Case Study: MilitarySuper

The assessment process

The assessment process involves 5 steps, from the member providing initial documentation through to CSC periodically reviewing the member’s invalidity classification where applicable.

1. Initial documentation

   The ADF advises CSC that Farid is medically transitioning and provides CSC with:

   • the DM042 from his Transition Health Examination
   • information about Farid’s medical and service history, which Farid has consented to sharing with CSC.

2. Medical examinations

   CSC may request that Farid undergo additional medical examinations at any time during the assessment period.

3. Eligibility

   A member will not be eligible for invalidity benefits if their medical transition from the ADF:

   • occurred within their first two years of the current period of service and was due to a condition that was present on entry which was not materially aggravated during that time;
   • in the opinion of CSC, was a result of any wilful action to obtain an invalidity benefit; or
   • was because of an injury which occurred while a member was absent without leave (AWOL) for a period over 21 consecutive days and their salary and allowances for that period had been forfeited under the regulations made under the Defence Act 1903 (Cth).

4. Level of incapacity

   CSC will determine Farid’s level of incapacity in relation to civilian employment. This will give him an invalidity classification of either Class A (incapacity of 60% or more), Class B (30–59% incapacity) or Class C (less than 30% incapacity).

   Before allocating a classification, CSC will consider:

   • Farid’s qualifications, skills and employment experience
   • the physical and/or mental impairments that led to Farid’s medical transition
   • the kinds of civilian employment a person with Farid’s skills, qualifications and experience might reasonably have undertaken before the impairments
   • the degree to which Farid’s impairments have diminished his capacity to undertake the kinds of civilian employment identified.

5. Benefit calculation

   Once a classification has been determined, Farid’s benefit will be calculated considering:

   • Farid’s FAS (final average salary) at exit
   • the length of his contributory service
   • his prospective service from age 48 at exit to his compulsory retirement age (CRA) at 60 (usually age 60 unless you have a higher CRA for rank or you have elected for an earlier CRA).

Review

If Farid’s classification is Class A or B, it will be reviewed periodically by CSC until Farid is 55. As a result of these reviews, his classification may change to reflect a change in his incapacity. This may affect Farid’s benefit. Farid’s classification cannot be downgraded past age 55. A review and possible reclassification process can also be initiated by Farid up until he turns 65. If the initial classification is Class C, the classification is not subject to review.

For more information go to ADF medical transition.

Invalidity classifications

A member's invalidity classification of Class A, B or C is determined by the member’s level of incapacity to undertake the kinds of civilian employment identified as relevant to their skills, qualifications and experience.

Farid’s level of incapacity has been assessed by CSC and classified as Class A, which provides a full Invalidity benefit payment.

Class A: incapacity of 60% or more

• A member is severely impacted by their impairments and would be largely restricted working within relevant civilian employment. 
• Allocated where there is an incapacity of 60% or more to undertake the kinds of civilian employment identified.
• Refer to the Benefit calculation.

Class B: incapacity of 30-59%

• A member has the capacity for some relevant civilian work at the time of their transition but suffers moderate incapacity. 
• Allocated where there is an incapacity of 30–59% to undertake the kinds of civilian employment identified.
• Provides a pension that is the greater of:
  • half the Class A pension; or
  • the pension calculated on your actual service up to the time of your exit (the Employer benefit at exit divided by the applicable age factor at exit).

Class C: incapacity of less than 30%

• A member has been deemed not fit for ADF duty but has the capacity to work within relevant civilian employment with minimal restriction.
• Allocated where there is an incapacity of less than 30% to undertake the kinds of civilian employment identified.
• No Invalidity benefit is payable following a Class C determination.

Benefit calculation: Class A

Members classified as Class A (incapacity of 60% or more) are entitled to:

• a CPI-indexed annual pension;
• less any accrued surcharge debt
• a lump sum of Member contributions and interest up until 30 June 1999
• a preserved benefit of Member contributions and interest after 30 June 1999, preserved in MilitarySuper or in a complying super fund of the member’s choice until they reach their preservation age.

Farid was not with MilitarySuper before 30 June 1999, so he isn’t entitled to a lump sum on leaving the RAAF. However, he is entitled to the CPI-indexed annual pension and the preserved benefit.

The pension amount is determined by dividing Farid’s Employer benefit by the pension conversion factor (PCF) applicable to the CRA of 60 for MilitarySuper (unless you have a higher CRA).

Employer benefit

This is calculated as:

FAS (final average salary*) × total Employer Benefit Multiple (EBM). Farid’s FAS was $97,584 at exit and his EBM is 9.01. See the EBM table.

*FAS is the average of the member’s super salary over the last three years.  Super salary is the member’s annual rate of pay plus certain recognised allowances.

CPI-indexed pension

This is calculated by dividing the Employer benefit by a PCF of 11 (the PCF for age 60). See the PCF table.

Employer Benefit Multiple (EBM)

While contributing to MilitarySuper, Farid’s EBM grows with his total years of service.