Product disclosure statementThird edition, issued on 16 December 2011

PSS Public Sector Superannuation Scheme

ReachWe understand your employment conditions and aim to deliver consistent returns and useful services, all at a competitive cost to you

What is this product disclosure statement for?

This document provides important information about the features, benefits, risk and cost of investing your super in the Public Sector Superannuation Scheme (PSS or the Fund). It will help you compare the features of the PSS with those of other funds.

Who should read this product disclosure statement?

This product disclosure statement is for members of the PSS.

Membership of the PSS is not generally open to people who joined the APS after 1 July 2005. These employees are, however, eligible to join the PSS accumulation plan (PSSap).

If you are a PSS preserved benefit member or a PSS invalidity pensioner and you return to eligible employment, you can return to the PSS as a contributing member, provided your new employer participates in the PSS and meets eligibility requirements.

Membership of the PSS is also open to former spouses or partners of PSS members who are eligible to become PSS associate benefit members as the result of a family law settlement which has split a members PSS entitlement. See page 16 for more information on PSS eligibility.

This product disclosure statement also contains information of use to both current PSS members and preserved benefit PSS members (that is, members who no longer contribute to the PSS but who still have super invested in the PSS).

The offer to which this document relates is available only to a person eligible to become a member of the PSS under the Superannuation Act 1990, receiving this document (electronically or otherwise) in Australia. If you are not sure whether you are eligible to join the PSS, please ask your employer or call us on 1300 000 377.

Who prepared this product disclosure statement?

This document was prepared and issued on 16 December 2011 by Commonwealth Superannuation Corporation (CSC) (CSC or we or us) ABN 48 882 817 243, AFSL 238069, RSE Licence No L0001397.

CSC is the issuer of membership interests in the PSS ABN 74 172 177 893, RSE R1004595 and SPIN CMS0101AU.

This document contains only general information which may change.

Any information in this document has been prepared without taking into account your personal objectives, financial situation or needs. Because of this, you should, before acting on any advice in this document, consider the appropriateness of the

advice, having regard to your objectives, financial situation or needs. You may wish to consult a licensed professional, such as a financial adviser or accountant, to do this.

Information in this document may change from time to time

Information that is not materially adverse may be updated and made available to you at the Our latest news area on our website www.pss.gov.au. Alternatively you can call us on 1300 000 377 and ask for a paper copy to be sent to you free of charge.

Please exercise your own judgment with respect to any offer being made by a third party

Neither CSC nor the Australian Government takes any responsibility for the services or guarantee(s) the performance of any product provided by third parties including AIA Australia Limited (AIA Australia or the insurer) and Members Equity Bank (ME). You are under no obligation to use the services of ME and should always compare financial products to find one which best meets your personal objectives, financial situation and needs.

AIA Australia (ABN 79 004 837 861, AFSL 230043) has consented to being named in this PDS and to the inclusion of information about them in the PDS in the form and context in which it is included. At the date of this PDS, that consent has not been withdrawn.

What you should know upfront

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PSSYour quick guide to the PSS

Its all about youThe PSS was established to meet the superannuation needs of Australian Government employees.

Our organisation represents over 30 years experience and were always at work for you, helping you make the most of your financial future with consistent returns and useful services, all at a competitive cost.

The following is a summary of key considerations which lets you see, in brief, how the PSS stacks up. Further information can be found at www.pss.gov.au or by calling us on 1300 000 377.

What you should consider How the PSS stacks up

1 Investment performance As the PSS is a defined benefit scheme investment returns do not actually affect your total benefit while you are a contributing member. However, any money you transfer from another super fund will be affected by investment earnings. For the latest performance information visit our website www.pss.gov.au. Select Investments and then Investment performance.

2 Fees, charges and commissions

As a member of the PSS you dont pay any administration fees or member transaction costs these costs are covered by your employer. The Fund deducts taxes and investment management costs from investment earnings before determining Fund earning rates.

The PSS pays no commissions to financial planners.

There may be some fees for services such as reconsideration of a decision, or a family law information request, however, these are payable at the time and not deducted from your PSS super account.

3 Level of contribution by your employer

Your employer contributions are made up of a fortnightly contribution (productivity component) and a component that is calculated when you leave the PSS and claim a benefit. Employer contributions depend on factors such as the rate you contribute and whether or not you work part time. There is also a restriction on how much your employer will contribute for a ten year period of your membership (not necessarily a continuous period or the first ten years).

4 Your contribution level With the PSS, member contributions are compulsory but you can choose to contribute 0% or whole percentage rates between 2% and 10% of your super salary, and change your contribution rate at any time to suit your financial needs.

5 Investment choice There is no investment choice for contributing members.

The PSS is a defined benefit fund. Unlike more common accumulation funds, the PSS provides you with a benefit that is defined by a formula based on your rate of contribution, your years of membership and your Final Average Salary. This means that your employer wears the risk of investment, not you.

If you leave the PSS and preserve your benefit in the PSS, you will have limited investment choice the choice between the Default Fund, or a Cash Investment Option. See pages 12, 24, 25 and 26 for further information on these options.

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6 Insurance As a PSS contributing member, and if you are under 60 years of age, you automatically receive invalidity and death cover at no additional cost. Youre covered for a benefit based on your entitlement had you worked to age 60*.

Some members may have the option to increase their death and invalidity cover. Your employer will pay half the costs of the standard premium for the additional insurance.

*Full benefits members only.

7 Efficiency and honesty of administration

The PSS uses the administration services of ComSuper.

8 Benefit options You can generally take your PSS retirement benefit as a lump sum, a pension, or a combination of both. You can also preserve your benefit in the PSS for payment at a later stage.

9 Information and education when you need it

We run an award-winning member education program. You have online access to benefit estimates and other information about the PSS at any time. You can also access information and assistance via email, phone, fax and letter, whichever is most convenient for you.

10 Compliance with regulatory framework

The PSS is established by the Superannuation Act 1990 and CSC is licensed under the Corporations Act 2001 and regulated by the Superannuation Industry (Supervision) Act 1993 (SIS Act).

11 Our understanding of your employment conditions

We work closely with employers for the benefit of members. Our organisation has been providing super services and products to employees of the Australian Government and participating employers since 1976.

12 Additional services As a PSS member, you have access to home loans provided by Members Equity Bank (ME).

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How superannuation works 5

About the PSS 9How the PSS works 10

Welcome 15Welcome to the PSS 16

Family law and your super 16

Choice of fund 17

Contributions 19Contributing and transferring super 20

Investments 23Investments and your options 24

Death and invalidity cover 27How you are covered 28

Full benefits membership 29

Limited benefits membership 30

Increasing your death and invalidity cover 30

Withdrawing your PSS super 33Withdrawing your super 34

Restrictions on withdrawing your benefit 42

How we calculate and pay your benefit 43

Administrative matters 45

Fees, taxes and other costs 49Fees and other costs 50

Tax and your super 53

Contacting us and other important information 57Your privacy 58

Managing your super online 58

Information, advice, complaints and contacting us 58

Additional services 59

Contents

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How superannuation works

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FIND OUT ABOUT:

How superannuation works

If youre starting a new job or changing employers, youll no doubt be receiving a lot of information and have to make a number of decisions.

With just a little attention now, your super could be one of your most valuable assets in the future and your key to relaxing and enjoying life after work.

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How superannuation worksSuper is a long-term way to save for your retirement. Depending on when you choose to retire, your retirement income may need to last for 20 years or more.

Super funds pool members contributions and invest them for the benefit of members. There are many different types of funds in Australia, with different benefits, risks and costs. Before you choose you should compare options and join a fund that will suit your individual personal objectives, financial situation and needs.

Subject to superannuation law, in most cases, you can only withdraw your super from the super system when you retire permanently from the workforce the money you withdraw is called a benefit.

You will generally have a choice of how you want to take your benefit, either as a lump sum, a pension, or a combination of both, but there are conditions to withdrawing your super. Benefits can also be paid if you die or become totally and permanently disabled.

Although your super is invested on your behalf by your super fund, there are some decisions only you can make such as how much you need to contribute to ensure your retirement income meets your financial needs in the future.

