Don’t set-and-forget super: what you need to know


Defined benefit versus accumulation plans, salary sacrifice, multiple funds management … There’s more to super than signing up. Dixon Advisory offers some pointers.

Super is a large and important part of the remuneration of any public servant. But in the changing workplace, it’s no longer a set-and-forget investment. Your super may need adjusting as you switch between different roles and employers to ensure you are protecting existing benefits and maximising new opportunities.

Defined benefit v accumulation

Depending on when you started work in the public sector, you may be covered by an older defined benefit plan (such as CSS or PSS) or a newer accumulation fund (such as PSSap). Each has their advantages.

Defined benefit plans generally provide a pension income in retirement (though you can opt for a lump sum). This income is based on a formula that takes into account things like your service period and salary and is usually indexed to inflation.

The certainty of receiving a guaranteed income in retirement is highly attractive, but defined benefit plans can be less flexible if you’re looking for a more varied career. Members looking to leave their employer, either permanently or for a period, will need to consider how best to manage and maximise their defined benefit. With both PSS and CSS, you can preserve your membership if you leave your employer and reactivate it later — so long as you haven’t accessed your benefit. But questions such as whether you return to your employer, and the timing of your return, can impact on your final benefit. So it pays to plan any moves carefully.

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