5 Defined benefit (DB) questions you’ve always wanted to ask

13 January, 2024 |

 1.  What happens to my DB if I leave my employer, reduce hours or change jobs?

Once you leave your employer, and if you are not re-employed by a DB employer (Authority) within two months of your departure, your membership of the defined benefit plan will cease and you will be eligible for a benefit.

Your employer will advise Vision Super of your departure, including:

  • Confirming your final membership details
  • Advising the type of employment termination, for example, retirement, retrenchment, resignation.

This might occur either before or after your actual departure date. When all the correct information is received by Vision Super, we will calculate your benefit entitlements, write to you explaining the next steps and invite you to a meeting or phone call with one of our Member Services team.

You do not contribute to the defined benefit plan once you reach age 65, and years of membership after age 65 do not count for benefit calculation purposes. If you continue to work after you turn 65, your employer will make contributions on your behalf to an accumulation plan (such as Vision Super’s Super Saver), and you may choose to contribute to this account yourself.

If you reduce hours your DB will still grow, but at a slower rate.

Prior to age 65, if you are re-employed by an eligible DB employer within two months, you must continue to be a member of the DB plan (provided you are not re-employed on a casual basis). If your new employer is not an Authority, you will need to make some decisions and, at this point, you may choose to get financial advice.

2.  How are my entitlements calculated?

Under the defined benefit plan your entitlements are calculated according to predetermined, or ‘defined’ formulas. Unlike many other superannuation plans, your entitlements are not directly linked to the contributions paid to the Fund, or to investment returns.

The formula used to calculate your benefit follows the general formula:

Adjusted Final Salary x Accrual rates x Years of membership

The components in the formula may vary, depending on:

  • The reason for leaving your employment with an Authority
  • The period to which your years of membership relates
  • Whether you have ever worked part-time, or taken leave without pay
  • Your age when you leave your employment with an Authority.

Your entitlement may be reduced if you have an offset account, such as a family law offset account.

3.  How do I nominate a beneficiary?

As a DB member, your balance will be paid to your estate if you die.

4.  Does my DB include insurance?
While you’re an active member of the defined benefit plan you are covered for death and disability benefits 24 hours a day. You should be aware that you are no longer covered if you have left employment with an Authority, but you can apply for cover in one of our Vision Super accumulation plans. If you’d like to do this, you may choose to speak to us first so we can understand your situation.

5.  Am I eligible for a lifetime pension?

If you joined the Vision Super defined benefit plan on or before 25 May 1988, you can convert up to 50% of your DB retirement benefit into a lifetime pension once you are eligible to take your benefit after age 55.

Unlike an account-based income stream/pension, you can’t run out of a lifetime pension or use up all the money – a Vision Super DB lifetime pension will be paid to you as a regular income stream/pension every fortnight for the rest of your life.

Your lifetime pension is CPI indexed twice yearly (June/December), subject to a six-month qualifying period.

In the event of your death, if you’re married or have a long-term defacto partner, they will generally continue to be paid two-thirds of your gross pension.

Need to talk one-on-one?

Defined benefits are valuable and can give you peace of mind about your retirement – but they can also be complex and difficult to understand. Our Financial Planners are superannuation and DB specialists and understand the intricacies of the Vision Super DB benefit and what is available to you. Their job is to help members plan their retirement and they do not receive brokerage, fees, bonuses or commissions for recommending products. If you choose to obtain advice from a Vision Super Financial Planner, you may be charged a fee. If any fees are applicable, they will be discussed with you before any financial advice is provided. Call the Member Services team on 1300 300 820 Monday to Friday 8:30am to 5pm to set up a time.


5 February, 2024 |

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