Visit www.pss.gov.au and select Member Services Online* to register your email.

* You will need an Access Number to use this service. If you do not have an Access Number call us on 1300 000 377.

Who said it was hard to get information on super?

You can email any queries to members@pss.gov.au

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subscribe to our email news service for updates on your super and to receive Annual Member Statements.

@Super made super easy with email

Experience

About the PSS

The PSS is managed by CSC. CSC represents over 30 years of experience working for Australian Government employees and employers.

You can be sure that we will do all we can to help you make the most of your financial future through risk assessed investment, keeping you informed and helping you develop the skills you need to manage your super with confidence.

FIND OUT ABOUT:

How the PSS works and what you can expect from us

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How the PSS works

Who looks after the PSS?

The PSS was established under the Superannuation Act 1990 to provide superannuation services and products to employees of the Australian Government and participating employers. As at the end of November 2011, the PSS comprised more than $12.2 billion for over 213,000 members.

The PSS is managed by CSC. CSC is licensed under the Corporations Act 2001 and the Superannuation Industry (Supervision) Act 1993 (SIS Act).

CSC is the Trustee of four regulated superannuation schemes; the PSS, the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation accumulation plan (PSSap), the Military Superannuation and Benefits Scheme (MSBS) and five exempt public sector schemes.

CSC is responsible for all aspects of the PSS, including investment strategy, administration and member communications.

CSC is supported by an administrator, a custodian and other specialist service providers, including leading Australian and international investment managers.

Governance and risk management

Our legislation requires us to act in good faith, with prudence and in the members best interests in respect of the investment and administration of the PSS.

The Auditor-General is required to audit the PSS at least once each financial year.

Our investment governance focuses on managing risk and is driven by our primary investment objective to maximise long-term real return within certain risk constraints.

Day-to-day investment decisions are made by professional investment managers within agreed investment parameters which are regularly reviewed.

If you are interested in additional information on our governance program, visit www.csc.gov.au.

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PSSWhat the PSS provides

The PSS provides a long-term way for you to save for your retirement. The quick guide at the front of this document provides a summary of what the PSS offers.

The PSS is a defined benefit scheme. Unlike more common accumulation funds, the PSS provides you with a benefit that is defined by your Final Average Salary and an Accrued Benefit Multiple. These two factors have greater influence on your benefit than investment returns. See pages 20 to 22 for more information.

Final Average Salary Accrued Benefit Multiple = Your Benefit

PSS benefits can, depending on the circumstance, be taken as a lump sum, pension or a combination of both. Your PSS retirement benefit is made up of three components (see Table 1).

If you have become a member as a result of a Family Court splitting order, your benefit is calculated differently. See page 16 for more information.

Table 1: Your PSS retirement benefit components

Component Description

1 Member component This is your own after-tax contributions together with Fund earnings. We call this a taxed component because it is money paid from your net salary directly into the PSS to be invested.

2 Productivity component This is your employers productivity contributions since 1 July 1990 (less 15% contributions tax) together with Fund earnings. We call this a taxed component because it includes money paid directly into the PSS to be invested. Any productivity contributions paid before 1 July 1990 are treated as an untaxed component.

3 Employer-financed component

Determined only when you leave, this amount is the balance remaining after your member and productivity components are deducted from your total lump sum benefit.

We call this an untaxed component because it is paid from the Consolidated Revenue Fund (CRF), not the PSS. For tax purposes, it is treated as coming from an untaxed source.

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Managing risk

Super, like any investment, has risks. For example, superannuation laws, including those relating to the PSS, may change and asset classes may perform differently from time to time. Table 2 on page 13 shows significant risks you should know about.

Ways we manage risk include:

> diversification across asset classes, individual assets, investment styles and investment managers

> continuous research and analysis

> systematic compliance and fraud control programs; and

> continuous monitoring of market performance, investment manager performance and relevant legislation.

We use governance advisory services to help manage investment governance in Australia and our right to cast proxy votes in the Australian and international companies in which we invest.

We do not take labour standards or environmental, social or ethical considerations into account when making decisions to buy, hold or sell investments.

Our responsibility, your responsibility

The PSS Trust Deed and Rules made under the Superannuation Act 1990, together with this document and the laws govern our relationship with you. They may change from time to time.

We are responsible for managing the Funds investment strategy, administration and keeping you informed about your super with the PSS. We are also responsible for responding to your enquiries, complaints and claims.

You are responsible for keeping us informed about how we can contact you and making decisions about your super, such as how much you need to contribute to ensure you have sufficient money for retirement.

Under current law, a successful claim against CSC or any of its directors relating to the performance of their functions, will not affect the balance of your PSS super account.

Do I have investment choice?

At the date of this PDS, contributing members of PSS do not have investment choice.

Preserved benefit and associate members who have taxed components that are affected by investment earnings can choose between the Cash Investment Option and the Default Fund, subject to terms and conditions (for more information see pages 24 to 26).

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PSSTable 2: Significant risks that may affect the Fund

Risk Description

Inflation Inflation may exceed the return on investment.

Asset investment risk

Individual assets we buy can (and do) fall in value for many reasons, such as changes in the internal operations or management of a fund or company we invest in, or in its business environment.

Market risk Economic, technological, political or legal conditions, and even market sentiment, can (and do) change, and this can affect the value of the investments in the Fund.

Interest rate risk Changes in interest rates can have a positive or negative impact directly or indirectly on investment value or returns.

Currency risk We invest in other countries and if their currencies change in value relative to the Australian dollar, the value of the investment can change.

Derivatives risk We may use derivatives to reduce risk or gain exposure to investment markets when we think it appropriate. Risks associated with these derivatives include the value of the derivative failing to move in line with the underlying asset, market or index, and counterparty risk the risk that the other party to the derivative contract cannot meet its obligations under the contract.

Fund risk Risks particular to the Fund include that it could cease operation, that fraud against CSC could occur, Trustee restructure, directors could be replaced and that our investment professionals could change.

Insurance risk Additional death and invalidity cover is obtained from a third party. This involves the risk that the third party insurer will not be able to, or will decline to, meet its obligations under the contract of insurance.

Super laws Changes are frequently made to superannuation law and may affect your investment and your ability to access it. For example, under the existing law, your super benefit may be split by agreement or by court order with your spouse if you and your spouse permanently separate.

Changes to tax Changes can occur to taxes on investments or super generally, which may affect the value of your investment or benefit.

Liquidity risk Assets that we invest in can become difficult to trade under certain market conditions.

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Welcome

If you have a PSS preserved benefit, we are pleased to welcome you back to contributory membership. There may have been some changes to the PSS since you last contributed, so it is important to read this document as if you were a new member.

If you have become an associate benefit member of the PSS as the result of a family law split, we welcome you to the PSS. It is important to note, however, that not all of the information in this document will apply to associate benefit members.

FIND OUT ABOUT:

Returning to the PSS

Associate benefit membership

Choice of fund

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Welcome to the PSSIf youre a PSS preserved benefit member or a PSS invalidity pensioner and you return to eligible employment, you can return to the PSS as a contributing member, provided your new employer participates in the PSS and meets eligibility requirements. Once you re-enter the PSS, you are given credit for your preserved benefit in your new period of membership. Your preserved benefit no longer applies and you are unable to invest in the Cash Investment Option.

While you are a contributing member of the PSS, you are unable to claim any benefit from your earlier PSS membership.

Since 1 July 2005 new membership of the PSS has been limited to certain defined groups.

If you are a temporary or casual employee or a statutory office holder in the Australian Public Service you can only join the PSS if:

> you made an election to join the PSS on or before 30 June 2005 (even if your election did not come into effect until after 1 July 2005); or

> you were entitled to make an election to join the PSS after 1 July 2005 in respect of the employment you were in on 30 June 2005 and you remain in that employment at the time of your election to join the PSS.

Family law and your superFollowing a marriage or de facto relationship breakdown, it is possible for part of your PSS benefit entitlement to be used to create a separate superannuation interest for your former spouse or partner. The Family Law Act 1975 allows superannuation to be split on relationship breakdown either by a court order or a superannuation agreement between the parties to settle their affairs (splitting order).

