How to make the most of your Public Service Super
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If you’re one of the many professionals powering the offices around the Parliamentary Triangle, there’s a good chance you’ve got access to one of Australia’s most valuable retirement perks – government-guaranteed super. Here’s what you need to know.
Are you a PSS or CSS member? Lucky you! Here’s how to get the most out of these generous superannuation schemes.
Your super isn’t just another line on your payslip – it’s your future freedom fund. Understanding it now isn’t about being “good with money”, it’s about being good to yourself – giving your future-self choices about how and when you want to live, work, and retire.
We’re talking about the Public Sector Superannuation Scheme (PSS) and Commonwealth Superannuation Scheme (CSS) defined benefit schemes, which are so generous that they have been closed to new members for at least 20 years.
If you ARE one of the 55,000 existing members, understanding how your PSS or CSS super actually works can feel about as confusing as trying to follow Question Time without subtitles.
But here’s the truth: if you know how to make the most of it, your public service super could be your golden ticket to long-term financial freedom, and it’s never too early to start paying attention.
What makes the PSS and CSS unique?
Unlike most super funds, which move up and down depending on how the share market performs, these defined benefit schemes promise a guaranteed pension based on your salary and years of service. That means stability, which is a rare find in today’s investment world and the income is paid to you in retirement each fortnight, like a salary, except you don’t have to clock in.
What’s even better is that these super funds often favour women who may take time off or work part-time for family or study reasons. Your years of service, including some types of leave, can still count toward your final benefit, meaning your super keeps working for you, even when you’re focused on other parts of life.
Getting the most out of your super
Start small
- Actually read your annual defined benefit super statement – yes, beyond the first page! It’ll help you get familiar with all the defined benefit lingo.
- Play around with the pension projection tool available in your member portal – compare the results against what you need to live comfortably so you can see whether you’re on track. Make sure you factor in weekend getaways, home improvements, and helping the kids – they all count!
Climb smart
- Consider extra voluntary contributions to a second super fund to further boost your super balances
- Plan your promotions strategically because your pension often depends on your final average salary, a well-timed pay rise could have a lasting impact on your retirement income
Other ways to build wealth
Your defined benefit super is brilliant, but don’t let it be your only safety net. You can also grow wealth through:
- A second super fund (great for extra contributions or when you leave the public service)
- A diversified investment portfolio
- An investment property in one of Canberra’s up-and-coming suburbs
- Or even a side hustle that fits around your lifestyle.
Defined benefit members often don’t realise that you can contribute to a second super fund. Of course, your contributions are subject to all the regular caps, but if you’ve got room and the cash flow to do it, there is nothing stopping you from adding more to super. While PSSap is the default for public service employees, you’re free to choose another fund if you’d like more flexibility, broader investment options, or adviser support.
A second super fund can be an easy option because you can contribute to it in a way that saves you tax personally, future returns also don’t negatively impact your personal tax, unlike investments you own personally, and you ultimately control how much goes into it. While investment properties and side hustles sound attractive, they often involve more risk, more debt and less diversification.
The difference this extra contribution to a second super fund could make to your retirement is huge. If you contribute $100 per week – that’s roughly the cost of a couple of brunches or a dinner out, and your super fund earns an average 7% annual return, after 20 years you could have around $225,000.
Coupled with a defined benefit pension, which will pay a fortnightly income, having this extra nest egg, which is accessible tax-free after 60, could give you the flexibility to travel overseas every year, do those renovations you’ve been putting off, or just live a more comfortable life.
Tips and traps
The biggest trap? Not knowing the rules and not taking advantage of the hidden opportunities.
Know what it can do for you
Many assume they can’t access their defined benefit until age 60, but PSS and CSS members can access their benefit from 55 if certain criteria are met. For those considering a career break or change to the private sector, this could present a unique opportunity.
Check your leave
If you’ve taken parental leave, here’s a crucial tip: paid parental leave usually counts as service, but unpaid leave may not. Knowing these details early can help you make smarter decisions now to avoid unnecessary stress later on.
Thinking about leaving the public service?
Pause before you hit send on that resignation email. Your defined benefit entitlements could be worth hundreds of thousands more than a standard super fund. If you’re craving change, consider a career break instead of quitting altogether. It might protect your benefits while giving you space to explore your next move. If you do leave, know your options: you might preserve your super until retirement, or if you’re eligible, it might be best to claim the benefits immediately, but both choices have long-term consequences.
Talk to an PSS/CSS expert
These super funds are not like any other — they have their own rules — so ignore the watercooler chatter when it comes to planning your retirement and get some proper advice. Here in Canberra, we’re fortunate to have advisers who are CSS and PSS experts, ready to help you navigate your options and make the most of a super fund that truly only comes around once in a lifetime.
Sources and disclaimer
This article was prepared by Evans and Partners Pty Ltd (ABN 85 125 338 785, AFSL 318075) (“Evans and Partners”), a wholly owned subsidiary of E&P Financial Group Limited (ABN 54 609 913 457).
The information is general in nature and prepared without considering your objectives, financial situation or needs. You should seek professional advice before acting. Past performance is not a reliable indicator of future performance. The article may include forward-looking statements based on assumptions. Actual returns will vary and will also depend on investment structure. Neither E&P Financial Group nor its related entities make any representation as to the accuracy or likelihood of fulfilment of the forward-looking statements or any of the assumptions upon which they are based.
Any taxation information contained in this communication is a general statement and should only be used as a guide. It does not constitute taxation advice and before making any decisions, you should seek professional taxation advice on any taxation matters where applicable.
Our Financial Services Guide, which sets out our services, remuneration and potential conflicts, is available at eandp.com.au or on request free of charge.
