The longer you contribute to PSS and the higher your contribution rate, the greater your final PSS retirement benefit is likely to be. That's because PSS provides you with a defined benefit determined by a set formula. It's calculated using the following three factors:
- your rate of personal fortnightly contributions
- your Final Average Salary (FAS) and
- your years of contributions (length of PSS contributory membership).
You can't contribute to PSS if you do not work for a PSS participating employer.
To again be eligible to contribute to your PSS acount, you must have a PSS preserved benefit entitlement at the time you rejoin the Australian Public Serivce or another PSS participating employer.
Want to grow extra super outside of PSS and stay in the Australian Government super environment?
You can open a PSSap Ancillary account to salary sacrifice, make personal (after tax) contributions and pay in rollovers from other funds. You’d be a member of two government schemes - PSS and PSSap. See the PSSap website for more information.
Do investment returns matter to contributing members?
The most direct impact you can make on your final benefit is through your rate of fortnightly contributions (in combination with your length of contributing service in PSS).
Earning rates do, however, have a more direct impact on:
- the funded component of a preserved benefit
- amounts you may transfer in
- an unfunded productivity component
- how much tax you may pay on your withdrawn benefit.
Learn the full details of how earning rates do affect your PSS super.
You can choose to provide us your tax file number (TFN) to help avoid paying extra tax on your contributions, benefit payments and rollovers and more.More
Why is my personal fortnightly contribution rate so important?
The higher your fortnightly rate, the higher your defined benefit is likely to be. It is one of the most effective ways to increase your PSS super benefit over your public sector working life.
What is the PSS formula?
The formula to determine your defined benefit as a contributing member is:
The benefit calculation is different for preserved benefit members.
Your Benefit Multiple only accrues when you are a contributing member. It accrues accordingly to your rate of member contributions. Your Benefit Multiple grows every fortnight with each contribution you make.
It is grown by your member contributions, employer contributions, your notional employer matching contributions and your years of contributory service.
What components make-up my final defined benefit?
Components that make-up your defined benefit are the:
- member component, comprising your fortnightly contributions plus earnings
- productivity component, comprising the fortnightly superannuation productivity contributions made by your employer plus earnings
- employer-financed component, which is a notional (unfunded) amount that is paid by your employer when you withdraw your PSS benefit and exit the scheme.
The value of your employer-financed component is the balance of your defined benefit once your member and productivity components are taken into account.
The value of your defined benefit components is shown on your Member Statement.
What contributions grow my Benefit Multiple?
The following member and employer contributions will grow your Benefit Multiple:
- your fortnightly member contributions, which you choose to be between 2% and 10% of your super salary (the member component of your benefit)
- your employer contributions fixed at 3% of your super salary (the productivity component)
- your notional employer contributions, which accrue at 8% of your super salary
What if I don't contribute or fall behind in my contributions?
If you don't contribute (ie you elect a 0% rate), your employer will still contribute to your defined benefit, but your Benefit Multiple will accrue only at 11% per annum. You will get no employer notional matching contributions during periods you don't contribute.
If you fall behind in your personal contributions you must repay any arrears as soon as possible. Unpaid arrears (a contribution shortfall) may mean you pay more tax in retirement. That's because both your personal contributions and the earnings applied to the member and productivity components of your benefit attract certain taxation concessions when your benefit is paid.
Earnings can't be applied to your outstanding contributions until they are paid.
Earnings can also not be applied retrospectively.
Any arrears when you retire will be deducted from your benefit, along with the earnings that would have accrued had your contributions been paid on time.
What contributions do not form part of my defined benefit?
The following contributions and amounts are accumulation benefits (not defined benefits):
- co-contributions, low income contributions and ATO Superannuation Guarantee transfers
- amounts you transfer into PSS (after 1995)
- fund earnings on the above contributions and amounts transferred into PSS
These amounts form a separate Accumulated transfer amount (Post 1995) in your account. This amount is not part of your PSS defined benefit.