Defining your RBF Benefits
March 2012
The Retirement Benefits Fund (RBF) is the superannuation fund setup for Tasmanian State Government employees. It has gained much attention in recent times due to a decision to outsource back office functions to Mercers. Whilst this move has been unpopular it was a well overdue move to improve the accuracy and timeliness of information provided to members.
I am currently working with a number of RBF members who are still experiencing long delays and so it is worth highlighting that members of RBF should seek advice from a quality financial adviser well in advance of any retirement plans.
Members of RBF should make sure that they fully understand their RBF account as there are a vast numbers of options, all of which provide different opportunities for members in retirement.
The first major difference between accounts that exist is that some exist under a (now closed) defined benefit option, whilst the option offered to new members is an accumulation style account.
An accumulation account operates by receiving member and employer contributions and investing these funds according to the selected investment options. A member's eventual retirement benefit will depend on the amount of contributions and the investment performance achieved.
Defined Benefit accounts (the "Contributory Scheme") on the other hand determine a member's benefit by multiplying Years of Service (i.e. how long a member has worked) by their contribution rate (this is a percentage rather than a dollar figure) by their final average salary (typically the full time equivalent average salary they have earned in their final 3 working years).
However, all may not be as it seems. I have provided advice to many clients over the years who had always believed that their superannuation, being a defined benefit account, was not influenced in any way by investment markets. However, the actual benefit could be chosen from a number of different options, some of which were calculated as a defined benefit and some which were indeed linked to investment market performance.
This situation had arisen as a result of the consolidation of a number of state government superannuation schemes into the current RBF. Organisations such as the Fire Department and Parks and Wildlife have in past years had slightly different ways of calculating benefits and so during mergers of these schemes members have been left with a number of different schemes and options to consider.
With careful planning the RBF Contributory Scheme can be a very attractive way to accelerate your wealth accumulation in the years to retirement. For those lucky enough to be part of the scheme they should seek to understand their options fully to maximise their benefits. The complexity of these schemes, as well as the growing restrictions around contributions limits make it essential to get quality, unbiased advice regarding RBF superannuation funds.
The information contained in this article was compiled by Ben Coxen, a representative of WHK Financial Planning Pty Ltd (WHKFP). All material contained in this article is based on opinions, conclusions and forecasts that are reasonably held at the time this presentation was compiled. WHK FP assumes no obligation to update the material to reflect any changes. No action should be taken solely on the material contained in this article as the information is of a general nature and does not take into account personal circumstances. Before acting on any material contained in this article you should seek professional advice.
WHKFP (ABN 51 060 092 631) is the holder of Australian Financial Services Licence number 238244 - a WHK Group firm.
