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For Defined Benefit accounts
The Defined Benefit account was designed to provide you with a respectable retirement amount which reflects your service to the state. The scheme was designed around the idea that you would work for the government until you retire, with 55 originally designated as the earliest retirement age. This means if you leave before turning 55 some different rules apply to determine what happens with your super.
When you resign from your employer your Defined Benefit account will close unless within one month of leaving your original employer you move to another Queensland Government employer who can pay into a Defined Benefit account. When we hear from your employer that you’ve resigned, we’ll send you a form which allows you to give us instructions for how you want your money invested.
If you don’t return the form to us, we’ll transfer your benefit as explained below.
All of your funds will be transferred to an Accumulation account.
We calculate your benefit and then split it into two parts. We move the money you contributed including your associated interest (your part) into an Accumulation account following your investment preference or the default investment preference of Lifetime. The remaining amount representing your employer’s part is retained as a Deferred Retirement Benefit (DRB) unless you ask us to transfer a discounted amount to the Accumulation account instead.
Your employer’s part of your Defined Benefit is placed in a Deferred Retirement Benefit (DRB) until you turn 55. From the time of deferral, your DRB increases every quarter in line with average weekly ordinary time earnings (AWOTE).1 This increase is intended to reflect the salary growth you might have earned if you’d stayed a member with a Defined Benefit account. We previously referred to this as the Average Wage Option. When you turn 55, we’ll transfer your DRB to an Accumulation account. We’ll get in touch with you before you turn 55 to check how you’d like your money invested. If we don’t hear back from you before your 55th birthday, we’ll use your Accumulation account investment preference or the default investment option.
Instead of the DRB, you can choose to transfer a discounted transfer value to the Accumulation account. You can choose this option when you’re leaving the Defined Benefit account, or at any point while in the DRB. We previously referred to this as the Investment Linked Option. For details on the Accumulation account, please see the PDS for Accumulation and Income Accounts.
The table below shows how much the amount transferred will be discounted by, and you can find your transfer value on quotes and statements we send you.
The scheme was designed for you to stay in it until at least age 55.
To determine how much your employer should contribute to fund your benefit by age 55, the Queensland Government uses an assumed investment return rate of 7 per cent. This means that if you transfer your funds out before age 55, we need to discount the amount transferred to reflect the investment earnings not yet received.
However, if you leave before age 55, the employers part of your benefit is placed in a Deferred Retirement Benefit which increases in value in line with average weekly ordinary time earnings (AWOTE). The Queensland Government assumes an average wage of 4 per cent.
Therefore, the transfer amount is discounted to reflect the 7 per cent investment returns not received offset by the 4 per cent wage growth which doesn’t need to be paid.
The discount formula is:
For the technical and inquisitively minded, 1.0288 is 1.07/1.04 reflecting the 7 per cent assumed investment returns offset by the 4 per cent assumed AWOTE growth.
This means, if AWOTE grows at 4 per cent each year, you’ll need to earn 7 per cent interest each year on your transfer value to have the same amount as the DRB when you reach age 55.
The full amount of money representing your employer part is placed into a DRB and increased each quarter with AWOTE.
Your DRB doesn’t include insurance (however if you die or are assessed as being totally and permanently disabled you can receive your benefit at a non-discounted rate).
The portion of money that you contributed will be transferred into an Accumulation account meaning you’ll receive the Accumulation account default insurance arrangements explained in the insurance section and in our Accumulation Account Insurance Guide.
Some people have a portion of money in their DRB which we report to them as available to withdraw when they turn 55. This money doesn’t require you to meet the standard conditions to access you super. When we close your DRB at age 55, you may have the option to withdraw this amount if you aren’t working for the same Defined Benefit employer.
The transfer value is a discounted amount of your employer part to reflect the investment earnings not yet received. This is known as the present day value of the funds, measured between the time you leave and the time you turn 55. We tell you the transfer value in quotes and letters we send.
You’ll receive the Accumulation account default insurance arrangements as explained in the insurance section and in our Accumulation Account Insurance Guide.
If you choose to transfer this money to the Accumulation account you won’t be able to access the portion of money we reported to you as available to withdraw when you turn age 55. Within the Accumulation account, this amount will only be available for you to withdraw when you meet the regular conditions allowing you to access your super. We call these preserved funds.
By default you’ll receive the DRB unless you send us instructions choosing instead to transfer a discounted value to the Accumulation account. We’ll send you a form when we hear you’re leaving the
account, or you can use the Transfer your Defined Benefit to an Accumulation account form. If you already have a DRB, you can choose to close it at any time. Remember the transfer value is calculated on the day of transfer. Keep in mind that if you choose to transfer to the Accumulation account, you can’t transfer back to a DRB.
Your DRB isn’t affected by stock market fluctuations and losses as your employer assumes the risk of the market returns. If you transfer out, you'll take on the risk of the market returns. For this reason it’s not easy to compare the two outcomes, so we recommend you speak with a financial adviser to help you make a decision.
More information can also be found in the Defined Benefit Guide.
Find out more about how the Defined Benefit account works.
How your final benefit is calculated and how part time work can affect it.
Understand your options when you resign or change your job.
There are two different ways you can grow your super with us.
Details of the included insurance benefits.
1. AWOTE is a measure of wage levels across Australia and is calculated by the Australian Bureau of Statistics.