Defined Benefit Division

Find out what you’re entitled to as a UniSuper Defined Benefit member.

Defined Benefit Division membership offers you

• Your super components - defined benefit and accumulation
• Employer, standard member and voluntary member contributions
• Investment choice for your accumulation component
• Benefits on retirement, resignation, death, disablement, terminal medical condition or temporary incapacity
• Optional Death and Disablement insurance cover
• Access to a low-cost UniSuper pensions when you retire
• Low fees and costs

You will initially join UniSuper's Defined Benefit Division. You then have 12 months to choose to transfer to Accumulation 2 membership.

The DBD is a defined benefit fund for legislative purposes. This means that it is subject to special funding and solvency rules under superannuation law. If the Fund’s actuary determines that it is unable to certify solvency (as defined under superannuation law), it is required to make a declaration of technical insolvency. If this occurs, UniSuper must initiate a program designed to restore solvency within five years or wind up the defined benefit fund.

Your super components

The defined benefit component

Your 14% employer contributions along with your standard member contributions go into your defined benefit component. They are automatically pooled with the contributions of other DBD members into a diversified portfolio of investments that are specifically selected and monitored by UniSuper.

This investment pool is used to pay members’ defined benefits when they leave UniSuper or retire.

The defined benefit component generally makes up the bulk of your benefit. Although its funds are invested, market performance typically does not affect the value of your final benefit.

This is because your final benefit is calculated using a formula based on your age, benefit salary, period of service, average service fraction, years of membership and average contribution factor. Fees, costs and taxes have been allowed for in the formula. So effectively, the value of your benefit is ‘defined’ by this formula.

It is possible, however, that if prolonged poor investment performance results in assets in the defined benefit pool being insufficient to meet defined benefit liabilities, your defined benefit could be reduced on a basis determined by the Trustee. Please see the DBD Update section for more information.

The accumulation component

The accumulation component of your DBD membership works quite differently from the defined benefit component. The 3% additional employer contribution (if applicable), any voluntary member contributions, and any rollovers you make or government super co-contributions you receive are allocated to the accumulation component.

You get to decide how this component is invested by choosing from UniSuper’s range of investment options. As such, the value of your final benefit from this component is determined not by a formula (as in the case of your defined benefit component), but instead by the performance of the investment options you have chosen (which could be positive or negative). This means that the value of your accumulation component can rise or fall depending on how investment markets have performed over the period you have been invested.

Fees, costs and taxes are also deducted from your accumulation component where applicable, as are any optional insurance premiums.

Contributions

Employer contributions

Employer contributions up to 17% of your salary are made to your account - 14% finances your defined benefit component and the remaining 3% additional employer contribution (if applicable) is made into your accumulation component.

Standard member contributions

In addition to your employer contributions, DBD members are encouraged to make standard member contributions at the rate of 7% of your after-tax salary.

You can reduce your standard member contributions under UniSuper’s contribution flexibility arrangements.

This gives you more control over your budgeting and finances, but there are implications for your membership and super savings.

If your employer contributes 17% to your super, you must make standard member contributions of at least 4.45% to maintain your full defined benefit entitlement.

If your employer contributes 14% to your super you must make 7% standard member (after-tax) contributions to maintain your full defined benefit entitlements.

If you reduce your standard member contributions, your defined benefit will be scaled back in proportion to your reduced standard member contributions.

In certain circumstances you may qualify for making half-contributions. Under this arrangement you will make member contributions of 3.5% of your after-tax salary, and your employer will make 7% employer contributions. As a result, your final benefit will also be reduced.

For more information see the following fact sheets:

• Contribution flexibility for members receiving 17% employer contributions
• Contribution flexibility for members receiving 14% employer contributions

You can also make voluntary member contributions into your accumulation component, over and above the amount that your employer contributes on your behalf. You can make regular voluntary member contributions from your salary, or you can make one-off, lump sum voluntary member contributions.

