ADF Super, MSBS, and DFRDB are all superannuation schemes administered by the CSC for Australian Defence Force Members, each operating under specific rules and benefit structures. The difference depends on whether your scheme is a defined benefit plan, an accumulation fund, or a hybrid fund.
At National Service Financial, we help you understand how your CSC Super scheme works, what you can do, what you can’t do, and how to make informed decisions about your financial future.
Which Defence superannuation scheme are you part of?
Over time, the Australian Defence Force has offered four distinct super schemes. Understanding which scheme you are in is the starting point for understanding your entitlements and the restrictions that apply.
- Australian Defence Force Superannuation (ADF Super) – launched on 1 July 2016 and is open to all new ADF Members. This is a fully accumulation-based fund, similar to most civilian super schemes.
- Military Superannuation and Benefits Scheme (MSBS) – began on 1 October 1991 and closed to new members on 30 June 2016. MSBS is a hybrid structure that combines a defined benefit (employer-financed pension) with accumulation accounts for member contributions.
- Defence Force Retirement and Death Benefits Scheme (DFRDB) – replaced DFRB on 1 October 1972 and closed to new members on 30 September 1991. It remained a defined benefit scheme, with pensions paid for life.
Defence Forces Retirement Benefits Scheme (DFRB) – introduced in 1948 and closed to new members in 1972. This was a defined benefit scheme, where pensions were calculated on service length and salary.
ADF Super
ADF Super is the current scheme for all new members of the Australian Defence Force. It is an accumulation-based fund, similar to civilian superannuation, where your retirement balance depends on contributions and investment performance. Employer contributions are paid at a rate of 16.4% of your super salary.
What you can do with ADF Super
Select investment options
You can choose from four investment options: Cash, Income Focused, Balanced, or Aggressive. You can change your investment mix at any time.
Make personal and salary-sacrifice contributions
You can make personal contributions or salary-sacrifice additional amounts while serving or after discharge.
Transfer or roll over your ADF Super
You can roll your ADF Super balance into another super fund, including a self-managed super fund (SMSF), at any time. You should seek financial advice before rolling over superannuation funds.
Nominate beneficiaries
You can make binding or non-binding beneficiary nominations for your ADF Super account to specify who will receive your benefit in the event of your death.
Claim TPD or death benefits
While serving, you are automatically covered under ADF Cover, a no-cost insurance policy providing death and invalidity cover. ADF Cover ceases on discharge, and you should review your insurance needs upon leaving the ADF.
Continue contributing after discharge
After leaving the ADF, your ADF Super account operates like any civilian super fund. You can continue making voluntary contributions, roll in superannuation from other funds, or consolidate accounts.
Access your super at preservation age
Once you reach your preservation age (between 55 and 60, depending on your date of birth) and have retired, you can access your ADF Super. You can take your benefit as a lump sum, an income stream, or a combination. If you have reached preservation age and haven’t fully retired, you can start a Transition to Retirement (TTR) income stream from ADF Super.
Enjoy flexibility in retirement
ADF Super functions like a standard accumulation fund, so you can choose how and when to draw your benefits.
Rejoin the fund
If you discharge and later rejoin the ADF, you can return to ADF Super as your default super fund.
What you can’t do with your ADF Super
Withdraw super early just because you want to
You cannot access your ADF Super until you have separated from the ADF and reached your preservation age, or meet another condition of release (such as permanent incapacity or death).
Opt out of superannuation
Superannuation participation is compulsory under Australian law. You cannot opt out of ADF Super or choose not to have employer contributions made.
Receive a defined benefit pension
ADF Super is an accumulation fund, not a defined benefit scheme. You do not receive a lifetime pension or guaranteed income stream.
Combine ADF Super with a defined benefit scheme
ADF Super is an accumulation fund and cannot be merged with a defined benefit scheme such as MSBS or DFRDB.
Invest your balance directly in property
You cannot use your ADF Super account to purchase property directly. This is only possible if you roll over your balance into a self-managed super fund (SMSF) that allows property investment under standard superannuation rules.
