Ancillary Membership

Ancillary memberships and accounts gives some of our customers’ access to more flexible contribution and investment options. Extra insurance cover may also be available through PSSap if applicable.

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  • DFRDB
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  • PSS
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Building for retirement

As a PSS member, it's important to understand the benefits of this scheme, and how you can make the most of your super. What you do with your PSS membership options could mean the difference between living a modest or comfortable retirement lifestyle.

father and son at sunset

An ancillary account is a great way for members to grow their super without impacting their DFRDB retirement benefit. All DFRDB contributing members have the ability to take advantage of this by:

  • Consolidating all of your super into one fund
  • Making additional pre-tax and post-tax contributions
  • Choice of 4 investment options
father and son at sunset

An ancillary benefit is a great way for members to grow their super without impacting their defined benefit. All MilitarySuper contributing members have the ability to take advantage of this by:

  • Consolidating all of your super into one fund
  • Making additional pre-tax and post-tax contributions
  • Choice of 4 investment options
Watch our explainer video to find out how a PSSap Ancillary account can complement your CSS or PSS defined benefit.

Ancillary membership....

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The Indexed Lifetime Pension you may receive can vary significantly depending on your personal contributions. The table below shows the way different rates of personal contributions can impact the Pension as a percentage of Final Average Salary.

 

Retire at Age 55

Retire at Age 60

Retire at Age 65

Note: The above is a simplified example based on full-time employment with the APS. It only shows how the Pension is impacted by personal contributions. It is based on a number of assumptions and does not consider other factors which would also affect the Pension, including, for example:

  • Involuntary retirement
  • Breaks in contributory service
  • Pre-1996 transfer amounts
  • Family law splitting
  • Leap years

If you'd like to know more about how you can grow your PSS benefit, visit our Additional Contributions page.

10 yrs contributory service

0% Contribution Rate

9%

10%

11%

5% Contribution Rate

18%

19%

21%

10% Contribution Rate

22%

24%

26%

20 yrs contributory service

0% Contribution Rate

18%

20%

22%

5% Contribution Rate

35%

38%

42%

10% Contribution Rate

48%

52%

57%

30 yrs contributory service

0% Contribution Rate

28%

30%

33%

5% Contribution Rate

53%

57%

63%

10% Contribution Rate

73%

80%

88%

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What else can you do to grow your super for retirement?

So, you have your PSS under control. But there are other ways you can save for retirement—this is where a PSSap Ancillary account can help.There are different types of contributions that you can make into a PSSap Ancillary account, which have different tax treatments and contribution limits ...

... two of the most common contributions into a PSSap Ancillary account are:

Salary sacrifice

What are the benefits of salary sacrificing?

Salary sacrifice contributions are also known as 'concessional' or 'before-tax' contributions, and are taxed at 15% on entry to your account. This means you could end up paying less tax on salary sacrifice contributions than you would pay if you took that same amount as ordinary income.

Does it mean I get paid less each fortnight?

If you salary sacrifice super contributions, you will have less take-home pay each fortnight. However, this may be a tax effective way to save for your retirement. If your personal tax rate is greater than 15%, the amount going into your super may be greater than the amount your take home pay is reduced by. You can also benefit from the effects of compound interest on the contributions you make into your super account.

The amount you decide to contribute is entirely up to you, so you can make sure it’s affordable and within your budget. It is important to remember that, subject to carry-forward contributions, concessional contributions are capped at $25,000 per year. If contributions exceed your cap, you may have to pay additional tax based on your marginal tax rate.

While you are contributing to PSS, you will have notional Defined Benefit Contributions that count towards your $25,000 concessional cap. We’ve got a concessional cap estimator to help you estimate the amount you can salary sacrifice in the current financial year. The estimator can be found in your Member Services Online.

Things you need to know about salary sacrifice contributions
  • The higher your income tax rate, the more benefit you get. The benefits for those earning less than $37,000 per year are limited.
  • As noted above, there is a cap on before-tax super contributions. The contribution cap applies across all superannuation accounts you hold, which includes PSS Defined Benefit Contributions. See more information on (both the concessional and non-concessional) contribution caps via the Australian Tax Office website.
  • Your employer may also have a cap on the amount you are allowed to salary sacrifice. Be sure not to exceed this amount.
  • You should talk to your employer to make sure that you understand whether salary sacrificing amounts into super will impact on any other element of your remuneration.
  • Contributions into super generally must remain within super until you meet a condition of release under superannuation law, for example, when you retire and reach preservation age. You need to weigh up the costs and benefits of salary sacrifice, taking into account your objectives, financial situation and needs, before making any financial decisions regarding your super.

