Are you planning on transitioning from the Australian Defence Force (ADF)? It is time when you will have a great deal of questions about navigating to civilian life. Here are some frequently asked questions that we are asked, and answers, to help you with your transition.
Superannuation is money for your retirement. During your working life, you accumulate your super to make sure you can have a comfortable retirement.
Before, and after your transition from the ADF, it is so important to understand where your super comes from and what your choices are around your super.
All employers are required to pay super via the ‘Super Guarantee’. This is the minimum contribution percentage (a % of your salary that is paid to a super fund on top of your salary). At time of writing this is 11%. It is being increased gradually up to 12% by 1 July 2025.
If you are an ADF member in Full-Time Force or a SERVOP C reservist, and a member of ADF Super or another super fund of your choice, you are entitled to a higher contribution rate of 16.4% of your Ordinary Time Earnings (OTE).
ADF Super is an ‘accumulation fund’, meaning that your super will grow or accumulate over time. The balance will depend on the money you and your employer put in, as well as investment returns and any fees/costs. The older DFRDB and MSBS schemes are different, they are what’s called a ‘defined benefit’. There is not an employer percentage contribution rate for DFRDB and MSBS. Retirement benefits under these older schemes get calculated by reference to a pre-determined formula set by legislation, and in certain circumstances there is an option for a life paid pension. If you are a reservist not undertaking SERVOP C you will not be eligible to receive super contributions from Defence as your income is not taxable.
Superannuation is treated differently to most other savings.
There are special tax treatments and concessions that apply to superannuation contributions to help Australians save for their retirement. Visit the Australian Taxation Office (ATO) website for more information.
There are caps on the amount that you can contribute into your super before you may be required to pay additional tax, so it is important that you understand what goes into your super and what the limits are. Visit the ATO to learn more about super caps.
It is important to remember that super is your money regardless of where you work.
So, when you are thinking of transitioning out of the ADF it is a good time to think about the money you have accumulated in super and make some decisions.
The benefits you may receive and what you can do with your super will depend on which fund you are a member of and why you are leaving the ADF. Whether or not you can access your super immediately after you transition will also depend on your mode of exit and your scheme. If you are in an accumulation scheme (like ADF Super) your retirement benefits are not accessible until you reach your preservation age and retire or you reach 65. If you were born after 1 July 1964, your preservation age is 60. If you are in DFRDB or MSBS, your scheme rules determine when you can start accessing your super retirement benefits. Invalidity benefits paid via your super can generally be accessed as soon as you cease military service.
If you are moving on to civilian employment and decide to rollover eligible benefits to another complying super fund, there are broadly three types of super funds typically available to you:
- Industry super funds – not-for-profit or profits-to-members funds, typically linked to participants in specific industries
- Retail super funds – typically owned by financial institutions.
- Self-managed super funds (SMSFs) – are where you set up and manage your own super fund. These can be costly to run as you will need to pay for accounting and auditing each year. While you can choose a variety of investments, they must still be fit for the purpose of providing you with an income in retirement. If investing is not your area of expertise, you may also need to pay for professional investment advice.
If you need help choosing a new fund, the Moneysmart website has information on choosing a super fund.
Go to https://moneysmart.gov.au/how-super-works/choosing-a-super-fund.
It will help you see what’s available in the market so you can choose a fund to suit your needs.
When choosing a super fund there are many different factors to look at and it’s important that you consider all the things that are relevant to you.
It’s a good idea to get a variety of information from multiple different sources and websites to assist you in making the best decisions for your personal circumstances. You may find useful information on choosing a super fund below at:
• YourSuper comparison tool | Australian Taxation Office (ato.gov.au)
• Moneysmart
ADF members are provided death and invalidity cover while you’re serving.
This is provided through ADF Cover, MSBS or DFRDB, depending on which scheme you are in. This cover will cease when you leave the ADF.
You or your family may also be eligible for DVA benefits. DVA continue to support veterans after they have transitioned from the ADF.
If you wish to take out further personal insurance after you leave the service, you will need to source it privately.
It’s a good idea to have your private cover in place before your termination date. If you are moving on to the Reserves, be aware that most personal insurance policies have war and war-like exclusions. Make sure you check with your insurer whether your Reserve service, or any other medical conditions you might have from your service, could exclude you from being able to claim on a policy before you pay any premiums.
Whether you are retiring or moving on to the next phase of your working life, when you leave the ADF your income and expenses are likely to change.