If you joined the PSS following a Family Court or splitting order, you are described in this document as an associate member. There are some differences between your interest and the features of PSS that apply to other members. The key differences are:

> you are not able to make contributions, and

> your benefit is not calculated in the same way as a contributing or preserved benefit member.

Under the legislation governing the PSS, once CSC has received a court or splitting order:

> Your benefit entitlement may be split and a separate interest set up in the PSS for your former spouse or partner, who becomes an associate member of the PSS.

> The benefit entitlement and any interest set up for your former spouse or partner will accrue separately or, if you are already receiving a PSS pension, will be paid separately.

> If you are a contributing member, your interest will continue to be a defined benefit, but your Accrued Benefit Multiple will be reduced at the time of the splitting order on account of the benefit entitlement created for your former spouse or partner.

> A benefit may be payable to your former spouse or partner immediately if you are already receiving a PSS pension. In this case, your pension will be reduced. However, if you are a spouse or partner of a former member receiving a reversionary pension, the component that relates to your eligible children will not be reduced. If a reversionary pension becomes payable directly to eligible children or partially dependant children, this reversionary pension will also not be reduced. See Withdrawing your super on page 34.

An associate member is eligible to claim a benefit from the date they reach preservation age and retires or in other situations such as death or invalidity subject to certain conditions being met.

The circumstances and application of superannuation splitting laws vary on a case by case basis, so please call us for more information if this occurs.

For more information see Family law and splitting super: how its done and what happens next available on our website www.pss.gov.au. You can also access further information about Family law and your super at www.pss.gov.au under About the PSS.

Choice of fundContributing members of the PSS have the option of preserving their PSS membership and choosing to have their future contributions paid into the PSSap. If this choice is made, members need to be aware that they cannot return as a contributing member of the PSS.

For more information see the Ceasing PSS membership fact sheet available on www.pss.gov.au.

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Achieve

Contributions

FIND OUT ABOUT:

What your employer contributes

How you can build super with member contributions and transfers

What the restrictions are on contributions

How you can benefit from the super co-contribution

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Making contributions to your super is important and there are a number of ways to do this. First, your employer must make contributions to your PSS super account on your behalf.

You can also make member contributions and if you are contributing to the PSS you can transfer super with other funds to your PSS super account.

Remember, contributions are important because your super may have to last 20 years or more.

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Contributing and transferring super

What your employer contributes

Your employer makes contributions to your PSS super account in two different ways:

1. a fortnightly contribution the productivity component; and

2. an employer component that is calculated when you leave the PSS and claim a benefit.

Your productivity component is paid fortnightly and the amount is generally based on your super salary. Productivity contributions are designed to average 3% for all workers.

Your employer component is the difference between your final benefit and the sum of your member and productivity components.

Restrictions on your employer benefit

For a ten year period (any 260 pay days on which you are due to contribute) and not necessarily a continuous period or the first ten years of membership, the maximum rate at which the employer component of your benefit accrues is based on an average membership contribution rate of 5% per annum, regardless of whether you are contributing above that amount. This is called the Ten Year Rule.

Irrespective of your actual contribution rates, your maximum employer component of your PSS benefit is generally calculated as if you had contributed at 5% for ten years and at 10% for the balance of your membership. If your contribution rates exceed this average, an adjustment is made to the normal Benefit Multiple calculation.

Table 3 (below) illustrates the growth of the Accrued Benefit Multiple, depending upon whether or not you have satisfied the Ten Year Rule.

Table 3: Growth of the Accrued Benefit Multiple

Contribution rate (% of salary)

Accrued Benefit Multiple p.a. (if you have satisfied the Ten Year Rule)

Accrued Benefit Multiple p.a. (if you have not satisfied the Ten Year Rule)

0% 0.11 0.11

2% 0.15 0.15

3% 0.17 0.17

4% 0.19 0.19

5% 0.21 0.21

6% 0.23 0.22

7% 0.25 0.23

8% 0.27 0.24

9% 0.29 0.25

10% 0.31 0.26

What you contribute

You can choose to make no contributions or to contribute any whole percentage rate between 2% and 10% of your fortnightly super salary (this is generally your annual superannuation salary, divided by 26) and change your contribution rate at any time to suit your financial needs.

If you elect to make no contributions your employer-financed component will accrue at a reduced rate during the period you are not contributing. As a result, this will reduce any future benefits that might be payable.

If you go on compensation leave, restrictions apply to changing your rate. Your starting contribution will be set at 5% unless you choose another rate. Your contributions are shown on your payslip.

You need to consider what contribution rate you choose as it influences your Accrued Benefit Multiple (ABM), which is used to calculate your final benefit along with your Final Average Salary. Table 3 shows how your ABM can grow depending on your rate of contribution. It is an example based on full-time members only. Table 4 provides an example of how it all works.

If you are a part-time employee, your ABM will only grow in line with the hours you work. For example, if you are working 50% of full-time hours per fortnight, your ABM will only grow at 50% of the rate it would have grown if you were working full-time.

Table 4: Alice and Peters contribution plans

Alice and Peter started on the same day and earned the same salaries for their working lives.

Peter Alice

Contribution rate and years of membership which determine the Accrued Benefit Multiple (ABM)

20 years @ 2% 10 years @ 5% = an ABM of 5.10

10 years @ 5% 12 years @ 10% 8 years @ 2% = an ABM of 7.02

Final Average Salary (FAS) averaged across your last three birthdays

$58,000 $58,000

FAS ABM = Total Benefit

$58,000 5.10 = $295,800

$58,000 7.02 = $407,160

Resulting CPI-indexed pension at age 60

$26,890 pa $37,014 pa

Your super salary

Your benefit and contributions are ultimately based on your super salary otherwise known as salary for superannuation purposes. Generally, your super salary is your basic salary plus any recognised allowances. Additional payments such as overtime, accommodation or travel allowances are not counted as super salary.

Whilst you are contributing to the PSS your super salary cannot be reduced. Contact your personnel section if you have any questions about your super salary or recognised allowances.

Your Final Average Salary

Final Average Salary (FAS) is generally the average of your super salaries on your last three birthdays before you leave the PSS. If you work part-time, we will base your FAS on what your salary would be if you worked full-time. Calculation of your FAS is different if you are retrenched (i.e made redundant). In this case a proportion of your super salary on the date you are retrenched is taken into account as well as the previous three birthdays.

Your Accrued Benefit Multiple

Your Accrued Benefit Multiple (ABM *) is determined by reference to the period during which you contribute and your rate of contribution. You can influence your ABM by your contribution rate but there are restrictions on the extent to which your contributions increase your ABM (see page 20). The following circumstances may also influence your ABM:

> you have transferred into the PSS from the Commonwealth Superannuation Scheme (CSS)

> you have a preserved benefit from an earlier period of PSS membership

> the combining of concurrent memberships (e.g. due to 2 or more concurrent periods of employment with differing employers)

> you have transferred amounts into the PSS from another super fund before 1996.

* The ABM is described as the Benefit Accrual Multiple in the PSS Rules.

> you were an invalidity pensioner immediately before again becoming a member

> you cease membership as a result of death or invalidity

> you cease membership because of death or invalidity and you have taken out additional death and invalidity cover.

Restrictions on your contributions

You will not be permitted to pay contributions:

> after you reach your maximum benefit limit

> when the SIS Act prohibits receipt of contributions

> during a continuous period of leave without pay that exceeds 12 weeks which is not covered by an exclusion agreement; and

> during a period of maternity or parental leave without pay, unless you have chosen to pay contributions during that period.

There is a limit on how much your potential lump sum benefit can grow. This is called a maximum benefit limit (MBL). Your MBL changes as your average salary ** and MBL thresholds change. If your potential lump sum benefit has grown to the MBL, you must stop contributing to the PSS. CSC adjusts the MBLs with effect from 1 July each year.

From 1 July 2011, the MBLs increased as shown in Table 5 on the following page.

** Your average salary is the average of your super salaries on

your past three birthdays.

