Case Study: DFRDB

Types of contributions

David can contribute before-tax and after-tax amounts to his super. The additional amounts will be invested in David’s chosen investment option and paid as a lump sum when he claims his final benefit. He can contribute through additional personal contributions, salary sacrifice and the transfer of amounts from other superannuation funds.

Additional personal contributions

These are voluntary contributions David can make from his after-tax salary. They can be paid regularly as a set amount or as one-off contributions, directly to CSC. 

They are classed as non-concessional contributions by the ATO. As the amounts were taxed before being paid to David, no tax is payable when the amounts are contributed and they cannot be claimed as a personal deductible contribution to his MilitarySuper Ancillary account. 

Salary sacrifice

These are voluntary contributions paid from David’s before-tax salary. They can be made in addition to his regular fortnightly after-tax contributions. 

Salary sacrifice amounts are classed as concessional contributions by the ATO. As the amounts were not taxed, a concessional rate of 15% tax is payable when the amounts are contributed to his MilitarySuper Ancillary account.

Salary sacrificing helps reduce David’s taxable income while increasing his super balance. He can arrange for salary sacrifice contributions through Defence payroll.

Transfer amounts

David can transfer amounts from any of the following to his MilitarySuper Ancillary account:

• a regulated super fund
• a Retirement Savings Account (RSA)
• an approved deposit fund; and
• the Special Account, previously called the Superannuation Holding Account Reserve (SHAR).

Tax of 15% is deducted from any untaxed portion of the transfer amounts when they are contributed to his MilitarySuper Ancillary account.

Although David can determine how much he wants to add to his super, caps set by the ATO will apply to all amounts other than amounts transferred from other super funds. 

Investment options

There are 4 investment options available to David: Cash, Income Focused, Balanced (default) and Aggressive. As David is currently invested in the Balanced option, any additional contributions will also be invested in that option unless he decides to switch options.

Switching options

David can switch to a different investment option any time, free of charge by logging in to the CSC Navigator, or sending CSC a completed Member investment choice form. Before making a decision to switch, he will need to review the product disclosure statement, consider his financial goals and circumstances, his risk tolerance, the time he has left to invest, and the fees and costs associated with each option.

Cash investment option

This option focuses on preserving capital.

• Risk rating: very low (Band 1 under the Standard Risk Measure)
• Recommended minimum investment timeframe: 1 year
• Return objective: Bloomberg AusBond Bank Bill index rate of return, net of fees
• May suit members who prefer the lower risk option.

Income Focused investment option

This option aims to limit capital loss while generating a sustainable income that keeps up with inflation.

• Risk rating: Medium (Band 4 under the Standard Risk Measure)
• Recommended minimum investment timeframe: 5 years
• Return objective: CPI +1.5% per year after fees and tax, over 10 years
• May suit members who wish to protect the value of their super rather than seeking high returns.

Balanced (default) investment option

This option aims to balance savings between higher-growth opportunities and capital-preserving assets, while managing downside risk.

• Risk rating: High (Band 6 under the Standard Risk Measure)
• Recommended minimum investment timeframe: 10 years
• Return objective: CPI +3.5% per year after fees and tax, over 10 years
• May suit members who are prepared to accept a higher risk in exchange for potentially higher returns over the medium-to-long term.

Aggressive investment option

This option is designed to grow super balances sustainably invests in higher-growth opportunities that are likely to fluctuate over shorter horizons, but have the potential to grow ably over a longer time.

• Risk rating: High (Band 6 under the Standard Risk Measure)
• Recommended minimum investment timeframe: 15 years
• Return objective: CPI +4% per year after fees and tax, over 10 years
• May suit members who are prepared to accept a higher risk in exchange for potentially higher returns over the long term.

For more information including asset allocations, see the MilitarySuper Investment options and risk and Investment options.

Contribution caps

Contributions caps are limits on concessional and non-concessional super contributions set by the ATO and reviewed each year. If David exceeds either of the caps, the excess will be included in his assessable income and taxed at his marginal rate with a 15% offset to account for the contributions tax already applied. 

David can obtain a contribution cap estimate from CSC to help manage his contributions efficiently. The estimate considers the defined benefit contributions made on his behalf and the contributions made to his MilitarySuper Ancillary account.

Concessional contributions cap (before-tax)

This is the maximum amount of before-tax contributions such as compulsory Superannuation Guarantee and salary sacrifice contribution amounts that can be contributed to a member’s super each financial year without contributions being subject to additional tax.

For the 2025–26 financial year, the concessional contributions cap is $30,000.

Non-concessional contributions cap (after-tax)

This is the maximum amount of after-tax contributions that a member can contribute to their super each year without their contributions being subject to additional tax. 

For the 2025–26 financial year, the non-concessional contributions cap is $120,000.

Exceeding the non-concessional cap

If David’s total after-tax contributions exceed the $120,000 cap, he could consider the ATO’s bring-forward arrangement. This allows him to contribute more than $120,000 without incurring additional tax, subject to specific requirements.

See the ATO information on Contributions caps for the 2025–26 financial year.