To manage these changes it might be a good time to look at your budget and review your financial goals. If you don’t already have an emergency fund, a good short-term goal might be to save 3-6 months’ worth of expenses as a safety net for any unforeseen circumstances.
If you are retiring, you may be wondering whether your income will be enough to sustain your lifestyle after you stop work.
Typically, when you retire, there will be changes to your spending habits. For example, work related expenses like transport, coffees, lunches, and uniform expenses may decrease, while spending on leisure activities and hobbies may increase. Think about how your income needs may change.
What do you want your retirement to look like? If you can answer that question it will be easier to work out the sort of income you’ll need to fund it. Often retirees plan to spend more in the first few years of retirement and less as they get older, perhaps something to consider when you’re planning your retirement income needs.
You may receive income from multiple sources in retirement, for example superannuation, DVA or Centrelink payments and income from investments. You’ll need to account for all income sources in your planning.
It is an integral time for you to get financial guidance and the great news is, you may be eligible to access $1,000 towards professional financial advice through the Defence Force Transition Program.
Call 3155 5090.As an ADF member, Defence takes care of all your medical, dental, optical and ancillary healthcare needs. When you transition out of the Service, you will be responsible for your health.
Medicare will cover 100% of your costs if you are admitted to hospital as a public patient, some of the fees charged by GP’s and other medical professionals, and subsidised prescription costs for medicines listed on the Pharmaceutical Benefits Scheme (PBS). You should register with Medicare before you leave the service but you won’t be able to use it until after you’ve transitioned out. For more information, visit the Services Australia website.
Private health insurance covers a range of services not covered by Medicare, for example, a private hospital and the doctor of your choice, as well as ancillary services such as dental, optical and physio.
If you are single and earn over $90,000 or a family earning more than $180,000 and you do not have private hospital cover you may have to pay an additional Medicare levy surcharge of up to 1.5%. This is in addition to the standard 2% Medicare levy.
When considering private health insurance, think about your cover needs, now and in the future. Generally, the more you are covered for, the higher the premium.
If you wait too long to take out private health insurance you’ll pay the Lifetime Health Cover Loading (LHC). This increases your premiums by an extra 2% for every year after age 30 that you haven’t had private hospital cover. There are special conditions that apply to full-time ADF members who discharge after age 30. For more information, visit the Government’s Private Health website.
If you have a property, or are thinking about buying a home before you leave the service that you intend to live in, consider whether the Defence Home Ownership Assistance Scheme (DHOAS) could benefit you.
DHOAS is a scheme that helps ADF members own their own home by giving you a subsidy, paid directly into your qualifying home loan. If you have a period of full-time service greater than 4 years, you may be eligible for assistance through the scheme.
Service credit accumulated through eligible service can still be used after you leave the ADF. You have a limited window to use your DHOAS entitlement after you separate from Defence and you may benefit from obtaining a subsidy certificate before you leave.
There are a limited number of approved lenders who participate in the scheme so it’s recommended you compare what DHOAS may offer you with the cost of obtaining a loan from other lenders. You can find more information on the DHOAS website at www.dhoas.gov.au.
If you are looking to buy your first home, you may be eligible for the First Home Owner’s Grant (FHOG) and/or other incentives available to first home buyers.
The FHOG is a national scheme, administered and funded by each state and territory, which provides a one-off grant to eligible first home owners. Some states and territories also offer stamp duty concessions to first home buyers.
From time to time the federal government offers additional incentives to fist home buyers to buy or build a new home, so search out what is available to you to make the most of your new home purchase.
A will is a legal document that dictates how your assets should be distributed when you die. If you die without a valid will you will be said to have died intestate and your assets will be distributed according to intestacy laws in your state, which may not be in line with your wishes.
For a will to be valid it must meet certain criteria, which is why we recommend seeing a lawyer (ADF LEGALOs can usually help). Never use a will kit.
Store a copy of your will in a safe place and tell your executor and next of kin where it is. If you are concerned about how your beneficiaries will manage their inheritance, ask your lawyer about a testamentary trust.
Review your will whenever your personal circumstances change, for example, you get married, separated or divorced, or become a parent, and make arrangements to update it if necessary. If you need to update your will, consider doing this before you leave Defence, as permanent ADF members can usually have a simple will written or updated for free.
Cameron Teague, our Certified Financial Planner from CTWealth, is a listed adviser to the ADF Financial Services Consumer Centre linked here.
We offer a complimentary and obligation-free 10 minute phone discussion to explore likely advice needs prior to committing to an initial appointment. Information discussed will be general advice only.
