You should keep the following contribution and benefit limits in mind:
- super contribution caps
- the 10-year rule
- your Maximum Benefit Limit (MBL)
How do super contribution caps limit how much I can contribute across all funds?
The amount of money you can contribute each year to super at tax effective rates is capped.
There are two caps – a concessional contribution cap and a non-concessional contribution cap. These caps apply to all super fund members.
Your personal fortnightly contributions count under your non-concessional cap. The additional 3% your employer contributes (the productivity component) and any salary sacrifice contributions (which cannot be made to PSS) count under your concessional cap. The notional 8% your employer contributes (the employer component) does not count under the caps.
Transfer amounts rolled into PSS from other funds also do not count under the caps.
To view the caps and for more information, refer to the Tax and your PSS super booklet.
How does the 10-year rule limit how much my employer will contribute?
The maximum employer component you can accrue is limited. The limit is calculated as if you contributed at 5% for 10 years (not necessarily your first 10 years of service) and 10% for the rest. This rule considers a 10-year period to be any 260 pay days you must contribute on, not necessarily a continuous period or your first 10 years in PSS.
You cannot receive an employer component in excess of this amount irrespective of your actual contribution rates or how frequently you vary your contribution rate.
How does my Maximum Benefit Limit cap my final PSS benefit?
Your Maximum Benefit Limit (MBL) caps the amount of benefits that can be paid to you under scheme rules. It generally only affects long time scheme members.
To reach your MBL, you must contribute at 10% of your super salary for at least 30 years.
If you do reach your MBL during your membership period, your employer will advise you to stop contributing to PSS. Your employer’s fortnight contribution (productivity contributions) will also stop at that time. Your benefit will, however, continue to increase with any growth in your super salary. That’s because your benefit is based on your Final Average Salary.
From 1 July 2007, MBLs increased, enabling members to accrue a larger PSS benefit.
Use the i-Estimator in Member Services Online to help work out your best contribution rate to maximise your final PSS defined benefit, based on your likely retirement date.
What are the Maximum Benefit Limits that apply from 1 July 2015?
|Average Salary||MBL Rate|
10 x Average Salary
Steve’s average salary is $57,339. This means his maximum benefit in PSS is $695,000 or, expressed as a multiple, 12.1 times his salary (ie, $695,000 divided by his average salary of $57,339).
Anne’s average salary is $85,000. This means her maximum benefit in PSS is $850,000 (ie a multiple of 10 times her average salary of $85,000).