Investment choice

You get to choose how your accumulation component is invested, and UniSuper provides a wide range of investment options for you to choose from. Over time you can change your investment choice (this is called switching), to accommodate any significant changes in your investment needs and goals. However, if you do so you may incur an investment switching fee.

When deciding how to invest your super, it’s important to choose investments that you feel comfortable with and which are best suited to your investment needs. To do that, you’ll need to understand how the investment options work.

The Investing for the future booklet provides important information about UniSuper’s Pre-Mixed and Single Asset Class investment options, including how they are invested, the different asset mixes and the different levels of risk associated with each option.

Inbuilt benefits and optional insurance cover

Inbuilt benefits are a feature of your Defined Benefit Division membership. Subject to eligibility, you can also take out additional optional insurance cover if required.

Your inbuilt benefits

You are eligible for inbuilt Death and Disablement benefits when you join the DBD. Your eligibility to receive a death benefit or terminal medical condition benefit ceases when you turn 60. Your eligibility for a disablement benefit ceases when you turn 65. There is no age limit on eligibility to receive a temporary incapacity benefit.

The insurance charge for the inbuilt benefits is equivalent to $9.24 per $1,000 of salary upon which your employer contributions are calculated. The insurance charge is allowed for in the defined benefit formula – no deductions are made from your contributions or your final benefit.

If you qualify for half contributions, your inbuilt benefits will be half of the full amount and the cost will be $4.62 per $1,000 of salary upon which your employer contributions are calculated.
If you reduce your standard member contributions under UniSuper’s contribution flexibility arrangements, your inbuilt benefits will not be affected. However, the amount your beneficiaries receive on your death will be lower. If you qualify for half contributions, all inbuilt benefits will be reduced.

For more details about your inbuilt benefits please refer to the Super for Defined Benefit Division and Accumulation 2 members product disclosure statement.

Restriction on inbuilt benefits within three years of joining

Inbuilt benefits will not be payable if you have completed less than three years of contributing service after joining UniSuper or transferring into the DBD or Accumulation 2 from Accumulation 1, and the Trustee considers that your death, disablement or temporary incapacity arose directly or indirectly from a condition which existed at the time of joining or transferring.

If you cease employment with a UniSuper employer and do not recommence active membership of the DBD or Accumulation 2 within 90 days, inbuilt benefits will not be payable if the Trustee considers that your death, disablement, temporary incapacity or terminal illness arose directly or indirectly from a condition which existed at the time of recommencing DBD or Accumulation 2 membership.

Resignation and retirement benefits

If you resign or retire you receive benefits made up of two components:

• The defined benefit component is calculated as benefit salary x period of service x lump sum factor x average service fraction x average contribution factor, divided by twelve.
• The accumulation component is made up of your 3% employer contributions (if any), voluntary contributions and rollovers, investment returns, less fees and taxes.

Death benefits while in service

Your death benefit is your retirement or resignation benefit as at the date of your death.

If you are under age 60 at the time of your death and are eligible, an additional amount that takes into account the number of years until you would have turned 60 is also paid.

Any death benefit from your optional insurance cover would also be payable.

Temporary incapacity and disablement benefits while in service

If you qualify for a temporary incapacity or disablement benefit and have worked full time for the duration of your membership, your monthly benefit will be 60% of your benefit salary multiplied by your average service fraction divided by 12. Periods of part time work or leave without pay during your membership will decrease your monthly benefit.

You may also be entitled to an insured disablement benefit under your optional insurance cover if you are permanently disabled. If you want to make a claim under your optional Disablement insurance cover, you will need to make a separate application as this benefit is externally insured.

Terminal medical condition benefit in service

If you qualify, you can elect to receive a terminal medical condition benefit.

Your election will be irrevocable. The terminal medical condition benefit is equivalent to your death benefit. Any terminal illness benefit from your optional insurance cover would also be payable.

Inbuilt benefits if you cease service

If you cease service and are no longer a contributing DBD or Accumulation 2 member, you may be eligible to receive an inbuilt benefit if you die, or suffer disablement, terminal medical condition or temporary incapacity, within a period of up to 90 days from the date you ceased service.

