Important information about changes to offset accounts and voluntary accumulation accounts
For members in Divisions 1, 2, and 3
We are making a few changes to offset accounts, and voluntary accumulation accounts.
1. We’re changing how offset accounts are invested
An offset account is designed to track any early withdrawals or advances given on your defined benefit. The balance of an offset account is negative and will be subtracted from your total benefit, for example at retirement or when you leave your division. This is to ensure that the funds you accessed early aren’t paid to you again and your total benefit is calculated fairly.
Your offset account increases or decreases in line with investment returns applied to your account. As a result, the balance could grow over time to be more than the initial payment you withdrew. We do this because the advance given on your defined benefit has come from the assets of Qantas Super, and it would have otherwise generated a return had it not been paid out early.
How offset accounts are currently invested
As a member of a defined benefit division, you have control over how certain accumulation accounts are invested. To now, some types of offset accounts were included in this list of accounts: Surcharge Accounts, Family Law Accounts, and Defined Benefit Offset Accounts. This meant that the balance of these offset accounts accrued investment returns as per the same options a member chose for their accumulation accounts with positive balances. If a member had not chosen an investment option for their accumulation accounts, investment earnings were applied using the Growth option, which is the default investment option for accumulation accounts in the division.
Meanwhile, if you have a Stand Down Contribution Debt Offset Account, which tracks any unpaid compulsory member contributions accrued during the stand down period, this account accrues investment returns via the same rate that applies to Qantas Super’s defined benefit assets (the DB rate).
We’re standardising how offset accounts are invested
To standardise the way that these accounts are treated, all current and new offset accounts will accrue investment returns by reference to the DB rate. However, the Plan Sponsor, Qantas Airways Limited, has requested that an exception is applied to members whose offset account is accruing investment earnings by reference to the Cash or Conservative investment options; you can learn more about this exception below.
As we are currently working towards a merger with Australian Retirement Trust (ART), this change will be implemented as soon as practicable, which is the date on which Qantas Super merges with ART; this is expected to be in the first half of 2025. The date on which the change will take effect will be referred to throughout this letter as the Implementation Date.
You can view the returns that apply to Qantas Super’s defined benefit assets (the DB rate) by downloading our weekly credited interest rates (CIRs).
Why we've made this change
Standardising the way that offset accounts are invested will ensure a fairer approach for all members.
If your offset account is already invested in Cash or Conservative
In accordance with the request from the Plan Sponsor, if as at 31 October 2024 part or all of your offset account accrues investment returns at the rate of the Cash or Conservative options, the portion of your balance aligned to these options will accrue investment returns at the Cash rate. As stated above, this change will take effect on the Implementation Date. The rest of your balance (if any) will accrue investment returns in accordance with the DB rate from this date.
Example
For example, if at 31 October 2024 65% of your offset account accrued investment returns at the Conservative option rate, and 35% as per the Balanced option, then 65% of your offset account will accrue investment returns at the Cash rate in ART, and this change will take effect on the Implementation Date. The remaining 35% of your offset account will accrue investment returns at the DB rate from this date.
The table below demonstrates how this would work, for an offset account with a balance of -$10,000 on 31 October 2024, which grows to -$15,000 on the Implementation Date.
Member investment choice will continue to apply to your positive accumulation accounts
As explained above, you have control over how certain accumulation accounts are invested. The investment choice you have made for any positive accumulation accounts you may have will continue to apply. You can find these accounts on your Annual Statement.
2. Changes to voluntary accumulation accounts
Members in a defined benefit division may have a voluntary accumulation account with a negative balance.
This occurs when a member has Voluntary Cover, and premiums for this insurance cover are deducted from their account. As these premiums can’t be deducted from a defined benefit amount, they are deducted from an existing voluntary accumulation account, or a voluntary accumulation account created for this purpose. If voluntary contributions are not made to this account as premiums are deducted, the balance may become negative.
Effective from the date that Qantas Super merges with ART, the overall balance of your voluntary accumulation accounts will not be able to become negative. This includes the total (if any) of your Member Voluntary Account, Salary Sacrifice Account and your Rollover Account.
To deal with this, we are making a few changes to this process:
Existing voluntary accumulation accounts with a negative balance will be treated as an offset account
Any voluntary accumulation accounts with a negative balance identified on the date that Qantas Super merges with ART will be treated in line with offset accounts. If you had a negative account balance as at 31 October 2024, this means that such an account will increase or decrease with investment returns in line with the changes to offset accounts explained above.
You will need to make voluntary contributions to cover the cost of premiums for Voluntary Cover
After the transfer to ART, if you have Voluntary Cover, you will need to make voluntary contributions to your account to cover the cost of the insurance premiums for this cover.
If you do not have a sufficient balance in your voluntary accumulation accounts to cover the cost of the insurance premiums, after a period of failing to pay the premiums (currently four months), your cover in ART will cease. ART will contact you prior to your cover ceasing to allow you to pay the insurance premiums and maintain your cover.
Frequently Asked Questions
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If you have any questions about accessing your super, you can book a one-on-one appointment with a Super Adviser on our website.