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Table 5: Maximum benefit limits from 1 July 2011

The following table shows the MBLs in the PSS which apply from 1 July 2011.

Members average salary (AS)

Members maximum benefit limit (MBL)

Less than $60,000 $600,000

$60,000 and over 10 times average salary

Transferring super from other funds

Contributing members may be able to transfer, or rollover, money from other super funds, into the PSS. If you do transfer money in there are conditions such as:

> you cannot take this amount out of the PSS until you cease PSS membership

> you cannot convert this amount into a PSS pension (except pre 1 January 1996 transfers), and

> the amount which you transferred will be adjusted with Fund earning rates until the benefit is claimed.

Australian Government super co-contribution

In some cases, the government will make a contribution for people at or below a determined income level. For more information visit the ATO website www.ato.gov.au.

PSS members have personal super contributions deducted from their after-tax salary. In the PSS you have a choice to contribute between 2% and 10% of your super salary or not contribute at all. If eligible and you contribute between 2% and 10% these contributions automatically count for super co-contribution purposes.

Providing you fall below the higher income threshold and meet all other eligibility requirements, the super co-contribution will be payable.

Any super co-contribution amount received by the PSS is subject to Fund earnings (positive or negative) and the amount must be paid as a lump sum. It will not accrue any additional employer benefit and cannot be used to purchase a pension upon retirement.

For more information about the co-contribution, visit the ATO website www.ato.gov.au, our website www.pss.gov.au or call us on 1300 000 377.

Investments

While youre working for others, our job is to help you build your means for retirement.

We do this through prudent investment strategies and by providing information that assists you to make well-informed decisions about your super.

FIND OUT ABOUT:

The impact of returns on a defined benefit fund

Investment objectives and strategies

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Total defined benefit

Employer-financed component

Productivity component

Member component

Years with high investment returns

Years with low investment returns

Investments and your options

Impact of returns on a defined benefit fund

The PSS is a defined benefit fund with your total benefit defined by your Final Average Salary and Accrued Benefit Multiple (see pages 20 and 21). So, how do investment returns actually affect you?

While you remain a contributing member of the PSS, your total benefit (the total of your member component, productivity component and employer-financed component) is unaffected by investment returns*, but changes in returns do change the way in which the three components of your benefit work. For example, higher returns will increase the taxed member and productivity components of your benefit and decrease the untaxed employer-financed component.

This may affect the tax you have to pay when you claim your benefit.

* Any amounts transferred to the PSS and any super co-contributions are affected by investment returns.

If you leave employment with the Australian Government or participating employer and preserve all or part of your benefit with the PSS (that is, no longer contribute but keep your super in the PSS), investment returns have a more direct impact on your benefit.

How investment returns are allocated to preserved benefit members

The taxed components of your benefit move in line with the earning rate of the Fund.

The untaxed component moves in line with the Consumer Price Index (CPI), that is, the index which measures the rate of inflation in the prices of goods and services.

How investment returns are allocated to associate benefit members

The taxed components of your benefit move in line with the earning rate of the Fund.

The untaxed component increases at the Treasury ten year bond rate for the last working day of each financial year between the time the splitting order takes effect and the date when the associate benefit first becomes available.

How the PSS performs

Investment performance information can be found on our website www.pss.gov.au. Select Investments and then Investment performance.

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Default Fund Cash Investment Option

Investment objective This Funds key investment objective is to maximise long-term real returns within some risk constraints.

This Funds key investment objective is to preserve its capital and earn a return close to that of the UBSA Bank Bill Index.

The UBSA Bank Bill Index is a market accepted index that is commonly used to benchmark the performance of short-term cash investment portfolios. The index composition reflects a basket of 13 generic bank bills that range in maturity from 1 week to 13 weeks. Each week the shortest dated bank bill matures and is replaced by a new 13 week bank bill. In this way, the index has an average maturity of 45 days and is turned over every 90 days.

How do we invest? In developing its investment strategy to achieve this objective, CSC has adopted the following constraint to manage the level of short-term volatility of returns and maintain appropriate levels of liquidity in the Fund:

> not more than 25% of the Funds investments are to be invested in illiquid assets, with a minimum cash allocation of 2%.

The investment environment going forward cannot be predicted, however CSC is constantly monitoring its strategic asset allocation and the global economic environment in which your money is invested.

Currently, a significant portion of the Funds assets are invested in equities, with the remainder invested in bonds, property, cash and alternative investments, such as, market-neutral strategies and private equity.

The Cash Investment Option invests in:

> cash (deposits with a bank)

> Australian-dollar-denominated money market securities that are issued or guaranteed by a government, bank or corporate entity with a minimum credit rating of A1 (or its floating rate equivalent) as determined by Standard & Poors (or the equivalent from Moodys or Fitch if no Standard & Poors rating is available); and

> interest rate futures and options traded on the Australian Securities Exchange.

Comparative risk level (also see Table 2)

Higher-investment performance is more likely to be volatile.

Lower-investment performance is likely to be less volatile.

Funds under management at 30 November 2011

$12.2 billion $31 million

Our investment objective

Table 6 outlines the investment objectives and other features of the Default Fund and the Cash Investment Option. We may change our investment objectives from time to time or acquire investments not described in the table.

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The Cash Investment Option for preserved benefit and associate members

Preserved benefit and associate members who choose this option can switch (subject to terms and conditions) their taxed components into the Cash Investment Option. From the switch date onwards, the transferred amount will move in line with the rate of the Cash Investment Option. Preserved benefit and associate members will be allowed (subject to terms and conditions) to switch from the Cash Investment Option back to the Default Fund.

Restrictions on switching to the cash investment option

If your taxed components total less than $1,000, you will not be able to switch to the Cash Investment Option.

You can only switch your entire taxed components to the Cash Investment Option. You cannot switch part of these components. If you have multiple super accounts with the PSS, you must complete a switch form for each account.

Untaxed employer and productivity (if applicable) components (see Table 1 on page 11) cannot be switched.

You cannot make more than two switches in a calendar year.

When to switch

Switch forms need to be received before monthly choice cut-off dates. Choice cut-off dates are the last Friday in each month. We then process your switch so it takes effect the following Wednesday.

Your switch form can be posted or faxed to us. If you post your form it is important that you allow sufficient time for postage.

You can withdraw a switch request but you need to notify us in writing or by fax on or before the last Friday of the month in which the request will take effect.

How to switch

Simply complete a Cash Investment Option transfer (switch) form and return it to us so we receive it on or before the choice cut-off date.

To switch back into the Default Fund, you need to complete a Transfer (switch) to Default Fund form. The forms are available at www.pss.gov.au.

Death and invalidity cover

FIND OUT ABOUT:

The difference between limited benefits membership and full benefits membership

Increasing your death and invalidity cover

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Insurance can help protect your current lifestyle and help your family in the event of injury or death.

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How you are covered

Contributing members

As a contributing member of the PSS and if you are under 60 years of age, you automatically receive invalidity and death cover at no additional cost. This means that, depending on the circumstances, additional benefits are payable to you if your employment is terminated because you become totally and permanently disabled and benefits are payable to your eligible dependants if you die. If there are no eligible dependants when you die, then benefits are generally paid to your estate (that is, your legal personal representative as defined in the SIS Act).

There are conditions that apply to the amount or type of benefit you receive. For example, if you have a pre-existing medical condition you may be classified as a limited benefits member and not be entitled to full death and invalidity cover.

Your limited benefits membership ceases after three years and then you become a full benefits member.

We do not offer salary continuance insurance. You may however be entitled to a partial invalidity benefit if a medical condition permanently changes the level of your employment, such as reducing the hours you work. We do not provide you with the option to choose who can receive your benefit in the event of death. Benefits can only go to eligible dependants or your estate if there are no eligible dependants (see Table 7 on the following page).

As a contributing member of the PSS you can apply for additional death and invalidity cover, as long as any additional cover does not exceed your potential maximum benefit limit a multiple of your final average salary. For more information see pages 30 to 31.