Withdraw your super before preservation age for voluntary reasons
You cannot access your super for discretionary purposes, such as debt repayment, home purchase, or travel, before meeting the legal condition of release.
Maintain ADF Cover after discharge
ADF Cover ceases automatically when you leave service, unless you receive an ADF Cover Invalidity Pension. You cannot continue it through ADF Super; you must arrange alternative insurance if needed.
Exceed the Transfer Balance Cap in pension phase
In ADF Super, your pension phase balance is limited by the Transfer Balance Cap—currently $1.9 million. This means you can’t transfer more than that amount from your accumulation account into a tax-free retirement pension. Any remaining balance must stay in accumulation, where earnings continue to be taxed at 15%.
Tax considerations when accessing ADF Super
If you access your ADF Super before age 60, part of your benefit may be taxable. Withdrawals made before you turn 60 are generally split into tax-free and taxable components. The timing of your withdrawal and its structure can impact your overall tax position, particularly if you plan to continue working or start drawing an income stream.
Why you should seek financial advice
Accessing your superannuation is a major financial decision. The right timing and structure can make a substantial difference to your retirement income, tax position, and Centrelink entitlements. At National Service Financial, we specialise in helping ADF Members, veterans, and their families understand the financial consequences of accessing super and plan appropriately for retirement.
Professional financial advice ensures you understand when you can retire, how your super will be taxed, and what strategy best supports your long-term goals.
Military Super (MSBS)
The Military Superannuation and Benefits Scheme (MSBS) is a hybrid scheme and combines both defined benefit and accumulation features. Your Employer Benefit is a defined benefit based on your years of service and Final Average Salary. Your Employer Benefit is managed by CSC and is not invested in a personal account.
You also contribute between 5% and 10% of your fortnightly salary toward your Member Benefit in MSBS. These contributions are compulsory while you are serving and form the foundation of your accumulation balance. You can choose the rate within this range, but it cannot fall below 5% except in limited circumstances, such as unpaid leave.
Your Member and Ancillary Benefits (the accumulation components) are invested according to your chosen investment option – Cash, Income Focused, Balanced, or Aggressive, and you may also salary-sacrifice additional amounts or make voluntary personal contributions to increase your balance.
What you can do with Military Super MSBS
Access your super at preservation age
You can access your Member and Ancillary Benefits once you have retired and reached your preservation age.
Access your Employer Benefit after discharge
If you have reached the age of 55 and you have transitioned from the ADF, you can access your Employer Benefit as a pension. This is not subject to normal retirement conditions, nor is it dependent on you reaching your preservation age. This differs from most other superannuation schemes, which require you to reach preservation age before accessing superannuation.
When you claim your MSBS superannuation benefit, you need to decide whether to take it as a pension, a lump sum, or a combination. If you claim your super before the age of 60, your only option is a lifetime pension. If you do not decide by the age of 65 and 3 months, your only option is to take your superannuation as a lump sum.
If you leave the ADF before 55, your Employer Benefit is preserved within the scheme until you reach eligibility.
Receive a lifetime pension
If you choose to take your Employer Benefit as a pension, it will be paid directly by the Commonwealth and indexed annually to reflect cost-of-living changes.
Your pension entitlement depends on service length, final average salary and the age at which you claim your benefit (over 55).
Because it is a defined benefit, access is determined by your service and discharge conditions, not civilian preservation age rules.
Select investment options
You can choose from four investment options (Cash, Income Focused, Balanced, Aggressive) for your Member and Ancillary contributions (the accumulation components of your MSBS). These balances are invested according to your chosen strategy and can be changed at any time through your CSC member account.
Your Employer Benefit (the defined benefit component) is not invested and has no investment choice, as it is calculated based on your FAS and years of service, not investment performance.
Make personal contributions
You can make additional voluntary contributions to your Member or Ancillary Benefit accounts, which will increase your overall balance. These contributions are separate from your compulsory member contributions (usually 5%) and can be made either from after-tax income or via salary sacrifice (before-tax) arrangements, depending on your financial preferences.
