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PENSION INDEXATION |
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How does this affect retired Public Servants?
If for example you retire on a $30,000 a year pension, after 20 years you will be receiving $15,000 p.a. less pension than you would have received had your pension been fairly indexed like the Age Pension.
| “Successive Governments have treated their former employees as second class” |
In that same 20 year period you will have lost $127,000. Can you afford this?
SCOA recently received advice from an independent actuary that confirms SCOA’s long held opinion that the Government’s estimated cost of fair indexation is overstated, due to questionable actuarial assumptions made by the Government’s actuaries.
That advice indicates that the cost estimates could be at least 50% overstated.
For example the Government’s actuary has assumed that if fair indexation was provided that there would be a greater take up by PSS and MSBS, (military) superannuants in using their lump sum to purchase additional indexed pension.
There is no actuarial evidence to support this assumption which our independent actuary
believes would be inflating the cost estimates by 30%.
Cost is forever cited by Governments as the reason for no change despite the fact that in budgetary terms the cost is very small and there will be at least 30% cost clawback due to reduced Age Pension expenditure and increased income tax revenue.
SCOA argues that the cost of fairly indexing Commonwealth pensions can be made from the Future Fund, which at 31 December 2010 held a massive $72 billion.
We are lobbying the Government to use it for that purpose.
Some say that it’s not so much a cost but rather the value of what’s been stolen from the Government’s former employees.
Both the Treasurer, Wayne Swan and the Public Service Minister, Gary Gray have separately said on radio recently that they value and appreciate the work of Public Servants.
If that is so, why do they treat their former employees and former members of the Defence Force as second class Australians by refusing to index their pensions fairly?
To add insult to injury, Commonwealth superannuants’ pensions and any non super income they receive are taxed in a most discriminatory manner and SCOA is also lobbying to have this inequity addressed.
So, if you are soon to retire you should plan your financial affairs very carefully and make allowances for the fact that your pension won’t maintain its purchasing power and that in time you will need to supplement your pension with any retirement savings you might have.
If you require further information about these issues you are welcome to call the Superannuated Commonwealth Officers’ Association on 6286 7977.
We are a non political, not for profit organisation that has pursued retirement issues for former public servants for almost 90 years.
* John Coleman is Vice President and Indexation Campaign Manager for the Superannuated Commonwealth Officers’ Association. |
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Fair go Overdue for Commonwealth Superannuants by John Coleman |
* PSNews article 24 May 2011
Retired APS staff fighting for ‘fair’ indexation of their pensions are looking for more people to join the fight says John Coleman...
For many years the Superannuated Commonwealth Officers’ Association, SCOA, has been lobbying both Labor and the Coalition to have Commonwealth Superannuants’ Pensions indexed fairly.
Their pensions are indexed by the CPI, an indexation methodology that was abandoned more than a decade ago for other Government funded pensions. The Australian Bureau of Statistics says that the CPI is neither a purchasing power nor cost of living measure. In the past 20 years Commonwealth superannuation pensions, which average less than the combined couple rate of Age Pension have risen by exactly half, (70%) the rate of the pensions of retired Federal MPs, (140%) who joined Parliament before 2004 and by only slightly more than half the percentage rise of the Age Pension, (130%). Despite three Senate Inquiries all recommending a fair wage-based index, successive Governments have continued to treat their former employees as second class Australians by refusing to adopt the Senate Committees’ recommendations. All we seek is the community standard for indexing Government funded pensions. More... |
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| Measuring Quality Inflation AND Adjustments to Prices for Technological Improvements and Quality Changes in Price Indexes |
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