The answer is most likely no! This content has been posted in other forums, but I wanted to put it all in one place and make it easier to read. If you joined the ADF after 01 Jul 16, then you have no choice but to join the ADF super scheme.

The Australian Defence Force's MSBS super scheme has a lifetime pension that never runs out, whilst ADF super is an accumulation superannuation scheme. I'm making some some assumptions and broad generalisations here (such as starting pension at age 55, and joining young), but here is a summary:

- at or after age 55, MSBS is outstanding. Second only to politicans' and magistrate pensions. You would probably be in a position to continue paying down your mortgage / further build up your investment portfolio and even service new loans; all whilst doing nothing. And then when you reach preservation age, take the lump sums out from your Member and Ancillary Benefits and pay off those loans! Or invest more. Or anything else... Yes you will pay some tax on your pension (you pay less tax after turning 60), but it's essentially free money from this point on for the remainder of your years – a guaranteed, passive income stream, and then some more.

- 45-55: Excellent. 10 Years of Consumer Price Index inflation is really not that bad when you consider the generous pension conversion factors. Your MSBS pension alone could probably give you a modest or even comfortable retirement, depending on your Final Average Salary.

- 40-45: Good. Probably still much better off than in MSBS than crystallising your Employer Benefit into another fund, if that were to be possible. Depending on Final Average Salary, your pension may not be enough to live off entirely, but it should definitely reduce the rate that you dip into other superannuation amounts.

- 35-40: Reasonable. If you've been in a while (20+ years), your pension is likely to still be an ok (35% or so) proportion of your Final Average Salary. Probably more than the Age pension by this point. It will look like Consumer Price Index -only-indexation has hit you hard (which it probably has), but don't forget those generous pension conversion rates.

- 25-35: Suboptimal to equivocal. Under MSBS, although you'd get the security of the pension it may not have had the chance to build up enough and not likely to be contributing to much of your retirement income at all. This is where ADF super would be a better scheme, especially as it is portable when you discharge from the Defence Force.

- Under 25: Poor. ADF Super is better. You should transfer your member benefit and your ancillary benefit to ADF Super. You should then transfer it to your new employer super fund or a Self Managed Super Fund (SMSF).

ADF Super

For new entrants to the Australian Defence Force (who must join ADF Super from 01 Jul 16), it will benefit only:
A. Those who join and leave whilst they are very young (and thus have time to compound their returns over many many years)
B. Those who serve/have served for a short period of time (whilst young)

Anyone else would have been better off on the existing hybrid MSBS scheme, including:

1. Those who end up serving for a long period of time. MSBS Employer benefit p.a.: 0-7 years 18%, 7-20 years 23%, 20+ years 28%. Compare this to ADF Super: The 16.4% government contribution does not appear to be tiered according to length of service; increased to 18% when in warlike conditions. The only caveat is it's portability.

2. Those who serve later in life (employer benefit has no investment risk)

3. Those who expect their salary to increase at all, via promotions/increments or standard pay rises (on average, rises at least equal the pace of Consumer Price Index, or exceed this).

Your Employer Benefit (the large part of your super) from your previous period of service will remain preserved and indexed to Consumer Price Index. :( However, the % employer contribution for your new period of service will start at a higher rate depending on how long you served previously. Eg. Previously served for 12 years, then rejoined and served for another 10 years. The multiple for the new period starts at 23% (7-20 years = 23%) and remains so for 8 years, after which it becomes 28% (20+ years = 28%).

Footnotes:
Employer Benefit (in MSBS)
The element of an ADF member's MSBS benefit that is unfunded (no money set aside) and untaxed in the fund (tax may be payable upon withdrawal). Used in the calculation of calculating a member's pension entitlements upon reaching age 55+; The pension factor applied varies with age and is very generous. You should take 100% of your Employer Benefit as a pension at retirement.

MSBS has a pension factor of 12 @ age 55 and 11 @ 60. So the actuarial value of the EB is actually about double of what it's numerical value is...

EB = FAS x LengthOfServiceFactor.
Where
FAS3 = Final average salary of the last three years of service
LengthOfServiceFactor = Value based on length of service

Years 0-7 of service = 0.18
Years 7-20 of service = 0.23
Years 20+ of service = 0.28

In other words, 25 years service would yield a value of 5.65 [(7 x 0.18) + (13 x 0.23) + (5 x 0.28)

Annual Pension amount, pre tax = EB / Pension factor.

Really, the new super is only 'good' if you're young, planning on getting in and out quickly, not taking any promotions, and never going to get back in.

Do your own reading before you see a planner/adviser. Start with MSBS PDS
http://www.militarysuper.gov.au/forms-and-publications/publications/product-disclosure-statement/

then go through to their factsheets.
http://www.militarysuper.gov.au/forms-and-publications/factsheets/

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