Choose your own super fund / transfer to SMSF
Once you have transitioned from the ADF, you can transfer your Member Benefit (the accumulation component) to another complying super fund or a self-managed super fund (SMSF).
Your Employer Benefit (the defined benefit component) remains preserved within the MSBS and cannot be rolled over or transferred to another fund.
Claim TPD or death benefits
MSBS members are covered for invalidity and death, with benefits drawn from both the defined and accumulation components. If you are medically discharged, you may be assessed under the scheme’s invalidity classification system (Class A, B, or C), depending on the extent of your incapacity and future work potential.
Invalidity and death benefits are primarily provided through your Employer Benefit (defined component), which pays an indexed lifetime pension based on your service and final average salary.
Your Member and Ancillary Benefits (the accumulation components) are also paid, usually as a lump sum, alongside any pension entitlement.
In the event of death, your benefits are paid according to MSBS scheme rules, typically to an eligible spouse and/or dependent children, or to your estate if no dependants exist.
Receive invalidity or death benefits
If you receive an Invalidity Benefit, the payments may qualify as Disability Superannuation Benefits under the Income Tax Assessment Act 1997, provided two medical practitioners certify that you are unlikely to work again in a role suited to your training or experience.
This classification can affect how your payments are taxed, with part of your income potentially tax-free or eligible for a tax offset.
Rejoin the scheme
If you discharge from the ADF and later return to service, you may be able to rejoin MSBS, provided you were an MSBS member at the time of your previous discharge, and did not transfer to ADF Super or another super fund during that earlier service. If you previously chose to transfer to ADF Super or another fund, that decision is permanent, and you cannot rejoin MSBS upon re-enlistment.
What you can’t do with your MSBS Super
Access your Member and Ancillary Benefits early
You cannot access your Member or Ancillary Benefits while serving, unless you meet a recognised condition of release such as permanent invalidity, death, or reaching your preservation age after separation.
Access your Employer Benefit before eligibility
If you leave before reaching retirement eligibility, your Employer Benefit remains preserved within MSBS. You cannot access or roll it over until you reach eligibility or retirement age under the scheme.
Invest employer contributions elsewhere
Employer contributions are credited toward your defined Employer Benefit and cannot be redirected or invested in another fund.
Contribute once you reach your Maximum Benefit Limit (MBL)
Maximum Benefit Limits (MBLs) are based on your Final Average Salary. Once you reach the Lump Sum MBL, you can choose to stop contributing, but if you do, you can’t restart contributions later, even if you continue serving. When you reach the higher Pension MBL, your compulsory 5–10% salary contributions must cease automatically, and you’ll be notified by CSC. After that point, only ancillary contributions (such as voluntary top-ups) are allowed.
Even after you hit an MBL, your employer benefit will still grow in line with future increases to your FAS and MBL tables, but you can’t resume making standard contributions for that period or any future service.
Directly manage or choose investments for your defined benefit
You cannot choose or directly manage how your defined Employer Benefit is invested. The Commonwealth Superannuation Corporation (CSC) manages these funds on behalf of all members. Investment choice is available only for your Member and Ancillary Benefits (the accumulation components), where you can select from the available CSC investment options
Nominate beneficiaries
Under MSBS, you cannot make binding beneficiary nominations, even for your Member or Ancillary Benefits.
Pensions and death benefits are paid according to legislated scheme rules, not personal choice.
In the event of death, your defined Employer Benefit will usually revert to an eligible spouse and/or dependent children. If there are no eligible dependants, the benefit is paid to your estate.
Your Member and Ancillary Benefits (the accumulation components) are treated separately but are still administered under MSBS legislation, not under standard superannuation law.
This means the Commonwealth Superannuation Corporation (CSC) has discretion to pay these benefits to a dependant or your estate, in accordance with the scheme’s governing rules, but you cannot make a binding nomination to direct who receives them.