Preserved benefit members

As a PSS preserved benefit member, you or your eligible dependants automatically receive benefits in the event of your permanent and total disability or death. Your cover is the value of your preserved entitlement at the date of claim. If you die, your eligible dependants will be entitled to a benefit.

Associate members

If you are an associate member and you die before your associate preserved benefit becomes payable, CSC must pay the benefit as a lump sum to your legal personal representative. If no legal personal representative can be found it will be paid to any individual or individuals that CSC determines.

As an associate member you have the option of taking your entire benefit as a pension or taking your employer and productivity components as a CPI-indexed pension and a lump sum of your member component. You also have the option of taking your entire benefit as a lump sum. If you do not have your entire benefit preserved in the PSS (that is, you have withdrawn part of your benefit) then your only option is to take your entire benefit as a lump sum.

See page 41 for more information.

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overTable 7: Who may be eligible* to receive a PSS benefit if I die?

Who? Description

Eligible spouse or partner > A person, whether of the same sex or opposite sex, who had been in a marital or couple relationship with you for a continuous period of at least three years at the date of your death; or

> A person with whom you had been in a relationship for less than three continuous years at the time of your death and CSC is satisfied that the person ordinarily lived with you as husband, wife or partner on a bona fide domestic basis; or

> A person who you previously had a marital or couple relationship with, but that relationship finished before the date of your death. A spouse benefit may still be payable if your spouse remained legally married to you at the time of death and it is determined that they were wholly or substantially dependent on you.

Eligible child Includes a child of yours (this includes adopted children, ex-nuptial children, step-children, or any other person we deem to be an eligible child) who was either living with you or was wholly or substantially dependent on you at the time of death, and is:

> aged less than 16; or

> aged between 16 and 25 provided they are in full-time study and not ordinarily employed.

Partially dependent child Includes a child of yours who is not an eligible child (including an adopted child, an ex-nuptial child, a step-child or any other person we deem to be an eligible child), who does not ordinarily live with you but for whom you are required to pay child support or regular maintenance, and who is:

> aged less than 16; or

> aged between 16 and 25 provided they are in full-time study and not ordinarily employed.

* That is, an eligible dependant.

For more information see the Death benefits fact sheet available on our website www.pss.gov.au and pages 37 to 40 of this document.

Full benefits membershipFull benefits members are those who are assessed as being sufficiently healthy to carry out their duties without taking excessive sick leave in the first three years of joining the PSS.

Invalidity and death benefits that become payable to full benefits members are not reduced on medical grounds and they may be entitled to income support if their salary is permanently reduced due to health reasons.

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Limited benefits membershipYou will be classified as a limited benefits member if you have less than three years in your current PSS membership and you:

> do not submit a Confidential Medical and Personal Statement (CMAPS) within 14 days of joining the PSS; or

> have completed a CMAPS and we assess you as having a pre-existing medical condition which we believe may require you to take excessive sick leave in the first three years of your new membership.

If you are classified as a limited benefits member, your death and invalidity benefits are restricted to a lump sum payment of your accrued benefit at the date you are retired on invalidity grounds, or die.

Once you have completed three years of your new PSS membership you will be entitled to full invalidity and death benefits, regardless of your medical situation. It is important you fully disclose any medical conditions you are aware of, or you may be reassessed as a limited benefits member at a later date.

Increasing your death and invalidity coverSome members may have the option of taking out additional death and invalidity cover (ADIC). Generally, you will pay half of the standard

premium (and any applicable loadings) and your employer will pay the other half.

There are important eligibility aspects to consider if you want to obtain additional cover:

> This cover is only available if you cannot achieve the maximum benefit coverage that would be available through the PSS. An example of this is if you join the PSS later in life and have a short prospective service career before turning 60.

> This additional cover is provided or underwritten by AIA Australia Limited (AIA Australia or the insurer), and they may accept or refuse your application.

> They are also entitled to charge additional premiums (also known as a premium loading) or apply exclusions if you have a pre-existing medical condition.

Your additional cover will cease:

> when you cease to be a contributing member

> when you reach age 60

> when you notify us you no longer want to be covered

> 30 days after you cease to pay additional premiums

> on the date you die or are paid an invalidity benefit under this policy

> 60 days after you cease to be employed by an eligible employer

> on the date you retire from the workforce

> on the date you effect a Continuation Option with AIA Australia Limited; or

> on the date you commence active duty in the armed forces.

In addition, exclusions apply to claims arising where either: death is caused as a result of any intentional, self-inflicted act of the insured member, whether while sane or insane, within 13 calendar months from the date an insured member joins or increases their cover; or total and permanent disablement arises due to an intentional, self-inflicted injury or sickness or any attempt at suicide. Exclusions also apply in the event of war or any act of invasion.

Total and permanent disablement is defined as where the member as a result of injury, sickness or disease:

> has not performed any work for an uninterrupted period of at least six consecutive months solely due to the same injury, sickness or disease; and

> is attending a Registered Medical Practitioner and has undergone all reasonable and usual treatment including rehabilitation for the injury, sickness or disease; and

> after consideration of all medical and other evidence as AIA Australia may require, has

become incapacitated to such an extent as to render him or her unlikely ever to be able to engage in his or her own occupation and any occupation for which he or she is reasonable suited by education, training or experience.

OR

> having suffered the total and irrecoverable loss of use of: i) sight of both eyes; or ii) use of two limbs; or iii) sight of one eye and use of one limb.

Continuation of cover

If you are under the age of 60 years and have additional death and invalidity cover at the time you exit the PSS, you may apply for the continuation of only the death cover option within 60 days of ceasing membership.

The insured amount cannot exceed the insured amount at the date you ceased being a member, is subject to premium changes and evidence of health submissions. Continuation of cover is a matter between yourself and AIA Australia. AIA Australia will provide a new policy governed by new terms and conditions where continuation cover is granted. Neither CSC, ComSuper, or your employer (past or present) have any role in the continuation of cover and are not responsible for the premium. Contact AIA Australia on 1800 333 613 for more information about the options available and the conditions applying to this benefit.

If you go on leave without pay your ADIC cover will continue until your return to work date for a period not exceeding 12 months. If you do not return to work on the expected due date, your cover will cease in 30 days. You can apply to extend the cover by contacting AIA Australia. AIA Australia has the discretion to grant the cover. If you wish to continue with additional cover during any periods of leave without pay that do not count as service, you will be required to pay the whole premium.

ADIC cover continues where you have been posted overseas and remain gainfully employed. However, you are not permitted to increase your cover while overseas other than in respect of normal salary increases.

The cost of additional cover is outlined in Table 8.

If you would like to apply for additional cover complete the application form available at www.pss.gov.au and send it to us for assessment.

Claims for ADIC cover will need to be notified to AIA Australia within a reasonable time of the death or total and permanent disablement.

For more information see the Additional death and invalidity cover fact sheet available on our website www.pss.gov.au.

Table 8: Annual cost of additional death and invalidity cover per $1,000 cover

Age next birthday

Rate per year

Age next birthday

Rate per year

22 $0.40 42 $0.92

23 $0.40 43 $1.00

24 $0.41 44 $1.13

25 $0.42 45 $1.26

26 $0.39 46 $1.41

27 $0.40 47 $1.58

28 $0.41 48 $1.78

29 $0.41 49 $1.97

30 $0.44 50 $2.19

31 $0.44 51 $2.44

32 $0.46 52 $2.71

33 $0.48 53 $3.02

34 $0.51 54 $3.34

35 $0.54 55 $3.69

36 $0.57 56 $4.08

37 $0.61 57 $4.51

38 $0.66 58 $5.00

39 $0.71 59 $5.42

40 $0.78 60 $5.88

41 $0.85

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Acquire

Withdrawing your PSS super

Your super is intended for your retirement and is therefore a long-term savings vehicle.

Under law, super is generally payable when you reach your preservation age and permanently retire from the workforce, or if you become totally and permanently disabled or die.

FIND OUT ABOUT:

When and in what form you can withdraw your benefit

Restrictions on withdrawing your benefit

How we calculate and pay your benefit

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Withdrawing your superThe options to withdraw your benefit outlined in this part are a guide only. These options may change over time as the laws regulating superannuation and the PSS Rules are changed. Your individual circumstances may also affect your withdrawal options. We recommend you contact us for further information before you withdraw your benefit to confirm your options.

