To Right The (Seemingly) Unrightable Wrongs
This update was produced on 28 August 2009
The debate on rectifying the many deficiencies identified in Military
Superannuation Schemes has been raging for far too long. Despite Senate
Select Committees and other reports having recommended improvements, our
government has chosen to ignore the majority of them. To this very day it
refuses to believe that there is any need to change the method of
indexation of military superannuation pensions.
Two issues, which affect the vast majority of retired military personnel
and negatively impact on their standard of living in retirement, are:
1. The inequitable CPI
indexation of military superannuation pensions, resulting in their
relative value being some 35% below what they otherwise would have been
had there been a linkage to a wage based index (e.g. MTAWE) such as has
been applied to the age/service pension. Such a disparity denies current
and former members of the ADF an equitable and appropriate share in the
nation’s productivity outcomes and in reality seriously erodes their
standard of living.
Despite the government’s
decision on 21 August 2008 NOT to act on this matter, we believe that
Military pensions and
Preserved Benefits should immediately be indexed at the higher of CPI or
2. The use of out-dated
life expectancy tables causes current and future retirees to suffer a
lower rate of pension by having to repay a larger amount over a lesser
number of years than would be the case if current life tables were used.
Combined with the inadequacy of indexation, previously discussed, this
adversely affects the standard of living able to be enjoyed by the
Amend the legislation to provide that existing DFRDB pensioners revert to
one hundred per cent of pension fully indexed once the life expectancy
upon which repayment was based has been exceeded AND to provide
that for all future retirees the life table to be used in the calculation
of the repayment of the commuted amount be the life table current at the
date of the election to commute.
can you help?
We would appreciate your assistance in lobbying government ministers and
other people of influence to;
least the discrepancies in military superannuation schemes as detailed
above rectified as a matter of priority.
A brief summary of events impacting on military superannuation issues
over the past two and a half years follows for your information.
A Review of Military
was commissioned on
27 February 2007
2007, the Howard Government commissioned a comprehensive review of
Military Superannuation. The Terms of Reference (TOR) for that review can
still be found on the
Defence Force website. Of particular interest, the TOR listed the
unique conditions of military service which the review team was to take
into account in developing its proposals.
Ex Service Organisations
and those with an interest in Military Superannuation were invited to make
submissions to the Review Team. While many submissions were made; those
Defence Force Welfare Association’s National Office and an associated
detailed submission by the
NSW Branch of the DFWA provide a good overview of the major
deficiencies within the various acts controlling military superannuation.
These submissions focused
on those issues that related to:
Older schemes –
DFRB and DFRDB – noting specific deficiencies and argument for their
from the introduction of the Government's "Simple Super" taxation
Report of the Review into Military Superannuation Arrangements
was completed before the 2007 elections and released by the Rudd
Government in late December 2007. It drew much criticism and in the
opinion of the President of the Defence Force Welfare Association, "it
should not be used as a basis for decision making by the Government".
28 February 2008
Following the release of
the report a joint
RSL-DFWA working group prepared an
interim response indicating some of the areas of concern with the
report. The group subsequently met with the Review Team to address these
and other technical issues, before finalising a full response on behalf of
the major ex-service organisations.
The Review Team
subsequently provided on 6 March 2008
answers to the questions posed in RSL-DFWA interim response. Those
answers were considered in formulating an agreed response to the report.
The DFWA and the Returned
and Services League (RSL) submitted on 19 March 2008 a combined response
to the Report of the Review of Military Superannuation. The following
links will provide you with the complete details of that response:
little evidence of any further action on the Podger Report. However the
Government in mid 2008 implemented a review into the cost of any change in
the method of indexation of military pensions.
Review of Pension Indexation Arrangements in Australian Government
Civilian and Military Superannuation Schemes was established on
26 June 2008.
The review was conducted
by Mr. Trevor Matthews, MA, FIA, FIAA, ASA, a prominent actuary in the
terms of reference for the review, Mr. Matthews considered and
reported on whether the current CPI pension indexation methodology in
these schemes should be changed, having regard to:
occupational nature of those schemes;
form and value of the benefits payable under those schemes;
indexation arrangements in similar defined benefit schemes in Australia;
interaction with government safety net benefits; and
full cost to the Commonwealth.
Submissions to the review were called for by 19 July 2008.
