Australian Council of Public Sector Retiree Organisations (ACPSRO)
ACPSRO is the peak council for organisations representing retired civilian and military public sector workers from the Commonwealth, State and Territory governments. The number of people represented by our grass roots organisations is in the region of 700,000. When their dependents are taken into account the people we are speaking for number about 2 million Australians or almost 10% of our population. On matters of common interest the members of ACPSRO ask the President to approach Government on their collective behalf.
How to contact ACPSRO
Australian Council of Public Sector Retiree Organisations
12 Muresk Street
FARRER ACT 2607
Tel: 02 6248 9609
Mob: 0412 164 404
Fax: 02 6248 0709
The ten percent cap issue explained
One of the issues ACPSRO, together with SCOA, has been advocating on recently, is the so-called Ten Percent Cap issue. In the following, you will find comments and links to what we have done so far. Please check this page regularly. It will be updated as we continue to pursue this issue and achieve the outcome we want for our members, the repeal of the legislation.
The 2015 Budget measure known as the 10% Cap came into effect on 1 January 2016.
The measure reduced from 50% to 10% the amount of tax-free income that defined benefit pensioners can exclude from the age Pension income test. The only justification that has ever been provided by the Government has been based on pensioners’ pre-30 June 1983 service.
The then-Minister for Social Services, Mr Morrison, gave, as his one example, that it is possible for a retiree couple on a defined benefit pension of $120,000 pa to receive a (very small) part Age pension. To their credit, on 25 June 2015, the Australian Greens, in the Senate debate on the measure, expressed misgivings about the likely actual effects of the 10% Cap, and promised to review the matter if their misgivings proved justified.
On 9 March 2016, after the effects of the 10% Cap would have become clear, ACPSRO wrote to the Minister for Human Services, requesting simple data about its impact on various levels of retirees’ income and, in particular, how many of those affected had no pre-30 June 1983 service at all.
Eventually, after attempts by the Office of the Minister for Social Services to avoid answering, eg claiming the Caretaker Convention, the Department of Social Services responded on 18 May 2016. In the second paragraph of the second page, the Department advised that it does not hold “administrative data” about who has, or has not, any pre-30 June 1983 service. The subsequent data provided in that letter, however, demonstrated that the financial effect of the 10% Cap measure has fallen predominantly on defined benefit pensioners on quite modest retirement incomes. Almost none of the data appears to to match Mr Morrison’s May 2015 example of a retiree couple with a defined benefit pension of $120,000 who had been receiving a part Age pension.
On 13 July 2016, after the General Election, ACPSRO wrote to the Minister for Social Services, pointing out the inconsistency of the data with the original claimed intention of the 10% Cap measure, and requesting corrective measures be taken.
On 16 August 2016, a departmental officer responded on behalf of the Minister, maintaining the original official line on the justification for the 10% Cap. ACPSRO responded on 26 August 2016, pointing out why the original concern about pre-30 June 1983 service is misconceived and, more pertinently, that imposing the 10% cap measure on retirees with no pre-30 June 1983 service is quite unjust.
In the same late-August period, ACPSRO wrote to the Australian Greens, requesting them to make good on their 25 June 2015 promise to have the matter reviewed if experience demonstrated unintended consequences, and sent letters to the Senate cross-bench, for example to Senator Xenophon, providing them with the background if the matter comes up for discussion.
On 9 December 2016, the Government’s “answers” to a number of Greens’ Questions on Notice that had been asked in Senate Estimates hearings were published here. Readers can see that most of the questions were not answered and ACPSRO released a media statement on 16 December 2017 which concludes:
“We are approaching the anniversary of the implementation of the 10% cap policy. Its history is replete with prevarication, prejudice and now more evasion. As they reflect on the cuts to their own retirement incomes, many far from affluent defined benefit retirees feel bitter contemplating the tax cuts and pork-barreling which the Government has felt able to provide to others this Christmas“.
ACPSRO is not aware of any subsequent action by politicians of any party to query or seek further advice on the Government’s non-answers on the 10% cap.
At that point (i.e. December 2016), strident public protests commenced about changes to the age pension assets test, which were to apply from 1 January 2017. One saving grace for those pensioners was that at least that 2017 assets test measure did not affect part-age pensioners with smaller asset levels. That is in contrast to the 2016 10% cap, which reduced the age pensions of even low-income defined benefit pensioners if more than 10% of their benefit defined pension was tax-free income derived from the retirees’ own contributions.
In early 2017, outcry about both those issues – the 10% cap and the assets test changes – was swamped by even wider public concern and ridicule about Centrelink’s attempts at automated data-matching to recover claimed over payments of all forms of pensions and allowances. The public furore obviously won’t help defined benefit pensioners who were affected by the 10% cap but it may give them some satisfaction to watch the Government’s continuing discomfort.
ACPSRO recommends that member organisations bring this compendium of documentation to the attention of affected retirees so that they may raise the matter with politicians.
On an associated matter, ACPSRO has made a submission to a Senate inquiry into legislation which attempts to define the objective of superannuation. Readers will see that the thrust of ACPSRO’s submission is that any consideration of the objective of superannuation must include how to maintain real world purchasing power of all forms of superannuation income.
The above quoted documents are also available in the table below.