Examination of Government superannuation

June 26, 2008

The Member for Eden-Monaro, Mike Kelly, says today’s announcement of a review of the pension indexation arrangements for Australian Government superannuation honours his election commitment on the issue.

Mike Kelly, Member for Eden-Monaro

“I promised this would be reviewed and worked hard to ensure this would happen. I would like to thank Nick Sherry and the team for responding to my call,” Dr Kelly said.

Dr Kelly said the issue was that these super pensions were not treated on the same playing field as others like the age pension.

Age pensions are indexed on either average weekly male earnings or CPI whichever is the higher.
Commonwealth civilian and military superannuants are indexed exclusively on the CPI.
Announcing the review, the Minister for Superannuation and Corporate Law, Senator Nick Sherry, said it would consider and report on whether:

• the purpose of indexation in these schemes meets the obligations of the Australian Government as an employer; and whether
• indexation of superannuation by growth in the CPI, over a specified period, is an appropriate measure and/or whether there are more appropriate measures.

Senator Sherry announced Trevor Matthews MA, FIA, FIAA, ASA, has accepted an invitation to lead the review.
Mr Matthews, an international leader in the global pensions and life insurance industry, is an Australian citizen, past president of the Institute of Actuaries of Australia and is currently a prominent actuary in the United Kingdom.

“The inquiry will be starting from scratch because the previous Government did no work at all on this issue,” Dr Kelly said. “Because of this we have no idea of what the costs over what period would be of treating commonwealth superannuants the same as other pension recipients and how this could be accommodated in forward estimates. The fact that the previous government put no effort at all into this shows the contempt with which they held these people, turning a deaf ear to their plight. It has placed us in a difficult position with a lot of work to do.”

“Most Commonwealth superannuant pensioners in Eden-Monaro have an average pension of around $21,000 a year with that usually supporting a couple. Many of these people are veterans who have served this country faithfully and deserve to have this issue addressed.

“I look forward to the outcome of the review and will advocate strongly for something to be done to correct the current anomalies in the system,” Dr Kelly said.