There are restrictions on when you can withdraw your benefit from the PSS, and what form you can withdraw it in (a pension, lump sum or a combination of these). These restrictions are set by the PSS Rules and the SIS Act and Regulations and their application varies depending on how your employment ends, whether you are a preserved benefit member or an associate member, your preservation age (see Table 15 on page 43) and how your benefit is characterised under the SIS Act.

There are a number of circumstances in which you may be able to withdraw your benefit, unless you choose to preserve it in the PSS until a later date. These include:

> withdrawal of your benefit upon retirement

> withdrawal due to total and permanent invalidity

> withdrawal upon death

> withdrawal of a preserved benefit

> withdrawal of an associate member benefit

These circumstances have been set out in a number of tables on the following pages.

In the event that you cease membership of the PSS upon the sale or transfer of a government agency you may be able to withdraw your benefit from the PSS in circumstances other than those set out here. Please contact us for further information about your options in this circumstance.

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rTable 9: Benefits payable on age retirement, involuntary retirement (retrenchment) or resignation

Exit type Withdrawal options

Age retirement

Generally, if you are over 55 and permanently retired from the workforce (or are over age 60 and ceasing employment, future employment intentions are disregarded) you can choose one of the following options:

> preserve your total benefit

> a lump sum

> a pension

> withdraw at least 50% as a pension and the balance as a lump sum

> withdraw part as a lump sum and preserve the balance in the PSS (if you do this you forego your PSS pension).

If you are under age 60 and not permanently retired from the workforce limited benefit options are available. If you have not reached your preservation age when you permanently retire, lump sum benefits are limited to your SIS Upper Limit and the balance must be rolled over. For more information refer to our website www.pss.gov.au.

Involuntary retirement (retrenchment)

Depending on your circumstances, such as the age at which you are retrenched and your future working intentions, you may be able to choose one of the following options:

> preserve your total benefit

> a lump sum

> a pension

> withdraw at least 50% as a pension and the balance as a lump sum

> withdraw part as a lump sum, up to your SIS Upper Limit, and convert the balance to pension

> withdraw part as a lump sum, up to your SIS Upper Limit, and preserve the balance in the PSS (if you do this you forego your PSS pension)

> withdraw part as a lump sum and preserve the balance in the PSS (if you do this you forego your PSS pension).

For more information see the Retrenchment benefits fact sheet available on www.pss.gov.au.

Resignation

If you are under 55 you are required to preserve your benefit. However, if you joined the PSS before 1 July 1999, are under age 55 and have resigned you can withdraw the member component of your benefit up to your SIS Upper Limit, as a lump sum and preserve the balance in the PSS (if you do this you forego your PSS pension).

If you are over age 55 refer to Age retirement above.

Please note: If you take any part of your benefit as a lump sum and preserve balances in the PSS you will not be able to take any part of your preserved benefit as a pension when it becomes payable.

For more information on your preservation age see Table 15 on page 43.

For more information on the SIS Upper Limit see page 43.

If you leave the PSS and join another eligible public sector superannuation scheme, a transfer value of the total benefit may be paid to that fund, providing you have not taken a refund of your member component.

You can combine your benefit with another concurrent benefit which you have in the PSS provided the combined benefit does not exceed your Maximum Benefit Limit. For more information on the Maximum Benefit Limit see page 21.

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Table 10: Benefits payable due to permanent invalidity

In the event that you leave the workforce due to total and permanent invalidity (you are unable to perform your duties because of a mental or physical incapacity) or a terminal illness, you may be able to access your superannuation benefit. However, we must first certify that you are entitled to an invalidity benefit and determine whether you are a full benefits member or a limited benefits member (see pages 29 and 30).

Member circumstances Withdrawal options and conditions

Termination of employment due to total and permanent invalidity before age 60 for a full benefits member*

You may be able to choose to:

> withdraw your invalidity benefit as a pension

> withdraw your invalidity benefit partially as a pension, with the balance withdrawn as a lump sum (there is a limit to the amount you may withdraw as a lump sum, calculated with reference to the member components of your retirement benefit, see Table 1 on page 11)

> if we certify that you are terminally ill, withdraw your invalidity benefit as a lump sum.

Generally, you may be entitled to an invalidity benefit based on the potential benefit you would have accrued had you worked to age 60. However, if you are terminally ill, your lump sum is based on your accrued benefit up to the date of your retirement only.

Termination of employment due to total and permanent invalidity before age 60 for a limited benefits member

Your invalidity benefit is based on your benefit as at the date you retire. You may only withdraw your invalidity benefit as a lump sum.

Termination of employment due to total and permanent invalidity after age 60 regardless of whether you are a limited benefits member or a full benefits member

You may be able to:

> withdraw your benefit as a pension

> withdraw your benefit as a lump sum

> withdraw at least half of your benefit as a pension and withdraw the balance as a lump sum

> roll over your benefit out of the PSS and into another superannuation fund

> combine your benefit entitlement with another concurrent benefit which you have in the PSS (for example if you are entitled to an associate benefit), provided the combined benefit does not exceed your Maximum Benefit Limit

> preserve your entire benefit in the PSS and withdraw it at a later time.

* Your invalidity benefit will be your Final Average Salary multiplied by the sum of your Accrued Benefit Multiple at retirement plus a multiple based on what you would have accrued had you continued contributing until age 60 at the greater of:

> 5%; or

> the average percentage rate you contributed over the 78 paydays (or total paydays, if less) before you commenced long-term sick leave (or retired if you didnt take any long-term sick leave).

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rHowever, your invalidity benefit is subject to the Maximum Benefit Limit (see page 21). If you are an invalidity retiree, your Maximum Benefit Limit is the amount calculated in accordance with Table 5 on page 22, unless your Final Average Salary is less than the minimum average salary shown, in which case your Maximum Benefit Limit will generally be the greater of:

> 10 times your Final Average Salary; or

> your accrued benefit

but cannot exceed the lowest benefit shown in Table 5.

The invalidity benefit is also subject to the Ten Year Rule (see page 20), including prospective service to age 60. If Invalidity pensions are subject to earnings reviews, they can be reduced or suspended if you engage in employment whilst in receipt of an invalidity pension.

Withdrawals upon death

We do not provide you with the option to choose who can receive your benefit in the event of your death. Generally, the benefit can only be received by your eligible spouse or partner, eligible children and partially dependant children (eligible dependants) (see Table 7 on page 29). If you have no eligible dependants, benefits are generally paid to your estate (through your legal personal representative).

The benefit received by your eligible dependants or other beneficiaries is called a reversionary benefit.

The form of the reversionary benefit that your eligible dependants receive depends on whether you die while you are:

> a contributing member (and whether you are a full benefits member or a limited benefits member)

> a preserved benefit member; or

> a pensioner.

In each of these situations, if you are survived by multiple eligible dependants we may apportion the reversionary benefit between them.

If you are an associate member, any benefit will be paid to your legal personal representative or, if no legal personal representative can be found, to any other individual or individuals that CSC determines.

Death of a contributing member or a preserved benefit member

> If you are a full benefits member (see page 29) and you die before the age of 60, your eligible dependants will receive a benefit based on what you would have received if you had become totally and permanently disabled your potential invalidity benefit. If you are over age 60 your eligible dependants receive a benefit

that is based on your final accrued benefit.

> If you die while you are a limited benefits member (see page 30) your eligible dependants will only receive a reversionary benefit based on your final accrued benefit as at the date you die.

> If you die while you are a preserved benefit member, your eligible dependants are entitled to your preserved benefit.

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Table 11: Who may receive a benefit should you die (reversionary benefit)?

Who may obtain your benefit

Withdrawal options and conditions

Eligible spouse* If you are a full benefits member or a preserved benefits member your eligible spouse or partner may be able to receive the reversionary benefit:

> as a reversionary pension

> as a lump sum

> at least half as a reversionary pension and withdraw the balance as a lump sum.