Personal Contributions

Personal contributions, also known as 'after-tax' or 'non-concessional' contributions, are not taxed when deposited into your super account—this is because, generally, these contributions come from sources that have already been taxed, for example, your ordinary income. You may consider this type of contribution for a number of reasons. For example, if:

  • you have reached your concessional (‘before tax’) contribution cap (see above)
  • your taxable income is not high enough to realise the tax benefits of a concessional contribution
  • your estimated Defined Benefit Contributions is subject to change during the year, and you don’t want to risk exceeding the concessional contribution cap by making salary sacrificed contributions.

However, there is also a cap on the amount of non-concessional super contributions you can make each year. The non-concessional cap varies, depending on your age and super balance. If you exceed your cap, you may be required to pay tax on the excess at the highest marginal tax rate.

Claiming a tax deduction

If you make a personal (after-tax) contribution to your PSSap Ancillary account, you may be able to claim a tax deduction on your next income tax return subject to certain conditions, including the provision of a valid notice of intent to claim, the contributions are still in your account—e.g. you haven’t rolled them out, or used any of the contributions to open a retirement pension income account.

Any contributions claimed as a tax deduction will have the same tax treatment as salary sacrificed contributions—i.e. they will have 15% tax deducted, and be counted towards your concessional (before-tax) contributions cap. You should keep this in mind if you are also making concessional contributions to your superannuation, as you may risk exceeding the concessional contributions cap. 

More information about how to claim a tax deduction can be found on the Australian Tax Office website.

Below is an example of the tax implications of making a concessional contribution to your superannuation account:

  • A PSS member has an annual taxable income of $95,000 and decides to salary sacrifice $5,000 of that income into their PSSap Ancillary superannuation account. This reduces the member’s take-home pay by $5,000 (the salary sacrificed contribution) to $90,000 per annum.
  • The $5,000 contribution is taxed in the PSSap Ancillary fund rather than in the hands of the member as ordinary income.
Assuming the member’s marginal rate of tax is 37%, the member has a tax windfall gain of $1,100. This is the difference in the 37% tax the member would have paid on the $5,000 as ordinary income, and the 15% rate the contribution was actually taxed at in the fund:
  • $5,000 * 37% = $1,850
  • $5,000 * 15% = $750
  • Windfall gain: $1,100

Claiming a tax deduction sounds complicated. If they are treated the same way as salary sacrifice, why would I contribute in this way?

Depending on your personal circumstances, there are a number of reasons to claim a tax deduction on non-concessional super contributions instead of making contributions through a regular salary sacrifice arrangement. Reasons you might want to do this include:

  • If you’re unsure if you can afford to salary sacrifice on a regular basis into super, you may prefer to make a once-off lump sum contribution when you know you can budget for it.
  • You want to maximise your contributions under the concessional contributions cap, but your Defined Benefit Contribution amount is not calculated until after 30 June and you are unsure how much you can contribute before exceeding the cap. Remember that we have online estimators to help you estimate this value).
  • Your employer processes salary sacrifice payments using a third party that charges a fee on each transaction processed. You will have to contact your employer to find out what, if any, fees are charged on salary sacrifice arrangements.

Investment Options

You are able to choose to invest in a single option, or split your investment strategy across multiple options. This gives you the flexibility to invest in a way that suits your personal appetite for risk. As a PSSap Ancillary member, you will have access to four different investment options to invest your accumulated superannuation.

You are able to choose to invest in a single option, or split your investment strategy across multiple options. This gives you the flexibility to invest in a way that suits your personal appetite for risk.

PSSap Ancillary investment options are:

Cash

Our Cash Option reduces risk by investing all your funds in cash assets.

Income focused

This option may be suitable for those who prefer less risk. The minimum suggested timeframe for holding this option is five years.

Balanced

This option may be suitable for those prepared to take more risk in exchange for potentially higher returns on their investment over the medium-to-long term. The minimum suggested timeframe for holding this option is 10 years.

Aggressive

This option may be suitable for those prepared to take more risk in exchange for potentially higher returns on their investment in the long-term. The minimum suggested timeframe for holding this option is 15 years.

