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What are Public sector super funds?

Public sector super funds are designed for employees working in the public or government sector. Here's how they work.

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Public sector super funds are a type of super fund that are generally only available to people working in the public sector. This includes people working in government related roles. These funds operate in a similar way to standard retail or industry super funds, however they can sometimes have a few extra benefits and features which we'll outline in this guide.

What are public sector super funds?

Public Sector super funds come with certain features that benefit employees of federal and state government departments. These funds generally have lower fees with profits going back to their members rather than shareholders. In addition, some employers contribute more than the 9.5% compulsory superannuation guarantee towards super for employees in the public sector fund, which is a major benefit.

Generally, long-term members of public sector super funds have defined benefits funds while newer members tend to have an accumulation fund.

About the Public Sector Superannuation Scheme

The Public Sector Superannuation Scheme (PSS) was established under the Superannuation Act 1990 exclusively for employees of the Australian Government. Since 1 July 2005, no new members have been allowed to join the PSS. However, if you’re a PSS preserved member or PSS invalidity pensioner, you may be able to rejoin the PSS as a contributing member.

The PSS is a defined benefit super fund with an accumulation component for any members with transferred amounts and/or super co-contributions.

How does the PSS work?

Only contributing members can put money into their super or receive employer contributions. The benefit provided to contributing members of the PSS is defined by the final average salary and an accrued benefit multiple.

In the PSS, your employer makes contributions in two different ways:

  1. A fortnightly contribution - the productivity component, and
  2. An employer component that is calculated when you leave the PSS.

What are the benefits of investing with the PSS?

If you invest with the PSS, you’ll receive a number of benefits that will help boost your retirement savings. Here’s a few of the benefits you receive:

  • Competitive cost. Employers contribute toward the costs of administering the PSS, which means that no administration fees are taken from your account. The PSS pays no commissions to financial advisers.
  • Investment choice. The default fund or the Cash Investment option are available to preserved and associate members. There is no choice of investment option for contributing members as the defined part of the benefit is unaffected by investment performance.
  • Invalidity and death benefits. The PSS offers partial invalidity retirement and death benefits at no cost. Additional death and invalidity cover is available for contributing members who are unable to reach their maximum benefits limit at a relatively low cost.

The risks of the PSS

To find out about the risks associated with the PSS, check out the infographic below.

What are the fees and costs associated with the PSS?

Small differences in both investment performance and fees and costs can have a substantial impact on your long-term returns.

For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your return by up to 20% over a 30-year period.

If you’re a member of the PSS, you don’t pay any administration, switching, exit or any other ongoing administration fees as these costs are covered by your employer (or your former employer if you’re a preserved member).

Insurance in your super

Death, partial invalidity and invalidity retirement benefits are available through the PSS to help protect your current lifestyle and provide for you or your family in the event of sickness, injury or death.

The calculation of an invalidity retirement benefit for contributing members under age 60 depends on a number of factors including:

  • Your final average salary.
  • Your accrued benefit multiple at retirement.
  • A multiple based on what would have accrued had contributions continued to age 60 (prospective multiple), at the greater of 5% or the average percentage rate contributed over the 78 pay days (total pay days, if less) prior to the date of invalidity retirement or death.
  • The maximum benefit limited.
  • Whether you have been classified as a limited or full benefits member.

A partial invalidity pension is a form of income maintenance. It’s paid as a pension when your salary is permanently reduced due to a medical condition. A partial invalidity pension is not paid where a member:

  • Has reached maximum retiring age (usually 65).
  • Has less than three years membership and/or is a limited benefits member.
  • Ceases to be a member of the PSS.
  • Is entitled to compensation under a Commonwealth or State or Territory law providing for worker’s compensation.
  • If the medical conditions has been caused by willful action for the purpose of obtaining an invalidity benefit.

Death benefits are payable to your spouse and/or children should you die while you are a contributing member, a preserved member or after retirement provided you were receiving a PSS pension.

If you die while you are a contributing member and were not a limited benefits member, the pension payable to your dependants will be a percentage of the invalidity pensions that would have been payable had you retired on invalidity grounds.

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How do I compare Public Sector Superannuation funds?

A public sector fund is only available to public sector (government) employees, and in some cases, former government employees. You can’t choose a public sector fund although some of them let you choose to remain a contributing member when you leave the public sector.

In these circumstances, you may be able to arrange for your new employer to contribute to your public sector fund. As of December 2015, there are 19 public sector super funds.

How can I apply for the PSS?

From 1 July 2005, no new members are allowed to join the PSS. However, if you’re a PSS preserved member or PSS invalidity pensioner, you may be able to rejoin the PSS as a contributing member.

So if you’re trying to apply for a public sector super fund, most likely, you won’t be able to do it unless you’re a preserved member or PSS invalidity pensioner.

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2 Responses

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    AaronMarch 11, 2019

    I have been a member of the PSS since 2001. Due to injury/illness, I for the past 2 years I have not been able to return to work. I m on a Sickness Allowance payment from Centrelink for the past 26 weeks continuously. Due to the small fortnightly amount, and currently possessing nil assets, I need to access my super based on financial hardship. PSS says I qualify but first I require an ATO approval letter. I am not sure how to get this letter and the ATO website provides no clear way of obtaining this letter. Can you provide me with guidance on how I can obtain this letter so I can begin my early release application?

    Reply
      Avatarfinder Customer Care
      JoshuaMarch 11, 2019Staff

      Hi Aaron,

      Thanks for getting in touch with Finder. I’m sorry to hear about your situation.

      To obtain the ATO approval letter, you would need to first create a myGov account. From there, you can then use an online form to apply for early access to your super.

      For ATO to give you their approval, you would need to present digital copies of the required evidence of why they should approve your application. They accept photos of documents. You can then submit your application form and supporting documents to the ATO.

      If the ATO approves the application, you will get a notification through your MyGov Inbox. The ATO will also notify your super fund about your approval.

      If you are still having problems, please directly get in touch with ATO.

      I hope this helps. Should you have further questions, please don’t hesitate to reach out again.

      Have a wonderful day!

      Cheers,
      Joshua

      Reply
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