Combine or roll over the defined benefit portion
Your defined benefit (Employer Benefit) cannot be rolled over, merged, or transferred to another super fund, as it is a Commonwealth-funded entitlement. Only your Member and Ancillary Benefits (the accumulation components) can be rolled over to another complying super fund or self-managed super fund (SMSF), and only after you have discharged from the ADF.
Opt out of super while serving
MSBS participation is compulsory during active ADF service. You cannot opt out or choose not to contribute while serving.
Use defined benefit funds to buy property directly
You cannot use the defined benefit portion to buy property. Property investment is only possible following discharge if you roll over your accumulation component into a self-managed super fund (SMSF) that allows such investments under normal superannuation rules.
Get a tax-free pension if it exceeds the Defined Benefit Income Cap
If your MSBS pension is above the Defined Benefit Income Cap, the excess amount loses its full tax-free status. You’ll still receive your entire pension, but part of it becomes taxable, reducing your overall after-tax income.
Move your full lump sum into a separate pension if it exceeds the Transfer Balance Cap
In MSBS, the Transfer Balance Cap doesn’t restrict your pension within the scheme itself – even if its notional value exceeds the limit. However, if you take your full benefit as a lump sum and move it into another super fund, you can only transfer up to the cap into a tax-free pension phase.
MSBS and why you should seek financial advice
The Military Superannuation and Benefits Scheme (MSBS) is one of the most complex superannuation arrangements in Australia. It combines both defined benefit and accumulation components, each with different rules for access, taxation, and retirement planning.
The way your MSBS benefits are taxed depends on whether you take them as a pension, a lump sum, or a combination of both. Your Member and Ancillary Benefits (accumulation components) are generally taxed like civilian super funds, while your Employer Benefit (defined benefit portion) is paid from an untaxed source, meaning it follows special tax rules under Commonwealth law.
Your age when accessing benefits also affects how tax applies. Generally, benefits accessed before age 60 may have some taxable components, while those accessed after age 60 are taxed more favourably. Because of these differences, timing and strategy can have a lasting impact on your financial outcomes.
Seeking professional advice ensures you:
- Understand how each component of MSBS is taxed and assessed.
- Make informed choices about pension versus lump sum options.
- Structure your retirement income to maximise benefits and minimise tax.
At National Service Financial, we specialise in ADF superannuation advice, helping members and veterans understand their entitlements, manage tax implications, and make confident decisions about when and how to access their super.
Defence Force Retirement and Death Benefits Scheme (DFRDB)
The Defence Force Retirement and Death Benefits Scheme (DFRDB) is a defined benefit scheme, meaning your retirement benefit is determined by your years of service and your final average salary, rather than investment performance.
What you can do under DFRDB
The DFRDB Scheme was open to members of the ADF from 1972 to 1991. The scheme is a fully defined benefit pension scheme. Members contribute a fixed percentage of salary, and benefits are paid primarily as a lifetime pension.
Access a defined benefit pension
Once you have left the ADF and have met the minimum service requirements, you are entitled to receive a lifetime defined benefit pension funded by the Commonwealth. The pension amount is calculated using your rate of pay and total years of effective service and is indexed annually.
Boost your savings
As a contributing DFRDB member, you can also hold a MilitarySuper Ancillary Membership. A MilitarySuper ancillary account allows you to make additional contributions that cannot be paid into the DFRDB scheme itself.
You can use your ancillary account to:
- Make before-tax (salary sacrifice) or after-tax (personal) contributions,
- Accept spouse contributions, and
- Consolidate super by transferring balances from other super funds into your ancillary account.
These contributions build an accumulation-style balance within MilitarySuper, separate from your DFRDB defined benefit pension.
TPD or death benefits
The DFRDB Scheme provides defined invalidity and death benefits for members who are medically discharged or die while serving. If you are medically discharged, you may be assessed as eligible for a Class A or Class B Invalidity Benefit, depending on the extent of your incapacity.