Submissions were also made
directly to Mr. Matthews at
hearings held in Canberra on 24 and 25 July 2008.
The review also received
information on the
compilation of the CPI.
Once again, the DFWA swung
into action and provided the following advice on the actions it took in
respect of this latest review. It noted the current disadvantage suffered
by military superannuants when compared with superannuants on other
indexation arrangements to be a matter of significant concern to all
serving and retired ADF members.
The inequitable CPI
indexation of military superannuation pensions has resulted in their
relative value being some 35% below what they otherwise would have been
had there been a linkage to a wage based indexation (e.g. MTAWE) such as
has been applied to the age/service pension. Such a disparity denies
current and former members of the ADF an equitable and appropriate share
in the nation’s productivity outcomes and in reality seriously erodes
their standard of living.
has been consistently recognised by members of Senate committees and a
wide range of current parliamentary representatives across the party
spectrum. The Association remains very perplexed that for so long
successive governments have chosen not to act and continue to
treat Australia’s military superannuants so inequitably.
The following links provide access to information on the DFWA's lobbying
on this matter:
On the 16 July 2008 a
joint RSL DFWA NAA RAAFA
Submission was made to the Indexation Review.
Prior to making the above
submission DFWA had produced on 3 May 2008 a pre-Budget
statement on the indexation of military retirement pensions. It
highlighted that on 20 March 2008, the Senate Community Affairs Committee,
report of its inquiry into Cost of living pressures on older Australians,
recommended immediate action by the Government to "index Commonwealth
funded superannuation benefits and the military pension to Male Total
Average Weekly Earnings or the Consumer Price Index, whichever is the
higher, as is currently the practice with the age pension."
Mr. Matthews’ report was
provided to the Government as scheduled at the end of the 2008 calendar
year and, after much delay, was released to the public on 21 August 2008.
Mr Matthews recommended
that pensions from the Australian Government civilian and military
superannuation schemes continue to be indexed by the CPI as it is the most
suitable index to protect pensions against inflationary price increases
available at this time.
Lindsay Tanner, the
Minister for Finance and Deregulation, in his media release 52/2009 said
that the Rudd Government fully supports the findings and recommendations
outlined in the report.
“The Rudd Government is
satisfied, after considering Mr Matthews’ report, the purpose of
indexation of civilian and military superannuation pensions should
continue to maintain the purchasing power of the pension.
will find a small extract of what the Defence Force Welfare Association
had to say about the Matthews Report and the failure of our government to
take any action to rectify the many deficiencies with military
Report - conveniently released the day Parliament went into recess -
blandly recommends that military superannuation schemes continue to be
indexed by the CPI. The Government has refused to provide ADF
superannuants with adequate protection against cost of living increases
Six parliamentary inquiries
recommending military superannuation pensions be better indexed.
The Prime Minister Mr Rudd
criticising the Coalition for its failure to implement the findings of
these inquiries during the last election campaign along with many Labor
candidates who offered their strong support – their silence on the
matter is now is deafening.
The Australian Bureau of
Statistics openly stating that the CPI simply does not reflect the cost
WHAT IS IT WE
indexation of our pension using the SAME formula that applies to Aged and
Service Pensions! Why should we be treated differently … and why should
we have our standard of living continually deteriorate??
SOME RELATED DOCUMENTS
The full Matthews Report
can be found
A DFWA Facts Sheet on
A DFWA Facts Sheet on
Defined Vs Accumulation Superannuation Schemes is
A graph showing the
increases in Aged Pensions, Military Superannuation Pensions and
Parliamentary Pensions is
The DFWA Press Release
regarding the Matthews Report is
write to the Prime Minister, his ministers, your local MP, and any other
person of influence you may know, to have the many known deficiencies in
military supperannuation schemes corrected as a matter of urgency. A
concerted effort is obviously needed to have this government take action
to repair the inadequacies that exist in Military Superannuation Acts.
Your support of the DFWA’s efforts to improve our situation in retirement
Address: 2 Naughton Grove, Blackburn, Vic 3130
'Phone/Fax: 03 9877 6067
Mobile: 04 2938 1862
Date: 28 August 2009
Notes: 1. Much of the Information contained in
this brief has been drawn from the Defence Force Welfare Association (DFWA)
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