If you are a limited benefits member your spouse may also be able to receive a reversionary benefit, but only in the form of a lump sum.

The reversionary pension is payable for the rest of your spouse or partners life, regardless of any other income earned.

Eligible child** May be able to receive a reversionary benefit in their own right (rather than having the reversionary benefit paid to your eligible spouse or partner) if you are not survived by an eligible spouse or partner or the eligible child does not ordinarily live with your eligible spouse or partner.

The reversionary benefit is payable:

> if you are a full benefits member, as a reversionary pension and any residual amount may then be paid as a lump sum

> if you are a preserved benefit member, as a lump sum only

> if you are a limited benefits member, as a lump sum only.

The reversionary pension is only paid for the period during which your child can be characterised as an eligible child.

Partially dependent child

Partially dependant children are paid a reversionary benefit regardless of whether you are survived by an eligible spouse, partner or eligible children.

The reversionary benefit is payable:

> if you are a full benefits member, as a reversionary pension and any residual amount may then be paid as a lump sum

> if you are a preserved benefit member, as a lump sum only

> if you are a limited benefits member, as a lump sum only.

The reversionary pension is only paid for the period during which your child can be characterised as a partially dependant child.

Payment of your benefit where you have no eligible dependants

If you are not survived by an eligible spouse, partner, eligible children or partially dependant children, or your eligible dependants cease to be entitled to a reversionary benefit, we may pay the residual amount of your benefit (if any) as a lump sum:

> to your children who survive you but who are otherwise ineligible to receive a reversionary benefit

> to your estate through your legal personal representative

> if we are unable to find your legal personal representative, to any other person as we determine.

* The amount of the reversionary pension your spouse or partner receives depends on the number of your eligible children who ordinarily live with your eligible spouse or partner. This ranges from 67% of your pension for a spouse or partner with no eligible children, up to 100% of your pension for an eligible spouse or partner with three or more eligible children. If you are a preserved benefit member at the date of your death, there are additional restrictions on your eligible spouse or partner receiving a reversionary pension based on whether you preserved the member components of your retirement benefit (see Table 1 on page 11) in the PSS. Generally, if you have already withdrawn some of your benefit and preserved the balance in the PSS, your eligible spouse or partner will not be entitled to receive your preserved benefit as a reversionary pension.

** The amount of the reversionary pension your eligible children receive depends on how many there are and whether they are living together. This may range from 45% of your benefit for one eligible child, to 100% for four or more eligible children.

We may adjust the apportionment of the reversionary pension between these persons as your spouse, partner and children become, or cease to be, entitled to this reversionary pension.

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rDeath of a person receiving a PSS pensionYour eligible dependants may be entitled to receive a reversionary pension based on your pension as at the date of your death.

Table 12: Who may obtain your benefit?

Who may obtain your benefit

Withdrawal options and conditions

Eligible spouse The amount of the reversionary pension your spouse or partner receives depends on the number of your eligible children who ordinarily live with your spouse or partner. This ranges from 67% of your pension for a spouse or partner with no eligible children, up to 100% of your pension for a spouse or partner with three or more eligible children.

Where you have elected to have a reduced pension in favour of a higher reversionary benefit these rates are higher (see pages 44 and 45). The reversionary pension is payable for the rest of your spouse or partners life, regardless of any other income earned.

Eligible children May be able to receive a reversionary benefit in their own right if you are not survived by an eligible spouse or the eligible child does not ordinarily live with your eligible spouse.

The amount of the reversionary pension your eligible children receive depends on how many there are and whether they are living together. This may range from 11% of your benefit for one eligible child, to 100% for four or more eligible children. The reversionary pension is only paid for the period during which your child can be characterised as an eligible child.

Partially dependant children

Partially dependant children are paid a reversionary benefit regardless of whether you are survived by an eligible spouse or eligible children. The reversionary pension is only paid for the period during which your child can be characterised as a partially dependant child.

Payment of your benefit where you have no eligible dependants

If you are not survived by an eligible spouse, eligible children or partially dependant children, or your eligible dependants cease to be entitled to a reversionary benefit, we generally pay the residual amount of your benefit (if any) as a lump sum to your estate.

If you are receiving a PSS pension, and you are over age 60, and you enter into a new relationship (either de facto or marriage) there are additional restrictions on your eligible dependants receiving a reversionary pension. In these circumstances if you die within three years of commencing the new relationship, your spouse or partner and any children from this relationship are not entitled to a full reversionary pension. Instead, their reversionary pension will be reduced proportionally based on the length of your relationship relative to three years. In limited circumstances, your eligible dependants may choose to convert this reduced reversionary pension into a lump sum instead. If your relationship has been ongoing for more than three years at your date of death, or you enter a relationship before age 60 while receiving a PSS pension, this reduction does not apply to the reversionary pension received by your eligible dependants.

Death of an associate member

If you are an associate member and you die while receiving an associate member pension, there is no reversionary benefit to your spouse, partner or children.

The benefit ends at that time.

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If you are an associate preserved member and you have not yet withdrawn your associate preserved benefit we may pay your associate preserved benefit as a lump sum:

> to your estate through your legal personal representative; or

> if we are unable to find your legal personal representative, to any other person as we determine.

Withdrawals of a preserved benefit

If you preserve your benefit in the PSS, the member components and productivity components will be adjusted to reflect the earning rate of the Fund. The employer-financed component of your benefit will be adjusted in line with the Consumer Price Index (CPI) (for a description of your retirement benefit components see Table 1 on page 11). You may be able to withdraw your preserved benefit in the circumstances and with the conditions as outlined in Table 13.

Table 13: Withdrawal options for preserved benefit members

Member circumstances Withdrawal options and conditions

> Reaching your minimum retirement age (usually 55) and permanently retiring from the workforce;

> Ceasing Australian Government employment after age 60; or

> Reaching age 65, regardless of whether you remain in the workforce

You may be able to:

> withdraw your preserved benefit as a pension

> withdraw your preserved benefit as a lump sum

> withdraw at least half of your preserved benefit as a pension and withdraw the balance as a lump sum.

Generally, if you have already withdrawn some of your benefit and preserved the balance in the PSS, you will not be entitled to receive your preserved benefit as a pension.

Invalidity or terminal illness We must first certify that you are entitled to an invalidity benefit.

You may be able to:

> withdraw your preserved benefit as a pension

> withdraw your preserved benefit as a lump sum

> withdraw your preserved benefit partially as a pension, with the balance withdrawn as a lump sum (there is a limit to the amount you may withdraw as a lump sum, calculated with reference to the member components of your retirement benefit, see Table 1 on page 11).

There are restrictions on withdrawing the pension in these circumstances. You must take at least all of the employer-financed and productivity components as a pension (see Table 1 on page 11). Generally, if you have already withdrawn some of your benefit and preserved the balance in the PSS, you will not be entitled to receive your preserved benefit as a pension.

Temporary resident leaving Australia permanently

You may withdraw your preserved benefit as a lump sum, provided the withdrawal is permitted by the SIS Act.

Suffering severe financial hardship or there are compassionate grounds that justify you accessing your superannuation benefit before age 55

We, or the the Department of Human Services (DHS) may, in very limited circumstances, allow you to withdraw some of your preserved benefit on these grounds.

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rWithdrawals by associate members separationIf you are an associate member, you may be entitled to an associate benefit under a splitting order made under the Family Law Act 1975 (see page 16). If your former spouse or partner is receiving a PSS pension at the time the splitting order takes effect, you may receive an associate preserved pension, calculated by reference to the amount of your interest on application of the splitting order.

If your former spouse or partner is a member of the PSS, and has not withdrawn all of his or her benefit, as an associate member you may be entitled to an associate preserved benefit calculated by reference to your former spouse or partners benefit in the PSS.

As an associate member you may be able to withdraw your associate preserved benefit in the circumstances and on the conditions set out in the following table.

