Give ADF reservists their SG – industry funds

Australian Defence Force (ADF) reservists should be entitled to superannuation guarantee (SG) contributions, according to industry funds-backed group, the Super Members Council (SMC).

The SMC has told the Government the current legislative framework governing superannuation and pension schemes for current and former members of the ADF is not fit for purpose because ADF reservists are not paid super to support their retirement.

Responding to the Senate Economics References Committee inquiry into the operation and appropriateness of the superannuation and pension schemes for current and former members of the ADF, the SMC said the current situation runs contrary to current objectives.

“This is contrary to the objective of super and inconsistent with recent reforms to promote greater coverage of super entitlements and equity among Australian workers, including:

— Removing the exemption that applied to employees earning less than $450 per calendar month from an employer

— Extending superannuation to parents on Commonwealth paid parental leave

— Amending the National Employment Standards to embed superannuation as an enforceable workplace entitlement.

“Members of the ADF are excluded from the national workplace relations system because military service is not considered a civilian contract of employment, but a unique statutory relationship governed by its own code,” the SMC said.

“Retirement benefits for permanent employees of the ADF are provided for under the defence force benefits Acts that underly the super schemes administered by the Commonwealth Superannuation Corporation, but Reservists are excluded,” the submission said.

“The legislative basis for this exclusion is that the Superannuation Guarantee (Administration) Act 1992 directly links the payment of taxation to the eligibility for superannuation. If income is exempt from taxation (such as Reservists’ income) superannuation is not payable on that income. Superannuation is only payable for ADF Reservists who are employed to undertake continuous full-time service.

“Most Reservists undertake a minimum of 20 and up to 100 days of service per financial year depending on personal circumstances and organisational need, earning between $209.58 and $658.11 per day (excluding senior officers) depending on their rank, pay grade and increment,” it said.

The SMC point out that, according to the 2021 Census, about 25,000 hard working Australians serve their country as ADF Reservists. They have a reasonably young profile – most are aged between 25 – 40 – compounding the negative financial impact from missing out on all-important super investment returns in the early years.

“SMC research shows about three quarters of someone’s super balance at retirement is from their investment earnings, compounding over a long time. Contributions make up the other quarter,” it said.