The Retirement Benefits Fund (RBF) Contributory Scheme is a defined benefit fund offered to employees of the Tasmanian State Government employees prior to 15 May 1999. The fund has since been closed to new members except under certain circumstances.
The fund is a historic style superannuation account which provides a member’s benefit, which is generally based on mathematical formula (defined benefit formula).
The defined benefit formula consists of the Accrued Benefit Multiple Factor (ABMF) which is made up of the Contributory Service, Employment Percentage and Benefit Multiple Factor.
- Contributory Service is the length of contributory service calculated in years.
- Employment Percentage is the member’s full-time equivalent service for a particular period of contributory service. 100% indicates fulltime employment.
- Benefit Multiple Factor is the rate that corresponds to the member’s contribution rate for the specified period of service.
All RBF Contributory Scheme members must contribute to the RBF Contributory Scheme whilst they are employed by the Tasmanian State Government. Contributions may be made in the form of after tax contributions or via salary sacrifice (pre-tax) contributions.
The minimum, or basic contribution rate, is 5% of salary paid fortnightly and the maximum contribution rate is 15% of salary (fortnightly). Some members who joined prior to 1 April 1987 elected to contribute at a lower rate of 2.5% and are entitled to continue to contribute at 2.5% of salary.
In the event of a change to employer, there are some options which can see the member’s membership maintained.
In the event of resignation, retirement or reaching age 70, you will no longer maintain RBF Contributory Scheme membership. Under these scenarios the fund will contact the member regarding end benefit options available based on the membership held. It is important to plan any change to your employment, retirement, resignation or reaching age 70 years prior to this occurring, as different benefit options will become available that will require consideration.
The end benefit is calculated by multiplying the ABMF by the Financial Average Salary (FAS) of 3 years, or if a member had joined the scheme prior to 1994, may have access to the FAS (1) multiplier which is the Final Average Salary of the past 12 months to finishing employment.
Upon retirement after preservation age, the fund offers the member the opportunity to receive their benefit via a Life Pension or Lump Sum or a combination of both. The Life Pension is a tax effective income stream that is stream paid fortnightly for the remainder of the member’s life and can be elected as reversionary (paid to member’s partner upon death of the member at a rate of 2/3rds) or non-reversionary (ceases upon death of the member). The Life Pension is indexed twice yearly in accordance with the Consumer Price Index (CPI). The Life Pension is a State Government guaranteed.
If a lump sum is requested the member requires to note that additional tax will be payable from their gross benefit, as the RBF Contributory Scheme is an unfunded, untaxed scheme. Therefore, the State Governments share of the benefit is required to be taxed at superannuation concessional rates (15%) upon funding.
In the event of a member’s employment position becoming made redundant, the member will have several options available to them depending on their membership type and the age of the member at the time of redundancy. It is important to review your RBF Contributory Scheme options prior to redundancy to ensure that you know which options are available to you.
Resignation of a member who is less than preservation age will have restricted options regarding their benefit. It is important that a member reviews their options prior to making their decision to resign from their employment, as options may be available to suspend such decisions, such as taking Leave without pay, maintaining a contribution holiday, or transferring to another position within the State Service.
Resignation of a member who has reached preservation age will generally be treated as retirement.
There are several ways in which a member can increase their benefits within the RBF Contributory Scheme. One of the easiest ways is to apply to the fund to increase the contribution rate to the fund. In the event of planning for future retirement, there are other options available which allow you to purchase or upgrade prior service which may be beneficial for your retirement planning. It is important that a member is aware of the opportunities available to increase their retirement benefits, as not all options are advantageous. It is worth the time to review your membership with us see what options are available.
If you are an RBF Contributory Scheme member and wish to discuss options available to you, feel free to contact us to book a time to discover your situation…