Table 14: Withdrawal options for associate members after divorce or separation

Associate member circumstances Withdrawal options and conditions

> on a date chosen by you which is after you reach age 55 and provided that you intend to retire permanently from the workforce; or

> on reaching age 65

You may be able to:

> withdraw your associate preserved benefit as an associate preserved pension

> withdraw your associate preserved benefit as a lump sum (subject to the SIS Upper Limit), with the residual amount either:

> withdrawn as an associate preserved pension

> rolled over out of the PSS and into another superannuation fund

> roll over your associate preserved benefit out of the PSS and into another superannuation fund.

There are restrictions on withdrawing the associate preserved pension in these circumstances based on the components of your benefit received under the splitting order.

Invalidity or terminal illness We must first certify that you are entitled to an invalidity benefit.

You may be able to:

> withdraw your associate preserved benefit as an associate preserved pension

> withdraw your associate preserved benefit as a lump sum

> withdraw your associate preserved benefit partially as a pension, with the balance withdrawn as a lump sum (there is a limit to the amount you may withdraw as a lump sum, calculated based on the components of your benefit received under the splitting order).

Temporary resident leaving Australia permanently

You may withdraw your associate preserved benefit as a lump sum, provided the withdrawal is permitted under the SIS Act.

Severe financial hardship or there are compassionate grounds that justify you accessing your associate preserved benefit before age 55

We, or the the Department of Human Services (DHS) may, in very limited circumstances, allow you to withdraw some of your preserved benefit on these grounds.

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> you were not employed (on a full-time or part-time basis) on the date of your application.

If your benefits are from Centrelink, you will need to provide us with your Centrelink Customer Reference Number which we will use to confirm your eligibility. If your benefits are from the Department of Veterans Affairs, you will need to provide a letter from them confirming your payments.

We can only make one payment on these grounds in any 12 month period, which generally cannot be less than $1,000, and which cannot exceed $10,000.

Specified compassionate grounds

If you do not qualify for early access to your superannuation benefits on severe financial hardship grounds, you may consider asking the Department of Human Services (DHS) to approve the release of benefits on specified grounds. Some examples of the types of expenses you may be able to claim include:

> medical expenses

> renovations to your home necessitated by severe disability

> mortgage payments to prevent loss of your home.

All enquiries regarding applications for early release on these grounds should be directed to DHS on 1300 131 060. An application form is also available from their website at www.humanservices.gov.au.

Restrictions on withdrawing your benefitAs outlined in this chapter, there are several circumstances in which you may withdraw your benefit as a lump sum, either as your entire benefit entitlement or partially together with a pension. In the event of your death, there are also several circumstances in which your eligible dependants may be entitled to a reversionary benefit in the form of a lump sum.

The PSS Rules place restrictions on the amount of your benefit you may withdraw as a lump sum in some circumstances. In circumstances where you may withdraw part of your benefit as a pension and the balance as a lump sum there are often restrictions requiring a minimal amount to be converted to a pension. This will reduce the amount that can be paid as a lump sum.

The SIS Act also imposes restrictions on the circumstances in which your benefit may be withdrawn as a lump sum. In particular it imposes a limit on the amount that may be withdrawn. This is known as the SIS Upper Limit. The SIS Upper Limit only applies to you if you have not yet reached your preservation age. Once you have reached your preservation age and satisfy a condition of release, the SIS Act does not restrict the amount of your benefit that you may withdraw as a lump sum, allowing you to withdraw your full benefit, including any amount that was preserved.

Early release on hardship or specified compassionate grounds

Contributing members are allowed early access to their taxed superannuation benefits on financial hardship or specified compassionate grounds, in line with the eligibility rules provided under the superannuation regulatory framework.

Financial hardship

There are two ways to qualify for a release on the grounds of severe financial hardship:

1. if we are satisfied that:

> you have received Commonwealth income support payments for a continuous period of 26 weeks (we will need written evidence of this from the relevant Commonwealth Government agency); and

> you were receiving these payments on the date of that written evidence; and

> you are not able to meet reasonable and immediate family living expenses.

2. if you have reached your preservation age (see below) plus 39 weeks, and we are satisfied that:

> you have received Commonwealth income support payments for a cumulative period of 39 weeks after reaching your preservation age (we will need written evidence of this from the relevant Commonwealth Government agency); and

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Wit

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rYour preservation age is based on your date of birth (see Table 15 below).

Table 15: Your preservation age

Date of birth Preservation age

Before 1 July 1960 55

1 July 1960 30 June 1961 56

1 July 1961 30 June 1962 57

1 July 1962 30 June 1963 58

1 July 1963 30 June 1964 59

After 30 June 1964 60

SIS Upper Limit

Under the SIS Act, the SIS Upper Limit is the amount of your benefit as at 1 July 1999 that you can withdraw as a lump sum. However, you can only withdraw an amount up to the value of your accumulated contributions as at that date if you cease membership of the PSS and you have not reached your preservation age. Your SIS Upper Limit is shown on your Annual Member Statement and is the cash amount you would have received if you had involuntarily retired (been retrenched) on 1 July 1999. If you have joined the PSS for the first time after 1 July 1999, you have a SIS Upper Limit of zero and your benefit may not be withdrawn as a lump sum until:

> you reach your preservation age and permanently leave the workforce

> you reach age 60 and cease membership

> you suffer permanent invalidity; or

> you die.

The rationale behind this is to conserve your benefit for retirement. However, if you paid in a transfer amount (such as an amount you have transferred from another superannuation fund into the PSS) the unrestricted portion of that payment may also be paid as a lump sum before you reach preservation age.

How we calculate and pay your benefit

Calculating lump sums

Withdrawing your benefit as a lump sum essentially means we will make a single payment of your benefit with no further payments owing, rather than the fortnightly payments you would receive under a pension.

STEP 1: Establish your Final Average Salary (FAS) (see page 21).

STEP 2: Establish your Accrued Benefit Multiple (ABM) (see page 21).

Calculate the number of years you have been contributing at a particular rate. Multiply this by the ABM rate as shown in Table 3 on page 20. This will provide you with the total ABM. You can also refer to your Member Statement for these details or call us on 1300 000 377.

STEP 3: Multiply your ABM by your FAS (see page 21).

You will find that by following these steps, you can get a rough idea of your projected retirement benefit. Please remember that you will need to make assumptions about your future FAS and future contribution rates if you are calculating projected figures. More importantly, you can calculate the effects of increasing the level of your member contributions on your retirement benefit. This can also be done on the i-Estimator which can be accessed on the PSS website at www.pss.gov.au. You will need an Access Number to use this service. An Access Number request/change of contact details form can be found at www.pss.gov.au or call us on 1300 000 377 and we can provide you with an Access Number over the phone.

Calculating pensions

In choosing to withdraw your benefit as a pension, you essentially choose to exchange some or all of your lump sum entitlement for a pension payable for life. In the event of your death, the reversionary pension payable to an eligible spouse is also payable for the remainder of their life. However, any reversionary pension payable to eligible children and partially dependant children in the event of your death ceases when they no longer meet eligibility requirements (see Table 7 on page 29).

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In circumstances where you choose to withdraw part of your benefit as a pension and part of it as a lump sum, you must convert at least a minimum amount of your benefit to a pension (which is either at least 50%, or is calculated based on the components of your retirement benefit, see page 11, depending on the circumstances).

Twice a year, your pension will be adjusted in line with the Consumer Price Index (CPI). This is usually an increase, but in the unlikely event of a negative CPI your pension will not be decreased. We advise you of these adjustments in writing at the time.

In most cases, for members and associate members, the rate of pension is calculated by dividing the lump sum you wish to exchange by a factor based on your age at retirement. The factors are shown in Table 16. Pensions paid as a result of invalidity retirement before age 60 are calculated differently.

If you cease membership on invalidity retirement before age 60, the rate of an invalidity pension is calculated by dividing the value your benefit that is to be converted into a pension by 11.

Table 16: Pension conversion factors

Age Factor Age Factor

70 9.0 62 10.6

69 9.2 61 10.8

68 9.4 60 11.0

67 9.6 59 11.2

66 9.8 58 11.4

65 10.0 57 11.6

64 10.2 56 11.8

63 10.4 55 12.0

Pension conversion factors are calculated to years and days. The factor decreases as you get older whic