Defined Benefit Members
 

The summary below provides information for defined benefits members about how their benefits are calculated when they leave their employer.

Under the terms of the Fund's Trust Deed, defined benefits cease to accrue when a member terminates employment with the employer sponsor who was providing the defined benefit. The process is as follows:

1. Calculation of the defined benefit at the date employment terminates Upon resignation or retirement, a member's benefit in the defined benefit section is calculated using the formula that has been determined by the member's school sponsor.

The resignation benefit usually comprises:

• the member's own contributions (excluding any voluntary additional contributions)
• less 15% contribution tax if the contributions have been paid on a salary sacrifice basis;
• plus earnings (which may be positive or negative) which are determined using the crediting rates applicable when the calculation is done
• plus a nominated percentage of the above result. This percentage is nominated by the school sponsor.

The retirement benefit applies to members who meet the qualifying age requirement. This entitlement is calculated by multiplying the member's accrued Retirement Benefit Multiple by their Final Salary. The definition of Retirement Benefit Multiple and Final Salary depends on the employer providing the defined benefit.

In calculating the benefit (whether this is a resignation or retirement benefit) a check is made to ensure that the benefit (together with any other benefit the school provides in the VISSF or in another fund) meets the Government's Superannuation Guarantee (SG) requirements. If necessary the defined benefit section formula benefit is increased to ensure that the SG requirements are met.

After these calculations are completed the amount of the defined benefit is known and the benefit from the defined benefit section is effectively crystallised into a dollar amount.

If you would like further information about how your defined benefits are calculated please contact the Fund office.

2. Transfer from defined benefit to the accumulation section If the member has no accumulation account (and therefore no existing investment choice option), the amount transferred to the retained section is automatically invested in the Fund's balanced investment option. If on termination of employment, a member wishes to specify a different investment option, they will need to advise the Administrator in accordance with the procedure set out in 4 below.

The applicable crediting rates will apply from the date of transfer to the retained section which is the day following the date of termination) until the account balance is next updated. Crediting Rates for each investment option are declared monthly following month end and during the current month are updated each week. Crediting rates for these periods may be either positive or negative, depending on the earnings of the particular investment option. Please note that members' accounts are updated on the following occasions:

at 31 January each year;

• when all or part of the benefit is paid from the Fund;
• if the member transfers to another employer participating in the Fund;
• when a benefit is transferred to or from the retained section of the Fund; or
• when a benefit is transferred to the pension section of the Fund.

As mentioned above, with effect from the date of termination of employment, a member's defined benefit is converted into a dollar amount. This benefit is then combined with any benefit the member already has in the accumulation section and the total is transferred into the "retained" section of the Fund. The total amount transferred to the retained section is invested according to the investment option previously chosen by the member for the accumulation portion of their account.

3. Interim crediting rates Interim crediting rates will be applied if an account needs to be updated and final crediting rates for that period have not yet been determined. Interim crediting rates are reviewed each Monday and reflect the estimated earnings for the relevant period, less an adjustment for estimated Fund expenses.

4. Investment choice
Members are able to switch the investment choice on their accumulation account on the first working day of each month. To change an investment choice, a signed written notice must be received at the VISSF office by the 15th of the month prior to the date of change. For example, if a member wishes to change their investment choice from 1 May, the written notice must reach the VISSF office by no later than the prior 15 April. In relation to members who have terminated employment the total benefit will remain in the retained section until the Fund is able to act on an instruction from the member to pay the benefit from the Fund or the benefit needs to be transferred it to another section of the Fund.

5. General
The calculation of the defined benefit section and accumulation section benefits cannot be completed until the termination date has been confirmed by the employer and all the contributions due relating to the period up to the termination date have been received by the Fund. Contributions for a month are due to be paid into the Fund by the 28th day of the following month. Therefore, the calculation of the defined and accumulation benefits at the date of termination may not be able to be completed for a number of weeks after the termination date while the Fund awaits the payment of these contributions.

During this time, the entire benefit is effectively invested in the accumulation section as outlined in 2 above, and as such will be subject to the normal positive or negative fluctuations of the relevant investment option. If the member wishes to select a specific investment option for the total account value that is to be transferred to the retained section the investment switch notice must reach the Fund by the 15th of the month for the switch to apply from the first working day of the following month.If a defined benefit member transfers in employment to another VISSF school, the total of the calculated defined and accumulation benefits will be transferred to an accumulation section account with that school and the benefits provided to employees of the new school will apply.

If you have any queries concerning your defined benefits or other superannuation entitlements please contact the Fund office on (03) 9258 6750.