You may already know there are different types of super funds, from retail funds to industry funds, and corporate funds dedicated to the staff of a particular employer, like Qantas Super.
But did you know there are also different types of super accounts which determine how a member’s super benefit is calculated?
The two main types of accounts are accumulation and defined benefit. Some funds, like Qantas Super, offer a mix of the two.
At Qantas Super, Divisions 1, 2, 3, 4, and 15 offer defined benefits. Some members in these Divisions may also have linked accumulation accounts.
What’s the difference between accumulation and defined benefit accounts?
An accumulation account works a bit like a bank account. Your balance at retirement depends on the contributions made by your employer and any contributions you may make, minus any relevant fees, taxes, and insurance premiums.
Your balance will also depend heavily on investment returns, which may be positive or negative. A member with an accumulation account will generally be able to choose their investment option, and bears the risk of investment returns being negative.
If you’re a member of a defined benefit division, the defined benefit component of your benefit will be calculated according to a pre-determined formula. Common factors in a formula may include your:
Case study: Betty
Here’s an example of how a defined benefit works, using a Qantas Super member.
Betty is in Division 3 and has worked for Qantas for 20 years full-time. Her Superannuation Salaries in the last three years were $58,000, $60,000, and $63,000.
Betty also has a Rollover Account, which is an accumulation account, of $150,000.
Let’s take a look at the benefit Betty will receive if she were to retire after 20 years of Credited Service.
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