These benefits provide an ongoing indexed pension and may be classified as Disability Superannuation Benefits for tax purposes, which can attract favourable tax treatment under the Income Tax Assessment Act 1997.
In the event of death, eligible dependants, such as a spouse or dependent children, may receive a reversionary pension or a lump-sum payment.
What you can’t do with your DFRDB
Withdraw super early
You cannot access your DFRDB benefit while still serving, except in cases of invalidity discharge or death.
Access to benefits only occurs once you have been discharged and met the scheme’s service and retirement conditions.
Opt out of super while serving
Participation in DFRDB is compulsory for eligible members. Members can not opt out or choose to join another super fund while serving.
Directly manage or choose investments
You cannot control how funds supporting the DFRDB pension are invested. These are managed collectively by the CSC.
Invest employer contributions elsewhere
Employer contributions are pooled to fund the defined pension and cannot be redirected or invested individually.
Choose or change investment options
There is no ability to select investment strategies or asset classes. DFRDB is a defined benefit pension scheme, not an accumulation fund.
Nominate beneficiaries for your defined benefit pension
Under the DFRDB Scheme, you cannot make a binding beneficiary nomination. Pensions and death benefits are paid in accordance with legislated scheme rules, not by personal nomination. In the event of death, your reversionary pension will usually be paid to an eligible spouse and/or dependent children. If there are no eligible dependants, the benefit is paid to your estate.
Take the entire benefit as a lump sum
Under the Defence Force Retirement and Death Benefits Scheme (DFRDB), you cannot take your entire benefit as a lump sum. At retirement, you may commute (convert) part of your pension into a one-off lump sum, with the maximum commutation limited to five times your initial annual pension. The remainder of your benefit is paid as a lifetime pension, indexed annually in line with Consumer Price Index (CPI) movements to maintain its purchasing power over time.
Roll over or combine with another fund
Your DFRDB pension cannot be rolled over, merged, or transferred into another super fund. It remains within the DFRDB scheme.
Use DFRDB benefits to buy property directly
You cannot use your pension entitlement or defined benefit funds to buy property directly. There is no accumulation balance to invest.
Access your pension before meeting service requirements
Your DFRDB pension is only payable once you have completed the minimum qualifying service. If you discharge before completing this period, you are not entitled to retirement pay. Instead, you’ll receive a lump sum refund of contributions paid into the scheme, plus a superannuation guarantee top-up, plus a gratuity (in some cases).
Once you meet the qualifying service requirements and separate from the ADF, your retirement pension is paid fortnightly for life. The amount of pension you receive is calculated as a percentage of your super salary at separation, based on your total years of effective service.
Defer or redirect employer contributions
Employer contributions under DFRDB are not paid to you personally and cannot be redirected to another fund or investment vehicle.
Get a tax-free pension if it exceeds the Defined Benefit Income Cap
If your DFRDB pension is above the Defined Benefit Income Cap, the excess amount loses its full tax-free status. You’ll still receive your entire pension, but part of it becomes taxable, reducing your overall after-tax income.
Tax and financial advice for DFRDB pensions
Both your DFRDB pension and any commutation lump sum are subject to tax, but the rules differ depending on when and how you access your benefits. Your pension payments are treated as assessable income, while lump sum amounts are taxed separately and may be affected by age, commutation limits, and preservation rules.
Because the DFRDB scheme is a defined benefit pension, tax treatment can be complex, particularly if you access your benefits before age 60, commute part of your pension, or receive other superannuation income alongside your DFRDB payments.
Advice matters when managing your Defence superannuation
Defence superannuation schemes can be complex. Each scheme has its own structure, rules, and eligibility conditions that determine how your benefits are calculated and accessed. Understanding these differences is critical to making informed decisions about your financial future.
Decisions such as whether to take a pension or part lump sum, when to roll over an accumulation account, or how to plan for preservation age can have long-term impacts on your retirement income. At National Service Financial, we specialise in helping ADF Members, Veterans, and their families navigate the complexities of military superannuation. We also provide qualified financial planning to help you invest for the future.
