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Public Sector Superannuation Scheme (PSS)

Optimising your contributions?

As a member of the Public Sector Superannuation (PSS) you can contribute 0% or between 2% and 10% of your salary into your super scheme. 

The level of your personal contributions is really important when the time comes for you to exit the scheme, as your benefit will be calculated based on this formula:  

Benefit amount = final average salary (FAS) × accrued benefit multiple

The growth of your ‘accrued benefit multiple’ will depend on your rate of contribution from your salary and your length of scheme membership. So the more you contribute and the longer you contribute for, the higher your accrued benefit multiple and the greater your PSS benefit will be. Remember there’s a maximum benefit limit, which will vary according to your salary. 

Whether you reach your maximum benefit, or not, will depend on your contribution rate over the years. That’s why it’s a good idea to make sure you’re contributing at the right level now – so you can maximise your final benefit payment when you leave work.

StatePlus financial planners are experts in PSS. One of our highly skilled professionals can work with you to design a financial strategy that helps you optimise your position, based on your individual circumstances and your current and future objectives. 

You can meet with one of our professional financial planners without cost or obligation. The fee you pay will reflect the advice you need and the level of service you want.

So why not call us on 1800 620 305 to make sure you’re maximising the opportunities now to deliver the lifestyle you want in the future.

Saving tax on your final benefit

When you retire and access your final PSS benefit, you generally have the option of:

  • taking it as a lump sum
  • converting it into a lifetime pension
  • taking a combination of lump sum and pension

As your benefit is made up of taxed and untaxed components, if you decide to take a combination of lump sum and pension, you can choose whether the majority of the untaxed element is ‘streamed’ to your lump sum or to your pension. The choice you make will have very different implications on the amount of tax you pay.

  • If you make the choice to have your untaxed element streamed to your lump sum, then a tax of at least 15% will be applied when you receive your benefit.
  • If you elect to have your untaxed element streamed to your pension, then the portion of your pension which is made up of the untaxed element will be subject your Marginal Tax Rate (MTR). 
  • If you’re over 60, you’ll also receive a 10% tax rebate depending on the size of your pension, and the amount which is taxable - so you may end up paying very little or no tax on your pension income.

So which is the better option? Is it to stream the majority of untaxed element into the pension to minimise tax in the short-term, or is it to stream the majority of the untaxed element into the lump sum and minimise tax on the pension? The answer isn’t a simple one and will depend on your individual situation and how you want to spend your retirement.

Deciding whether to take your PSS benefit as a lump sum or pension is an important lifestyle decision and you need to understand the short and long-term tax implications. That’s why it’s important you speak with a financial planner at StatePlus to discuss the option that’s right for you.

Give a financial planner a call on 1800 620 305. Now is the perfect time to speak to the experts about your scheme choices.

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Five essential super answers for public sector employees

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