What happens to my defined benefit (DB) when I reach the following milestones?

April 5 | 7 minutes

Many people may be familiar with an accumulation account, since it’s generally the superannuation account workers have their contributions held in today, but DB accounts, which were offered pre-1994, are not as widely known.

A DB benefit is very different to an accumulation account, as your DB benefit is based on a formula, rather than an account balance that includes investment returns.

When you turn 65 or reach 40 years of membership in the DB scheme, you have to make some important decisions about your benefit. For example, do you want to leave your money in your DB as it is, move it into an income stream, into accumulation, withdraw it, or take out a lifetime pension (if you’re eligible)?

When you reach one of these milestones, Vision Super will write to you to explain your options and what to do next.

Ok, so I have just hit 40 years of DB scheme membership, now what?

First things first, 40 years of DB scheme membership means you have been with a participating employer(s) for a period of 40 years in full time employment. If you happen to be employed part time for a period, or taken some leave without pay, your 40 years of DB scheme membership may be affected.

So, what happens when you reach 40 years of DB membership before age 65?

  • You will have reached your maximum allowable benefit multiple.
  • You will no longer be required to pay the mandatory 6% member contributions.
  • The mandatory DB employer contributions are maintained.
  • You can remain in the DB scheme until you cease employment or reach age 65, whichever first occurs.
  • Any growth in your benefits beyond 40 years will be dependent on salary growth if you remain in the DB scheme.

Alternatively, you have the option to cease your DB membership and transfer your accrued retirement benefit to a Vision Super Saver accumulation account. If you choose to transfer your DB benefit to a Super Saver account, you will forego the DB lifetime superannuation pension option (where eligible).

If you choose to transfer to an accumulation plan then as a minimum, your employer would be required to contribute at the prescribed Superannuation Guarantee Rate (currently 10%) of your salary to your accumulation account.

While we know all of this sounds daunting, don’t forget there are financial advisers on hand to help you.

I just turned 65, what do I do?

When you turn 65, you will have to make some decisions about your DB and where you want to move your funds.

So, what happens when you reach age 65 before reaching 40 years DB membership?

  • You will have reached your maximum allowable benefit multiple.
  • Both member and employer contributions cease.
  • You can continue to be employed with your employer beyond age 65. However, you cannot remain in the DB scheme as your benefits become payable and you must provide us with your payment instructions.
  • If you continue with your employment after age 65 then as a minimum, your employer would be required to contribute at the prescribed Superannuation Guarantee Rate (currently 10%) of your salary to your accumulation account.

Whatever you choose to do with it, remember you’re not alone, and you’re not expected to know everything straight away. At this point, you may choose to get financial advice.

How are my entitlements calculated?

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

The calculation of your benefit follows the general formula:

Adjusted Final Salary x Accrual rates x Years of DB scheme 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 to.
  • 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.

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.

A Vision Super DB lifetime pension will be paid to you as a regular payment 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.

If you’re married or partnered and you die before your spouse, two-thirds of your gross pension will be paid to your spouse for the rest of their life.

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. If you choose to get 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.


April 5 |  7 minutes

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Not a Vision Super member?

You’ll just need to open a Vision Personal account first and then you can transfer across to a Vision Super pension.