Which style of super is right for you?
If you’re an Accumulation 1 member, you could be eligible to join the Defined Benefit Division (DBD).
The DBD is only open to eligible people who work in higher education and receive 14% or 17% employer contributions. We'll let you know if you may be eligible. If you’re interested in making the switch, you’ll need to check your eligibility. We recommend you speak with a superannuation consultant who can talk you through the features of the DBD, including the in-built benefits and insurance. Make a booking. Eligibility requirements are outlined in the DBD/Accumulation 2 PDS.
We recommend you take the time to consider your options before making your choice. There’s no hurry; you have two years from when you become eligible to join the DBD, to make the decision. If you join the DBD and decide it’s not right for you, you can switch back to an accumulation account within your first two years as a DBD member.
What to consider when choosing an accumulation account versus the DBD
Your career plans
In the DBD, your super balance is linked to your age, average salary, and length of membership (among other things). So generally, it may suit you if you’re planning to work in the sector for a long time and expect your salary to grow over your career.
If you don't plan to work in the sector for long, or don’t expect much salary growth from promotion or reclassification to higher roles, staying in Accumulation 1 might be the better option.
Remember, these are generalisations about the suitability of the DBD and accumulation accounts and may not apply to your individual circumstances. Read the DBD/Accumulation 2 PDS to find out more.
How comfortable you are with market volatility
As your defined benefit component is calculated with a formula, it’s generally insulated from fluctuations in financial markets. Investment performance will change how much is in the DBD asset pool, but generally, there is a very low chance you won’t receive the amount your DBD formula produces when you retire.
Accumulation accounts let you choose how to invest your super, so you can pick options that target higher rates of return but carry higher levels of risk. You can also choose lower-risk options or sustainable options to build your own portfolio.
Your insurance needs
Accumulation accounts can receive default death and disablement cover (if eligible), with flexible options to suit you. The insurance offered with an accumulation account gives more flexibility, but you’ll pay premiums (deducted from your super) and you can expect insurance premiums to change over time. You can get more or less cover, or none at all.
The DBD comes with inbuilt benefits which are like insurance in that they can cover you if you can’t work due to illness or injury, if you have a terminal illness or pass away. They’re included in your membership at no extra charge so you don’t have to worry about the cost, but you can't cancel or change them.
Accumulation account vs DBD - at a glance
| Feature | Accumulation account | DBD account |
|---|---|---|
| OPERATION | An accumulation account, as its name suggests, generally grows or ‘accumulates’ over time. The value of your super depends on the money that you and your employers put in (known as super contributions), and the investment return generated based on the investment option(s) you choose minus any relevant fees, costs, taxes, and any insurance premiums. The value of your retirement benefit is based on investment returns added to your account, and investment losses coming out - you bear the investment risk and market risk of your super balance being lower when investments, financial markets or both drop. At UniSuper our accumulation account products include Accumulation 1 and Accumulation 2. |
A DBD account is made up of two components – the defined benefit component and an accumulation component.
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| INSURANCE AND INBUILT BENEFITS | You may receive insurance cover automatically. You can cancel, decrease or apply to increase your cover to suit your needs. |
You can think of inbuilt benefits as like insurance, however they are different. Generally, you’ll receive inbuilt benefits for temporary incapacity and disablement, and if you’re under age 60 you also receive inbuilt benefits for terminal medical condition and death. You can’t change, cancel or opt out of inbuilt benefits. You may also receive insurance cover automatically. You can cancel, decrease or apply to increase your insurance cover to suit your needs. |
| ADMIN FEES & COSTS | Fees cover the costs of managing your account and investments. Some are deducted directly from your account balance and some from your investment returns. | The costs of administering DBD members are allowed for in the DBD formula and deducted from the defined benefit pool of assets. No charge is deducted directly from your account. |
| INVESTMENT CHOICE | You can build an investment strategy that's right for you. We have a range of investment options, including sustainable and environmental branded investment options. We offer pre-mixed investments chosen by our experts, or you can build and manage your own portfolio with sector options. | The defined benefit component is backed by an asset pool invested across a range of asset classes including shares, property, infrastructure, bonds and cash. If you have a DBD account, most of your contributions are invested in this asset pool. You can choose your own investments for the accumulation component of your DBD account. |
| ADDING MONEY TO YOUR ACCOUNT | You can add to your super with extra contributions from your take-home pay or savings. This applies to accumulation or DBD accounts. Different rules apply depending on the type of account you have. Check your PDS for details. |
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Explore the DBD and Accumulation accounts in more detail
How to choose
You have two years from when you start in an eligible role at your employer to join the DBD. If you haven’t transferred to the DBD in that two years, you’ll only get another opportunity to join the DBD if you change jobs and get another eligible role.
If you’re unsure what’s best for you, we recommend you contact us or seek financial advice before making your decision.
Happy with the Defined Benefit Division?
