Commonwealth Superannuation Scheme (CSS)

Investment choice - what’s right for you?

As a CSS member your super benefit is made up of 3 parts: 

• Your member component;
• A productivity component; and
• An employer component.

If you’re a contributing member of CSS, you can nominate for your member and productivity components to be invested into either the default growth style fund or the cash investment option.  In the default fund, your contributions will be exposed to the ups and downs of investment markets, so their value and your returns will fluctuate. 

It’s important to remember that while the default fund is likely to out-perform the cash option over the long-term, you need to consider whether your money will have time to recover before you retire if markets fall.  The cash investment option may provide lower returns over the long-term, but it might be suitable for you if you’re looking for capital stability and protection.

Of course, if you leave the fund as an age retiree, your CPI-indexed pension, which is based on the employer component of your benefits, won’t be affected by investment performance as it’s determined by a defined benefit formula.

If you have a deferred CSS benefit, the value of your employer component (CPI-indexed pension) as well as the member and productivity components of your benefit will be impacted by the fund’s earnings.

When you come to claim your deferred benefit, including those implementing a 54/11 option, your CPI-indexed pension (employer component) will be calculated at 2.5 times your basic contributions plus earnings, multiplied by a factor based on your age at the time you claim.  As a result, any movement in the fund’s investment performance will impact your entire CSS benefit.

Which option to choose?

Deciding which investment option is right for you will depend on a number of factors such as how you’re going to exit the scheme, the level of risk you’re prepared to accept, your investment time-frame and your needs and objectives.
As the experts in your scheme choices, your financial planning team at SSFS is here to help you decide which investment option may be the most appropriate for you.  And, as part of your member service, there’s no cost or obligation to speak with your financial planner. 
So give your member service team a call on 1800 620 305 and speak to the experts in your scheme choices.

Retirement and the 54/11 option

If you’re a CSS member and approaching age 55, the 54/11 option may provide you with a better CSS benefit than under normal age retirement.

Generally, when you retire after reaching your retirement age (of 55) your employer component is converted to an indexed pension - calculated as a percentage of your final salary. The percentage is based on your age and years of contributory service.

The 54/11 option gives you the opportunity to resign prior to reaching age 55, preserving your benefit and claiming a deferred benefit after you reach 55. The employer component of your deferred benefit will be converted to an indexed pension using a different formula – 2.5 times your accumulated basic contributions plus earnings, multiplied by a pension factor based on your age at the time you claim.

In both cases (ie, with a deferred benefit or retirement benefit) at or after age 55, you’ll be able to take your member and productivity components as a lump sum or non-indexed pension if you’ve retired.

Depending on your circumstances it may be better to implement the 54/11 option in regards to your CSS benefit.

So should you resign prior to reaching age 55 and defer your benefit, or continue to work until age 55 or later and claim a normal age retirement benefit? The best option won’t be the same for everyone and will often depend on your years of contributory service and individual circumstances.

That’s why it’s important you speak with your financial planning team at SSFS. As the experts in your scheme choices our planners have an in-depth understanding of your scheme and how the 54/11 option may affect your final benefit. 

So give your member service team a call on 1800 620 305 and find out if the 54/11 option is right for you.

Related Links

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