Australia’s Defence Force superannuation system has two main schemes — a legacy defined benefit scheme (MSBS) and the modern accumulation scheme (ADF Super). Understanding which scheme applies to you and how it works is critical for planning your retirement.
The Two Military Super Schemes
ADF Super (from 1 July 2016)
The accumulation fund for ADF members who joined on or after 1 July 2016. See ADF Super Review for details.
Key features:
- Government contribution: 16.4% of salary (versus standard 11.5% SG for civilians)
- Accumulation account — balance depends on contributions and investment returns
- Administered by Commonwealth Superannuation Corporation (CSC)
Military Superannuation and Benefits Scheme (MSBS)
A hybrid defined benefit / accumulation scheme for ADF members who joined before 1 July 2016. Closed to new members.
MSBS — How It Works
The MSBS has two components:
1. Benefit Fund (Accumulation Component)
- Member contributions (5% of salary compulsory during service)
- Investment returns apply to this component
- Accessible as part of the overall benefit
2. Defined Benefit Component (Government-Funded)
- Calculated using a formula based on: final salary × years of service × accrual factor
- The benefit factor depends on the type of benefit (death, invalidity, resignation, retirement)
- Indexation of the pension component (if taken as pension) applies
Accessing MSBS Benefits
On resignation or separation (short service):
- Member contributions + fund earnings (if resigned before meeting service thresholds)
- Defined benefit calculated but may be deferred
On invalidity or death: Full defined benefit applies regardless of service duration
On retirement (longer service): Can be taken as lump sum, pension, or combination depending on circumstances
MSBS Tax Considerations
The defined benefit component of MSBS (pension and lump sum) has an untaxed element in many cases — meaning the defined benefit contributions were not taxed in the fund. This results in higher withdrawal tax than standard accumulation super:
- Under 60: Taxable at marginal rate less 15% offset
- Over 60: Taxed at 15% (not 0%) for the untaxed element
This is a significant difference from standard super and requires careful planning.
Commonwealth Superannuation Corporation (CSC)
Both MSBS and ADF Super are administered by CSC (formerly ARIA/Defence Force Retirement and Death Benefits scheme). CSC also administers:
- Public Sector Superannuation (PSS) — civilian public servants (defined benefit, closed)
- PSSap — civilian public servants (accumulation, open)
See Public Sector Super Guide for PSS and PSSap details.
For military super advice — particularly around MSBS valuations, lump sum vs pension decisions, and retirement strategies — speak with a specialist financial adviser with military super experience. Find an adviser via MoneySmart. For more: ADF Super Review, Defined Benefit Funds.