Protecting your future

If you're unable to work for any reason, there are many ways that CSC can help you and your family.

Contributing PSS members* have access to partial invalidity, invalidity retirement, and death benefits at no extra cost. These are superannuation benefits, rather than insurance, so you are generally covered when you become a PSS member.

You may be entitled to increase the amount you are covered for on death or invalidity by purchasing Additional Death and Invalidity Cover (ADIC). ADIC is available to contributing members who cannot achieve the maximum death and invalidity coverage that would be available through the PSS.

The cost of ADIC is also subsidised by your employer at varying rates, depending on your personal risk profile.

To learn more about ADIC and the cover provided by your PSS, see our ‘Insurance and cover page’.

*Exceptions apply if you are over the age of 60 or classified as a Limited Benefits Member

I have my PSS, so why would I need additional insurance?

As a contributing member of PSS, you can access flexible Death, Total and Permanent Disablement and Income Protection through lifePLUS choice if you join PSSap as an Ancillary member. PSSap lifePLUS offers cover that is not available in the defined benefit schemes.

PSSap lifePLUS death and TPD insurance is payable in addition to death and invalidity benefits and can assist to structure insurance arrangements by:

  • As a PSSap Ancillary Member, you also have the option to complete a Binding Beneficiary Nomination that will allow you to choose the distribution of death benefits of your PSSap Ancillary account balance, including any proceeds of your insurance cover.

What’s the difference between my PSS Invalidity benefits and Income Protection?

Your PSS Invalidity benefits provides payment if you are retired on invalidity grounds by your employer. If your permanent invalidity is approved by CSC you will be paid an amount based on the value of the benefit accrual you would have received if you had worked to age 60. You can elect to take this as a pension, or a combination of a pension and lump sum. Benefits may also be payable if you run out of sick leave while your invalidity retirement application is being assessed (pre-assessment payments), or if you need to reduce your working hours or classification because of a permanent medical condition (partial invalidity pensions). If you would like to know more about these benefits, visit our Insurance and cover page.

PSSap LifePlus Income Protection provides an income supplement when you are temporarily unable to work due to sickness or injury. LifePlus Income Protection may also cover the cost of rehabilitation programs to help you get back into the rhythm of things again. Our focus on rehabilitation post-injury allows us to support you through:

  • Fitness and coaching to get you back to work
  • Workplace assessments to identify solutions and equipment to help you transition and thrive at work
  • Skills and capability improvement
  • Career guidance in exploring other options if you can’t perform your old role.

Key features of a PSSap Ancillary membership

Features What you can do
You can make contributions and transfer super from other funds to PSSap

- Make salary sacrifice contributions

- Make personal (after-tax) contributions

- Make spouse contributions

- Transfer super from other funds into PSSap

- Transfer accumulated amounts into PSSap

You can make an investment choice
 

Choose one or a mix of up to four investment options from the following:

- Cash

- Income Focused

- Balanced

- Aggressive

 

Note that you have to pick an investment option when you join.

You can take out insurance cover through your super Apply for lifePLUS Income Protection and Death and TPD insurance
You’ll enjoy low fees and costs*

- Our administration fees are $7 per month ($84 per year)

- We estimate that our indirect costs* are from 0.15%–1.45% per annum of the total average net assets of the relevant investment option

 

*If your account balance for a product offered by the super entity is less than $6,000 at the end of the entity’s income year, the total combined amount of administration fees, investment fees and indirect costs charged to you is capped at three per cent of the account balance. Any amount charged in excess of that cap must be refunded.

You can make investment switches

- First two investment option switches are free each financial year

- Subsequent switches are $20 per switch in that year

We’ll keep you informed, and you can call us
 

- You can manage your account online

- You’ll get an annual member statement

- You can call our Customer Information Centre

Need to know

Your employer can’t contribute to PSSap

If you are a CSS or PSS member, your employer can’t make super guarantee (SG) contributions to your PSSap Ancillary Customer account.

How we work out your final benefit

We work out the final benefit for PSSap Ancillary Customers in the following way.

We add

- Eligible contributions and any super transfers you’ve made to your PSSap account (if applicable)

- Your investment earnings (plus or minus)

Then subtract

- Fees and charges

- PSSap super withdrawals (if you’ve made any)

- Super amounts you’ve transferred to other funds (if you’ve done that)

- Taxes

- Insurance premiums (if applicable)

To come up with Your final benefit             

Read more about ancillary membership

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