The benefit for death, disablement or terminal medical condition will be a lump sum benefit equivalent to the inbuilt death benefit you would have received from your Defined Benefit Division membership if you had died immediately prior to ceasing service, less the withdrawal benefit you were entitled to on ceasing service. The temporary incapacity benefit will be a monthly income benefit (of benefit salary x 60% x average service fraction divided by 12), calculated as at the date you ceased service, payable for up to two years.

To be eligible for a disablement, temporary incapacity or terminal medical condition benefit, you must satisfy the relevant definition in the Trust Deed.

You will not be eligible to receive any such benefit if:

• you commence employment with a UniSuper employer and become a contributing DBD or Accumulation 2 member within the 90-day period;
• you cease to be a UniSuper member within the 90-day period; or
• you were entitled to receive a disablement, terminal medical condition or temporary incapacity benefit upon ceasing service.

You will not be entitled to a disablement, death or terminal medical condition benefit if you are aged 60 years or over at the date you cease service.

Your optional insurance cover

Default Death and Disablement cover

You are eligible for default optional Death and Disablement cover, if you:

• are working on a full time, part-time, permanent or contract basis; and
• joined the Fund within 180 days of when you were first eligible to become a Fund member.

If you meet the eligibility criteria, receive 17% employer contributions and have not reduced your standard member contributions under contribution flexibility arrangements on joining the Fund, you will automatically be provided with and start to pay for one default unit of optional Death and Disablement cover if you:

• are less than 70 years of age when you join the Fund; and
• do not have a current claim for, are not eligible to claim, and have not previously received, an insured disablement benefit or terminal illness benefit.

Your default cover will be automatically transferred to optional Death-only cover when you turn 70 and your optional Death-only cover will cease when you turn 75.

If you meet the eligibility criteria, receive 17% employer contributions and have not reduced your standard member contributions under contribution flexibility arrangements on joining the Fund, you will automatically be provided with and start to pay for one default unit of optional Death-only cover if you:

• are aged between 70 and 74(inclusive) when you join the Fund; or
• have a current claim for, are eligible to claim, or have previously received an insured disablement benefit.

If you do not join the Fund within 180 days of being first eligible to do so, you will not be eligible for any default optional Death and Disablement cover or additional optional Death and Disablement insurance cover without providing health evidence to the Insurer.

If you have joined the Fund but you have not received an employer contribution into your account within the 180 day time frame, you are automatically provided with and start to pay for one default unit of optional Death cover and, for the first 12-month period only, one default unit of Limited Disablement cover. After this period, your cover will revert to one default unit of standard Death and Disablement cover.

Optional Death and Disablement insurance cover costs $1.40 per week. Optional Death-only cover costs 80 cents per unit per week. The premiums are deducted from your account on a monthly basis, based on the number of Fridays in each month.

You can purchase a further two units of the same type of cover as your default cover without providing health evidence to the Insurer, as long as you apply within 180 days of being first eligible to join the Fund and receive an employer contribution into your account within this time frame. You must apply for the additional two units of cover by completing the appropriate section of the Defined Benefit Division/Accumulation 2 application form.

All eligible members can apply for additional optional Death and Disablement cover or Death-only cover (in addition to the three units you applied for on your Defined Benefit Division/Accumulation 2 application form) by completing the form attached to the Optional insurance cover for members booklet. All applications must be approved by the insurer.

You can opt out of the default optional Death and Disablement cover altogether or choose to purchase Death-only cover when you join the Fund by completing the appropriate section of the Defined Benefit Division/Accumulation 2 application form. However, if you wish to apply for cover at a later date you will need to provide health evidence to the Insurer.

Tax and your super

See the Super for Defined Benefit Division and Accumulation 2 members product disclosure statement for information about taxation.

Fees and costs

UniSuper members benefit from the savings we achieve as one of the largest super funds in the country – savings we pass on to you through low fees. The fees and costs applicable to your Defined Benefit Division account are set out in the Super Defined Benefit Division and Accumulation 2 members product disclosure statement.