Why the CSS Surcharge factors have increased substantially for members at age 54.

The surcharge factors for CSS members have increased over those provided last year for members under age 55 - in particular for members aged 54.

Surcharge factors are calculated by the Australian Government Actuary and are based on assumptions as to what is likely to happen in the future in relation to the scheme.  These include financial assumptions, such as expected future salary increases, and assumptions on the rates of retirement, resignation and death.  These assumptions are generally set based on the experience of the plan together with projections into the future.

For many members of the CSS, the benefits payable on resignation just before 55 are higher than resignation benefits payable immediately after age 55.  As such many members choose to retire just before 55.  Over the last year the assumptions used to calculate the surcharge factors have been updated to reflect the increasing number of members resigning from service just before 55.  This change in the assumptions has increased the value of your accruing CSS benefits for taxation purposes.  This in turn has lead to the increase in the surcharge factors."