributor, but using the pension that was payable to the deceased at the time of death
18.2 Where part of the deceased pension was member-financed pension received on age retirement, however, the percentage increments attributable to children are applied to the employer- financed portion of the pension only.
19. RESIGNATION BEFORE MINIMUM RETIRING AGE
19.1 Unless an election is made for preservation of superannua tion rights or where an election has been made but the conditions for preservation have not been met, the benefit is a lump sum of accumulated contributions.
20.PRESERVATION OF RIGHTS ON ENTERING
20.1 On entry to the scheme a person may pay in a lump sum that includes an employer-financed element and receive credit for a period of contributory service. The current basis used by the Commissioner for Superannuation for calculating the period is by dividing the employer-financed element of the transfer value by 12 1/2 per cent of the person's salary 12 months after entry to the scheme but excluding any general salary increases in that 12 month period.
21. PRESERVATION OF SUPERANNUATION RIGHTS ON LEAVING SCHEME
21.1 Where a member resigns before attaining minimum retiring age or is involuntarily retired before age 60, the member may, instead of receiving the resignation or involuntary retirement benefit, elect within 21 days of resignation to preserve the member's benefits.
21.2 Where a member has elected to preserve benefits and the member becomes a member of a superannuation scheme that is an "eligible superannuation scheme" for the purposes of the Superannuation Act 1976 within 3 months of resignation, a transfer value (a lump sum equal to accumulated contributions plus an employer-financed element of 2 1/2 times accumulated basic contributions) is payable to that scheme.
21.3 If a member has elected to preserve benefits and a transfer value is not payable, a deferred benefit may be payable.
21.4 For a deferred benefits to be payable a person must either complete a period of at least five years eligible employment or remain continuously in public employment from leaving the CSS until the occurrence of an event on which the deferred benefit is to be paid. "Eligible employment" includes the former member's period of contributory service under the Superannuation Act;
21.5 A deferred benefit is paid on the occurrence of the first of the following events:
a: on or after (the person may nominate the retiring age at which
the benefit is to be paid) attaining the minimum retiring age;
b: on invalidity; or
c: on death.
Note: Where a person to whom a deferred benefit applied becomes a
member of an "eligible superannuation scheme", the person may
request that a transfer value at that date be paid to that
scheme.
21.6 The amount of deferred benefit currently granted by the
Commissioner for Superannuation is:
(a) an employer-financed pension calculated according to the
amount of 2 1/2 times the member's accumulated basic contribu-
tions at resignation accumulated with interest at the rate
prescribed for the Superannuation Fund to the date the deferred
benefit is paid; and at the member's option, either
(b.i) a lump sum of accumulated contributions updated with
interest to the date the deferred benefit is payable;
or
(b.ii) member-financed additional pension based on the amount of
the member's updated accumulated contributions.
21.7 Should a person who has elected to preserve benefits cease to become eligible to receive a deferred benefit (e.g.. not completing the service qualifications in paragraph 21.4), the person will receive the resignation benefit (with interest updated to that time at the rate applying when the person resigned or subsequently left public employment).
21.8 Should a person to whom a deferred benefit applies rejoin the CSS as a contributor, the deferred benefit will cease but the member will receive full credit for past contributory service.
22.1 All pensions referred to in this paper as employer-financed pensions are increased annually in July by the increase in the 8 capital cities Consumer Price Index during the previous 12 months (March quarter to March quarter).
22.2 The member-financed or additional pensions are not, however, subject to any increase.
SUPERANNUATION PSS SCHEME
The PSS scheme is the new scheme in the Public Service open to the Public Sector employees as an alternative to the CSS scheme. It is not open to Telecom or Post employees.
The old CSS scheme was essentially a pension scheme while the PSS is a lump sum scheme. We will add further details in later issues of this database.
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