The Public Sector Superannuation Scheme (PSS) is a retirement fund specifically designed for Australian Government employees. It provides significant benefits to its members, contributing to a secure financial future post-retirement.
With recent updates indicating a 1.8% rise in salaries, starting from March 2024, the scheme continues to offer substantial financial support. Here’s everything you need to know about the PSS benefits, payment dates, amounts, and eligibility criteria for 2024.
Public Sector Superannuation Scheme 2024
The PSS, which began on July 1, 1990, and closed to new members on June 30, 2005, is a Defined Benefit super fund. This means that the final benefit is determined by a specific formula rather than being directly tied to investment returns.
Contributions
- Member Contributions: Members contribute a percentage of their after-tax salary every fortnight, ranging from 0% to 10%. If no rate is nominated, a default rate of 5% is applied.
- Employer Contributions: Employers contribute an additional 2% to 3% of the member’s super salary to their PSS account as productivity contributions.
Benefits
No Additional Fees
As a PSS member, you do not have to pay for administration, switching, or other ongoing fees; your employer covers these costs. However, investment performance fees are deducted from your investment returns.
Death and Invalidity Cover
Members automatically receive Death and Invalidity Cover at no extra cost, based on potential earnings until age 60. Limited Benefits members’ entitlements are calculated up to their retirement or death date without considering future service.
Additional Cover
Contributing members can purchase Additional Death and Invalidity Cover to increase their coverage, with premiums typically invested by the employer. PSSap Ancillary Members can access flexible Death, Total and Permanent Disablement (TPD), and income protection insurance.
Payment Date
When you retire, you can access your super fund in several ways:
- Lifetime Fortnightly Payment: Receive regular payments throughout your lifetime.
- Lump Sum: Withdraw a single payment.
- Combination: Opt for a mix of both.
Your benefit may also include extra amounts from transfers, government contributions, and investment earnings. Payments are made within 14 days of application acceptance.
Payment Amount
Calculation
The payout amount depends on your contributions and personal circumstances. The formula used is FAS x ABM, where:
- FAS (Final Average Salary): Average of the highest three consecutive years of salary.
- ABM (Average Benefit Multiple): Calculated based on your years of service and contribution rate.
Boosting Savings
PSS members can open a personal accumulation account through PSSap, allowing for additional contributions like salary sacrifice and spouse contributions, which are not permitted in the Commonwealth Superannuation Scheme (CSS). Contributions can be made before-tax, after-tax, or by transferring funds from other super accounts.
Preserved Benefits
If you leave your job, your benefit remains in the PSS and continues to grow with the fund’s earnings and the Consumer Price Index (CPI). If you leave eligible employment but remain in a job covered by the scheme, your benefit stays preserved unless you meet an access condition, such as reaching age 65.
Investment Options
All contributions to your PSS account are invested, and your final benefit includes these contributions and investment returns. Preserved members can choose between two investment options:
- Default Fund: The standard investment option.
- Cash Option: A more conservative investment choice.
Members actively contributing must stay in the Default Fund but can switch to the Cash Option once they become preserved members.
Eligibility
Membership
- Active Members: Employees who contribute regularly to the PSS.
- Preserved Members: Former employees who have left their job but have not yet met the conditions for accessing their benefit.
Criteria
- Age: Typically, benefits can be accessed after reaching age 65 or under other specific conditions.
- Service Period: A minimum contribution period of 10 years is required to qualify for benefits.
- Contribution Rate: Members can choose their contribution rate within the 0% to 10% range.
The Public Sector Superannuation Scheme continues to provide robust financial security to its members, with substantial increases in benefits and flexible contribution options.
The upcoming salary increase and changes in payment structures for 2024 ensure that beneficiaries will have enhanced support to meet their financial needs.
FAQs
What is the Public Sector Superannuation Scheme?
A retirement fund for Australian Government employees providing defined benefits based on a specific formula.
When will the salary increase take effect?
The 1.8% salary increase will start from March 2024.
How can I access my PSS benefits?
You can choose a lifetime fortnightly payment, a lump sum, or a combination of both.
What is the formula for calculating benefits?
Benefits are calculated using the FAS x ABM formula.
Are there additional costs for Death and Invalidity Cover?
No, it is provided automatically at no extra cost to members.
