Common customer questions – the PSS ten year rule

One of the most commonly asked questions we get from customers is about the PSS 10-year rule and the employer component.

19 Jul 2019

This article contains some general information about the PSS 10-year rule. Noting that if you get any questions from your employees about the 10-year rule, you should continue to refer them to our Customer Contact Centre, as individual circumstances may vary. 

The PSS 10-year rule is related to the accrual of the benefit multiple, commonly known as the ABM. PSS multiples accrue fortnightly on each payday that a contribution is due, with the rate of accrual based on the contribution rate and any part-time hours or casual earnings. The annual rate of accrual is calculated as 2 x the Contribution rate + 0.11. This is commonly referred to as ‘employer matching’, even though it isn’t related to employer contributions and only relates to the rate of multiple accrual. The multiple accrual over the first 260 contribution due days (usually 10 years) follow the same formula, however the accrual may be restricted if the customer contributes more than 5%. This is commonly referred to as the 10-year rule.

The only contributions an employer pays into a PSS customer’s account are the EPSC contributions. The component of a PSS benefit referred to as the ‘Employer Component’ isn’t comprised of contributions paid into the fund. Instead, it represents the difference between the contributing PSS customer’s total benefit (which is determined by a formula) and the Member and Productivity components (which are a combination of contributions and earnings). Where the Employer Component accrual appears to be low, or even negative, it is actually due to a larger accrual of the Member and Productivity components meaning there is less gap between the total benefit and those components.