Indexation

Over the past thirty years, Governments have failed to honour their obligation to maintain the real value of military superannuation benefits with realistic cost of living adjustments. For retired, invalid and widowed military members, the value of their military superannuation has suffered significant decline causing falling standards of living. It is exactly the same issue that age pensioners agitated to have fixed in the mid-nineties. The Government corrected the problem for them but they have refused to do the same for the military superannuants. This has greatly disadvantaged those who served their country in uniform, leaving them with incomes that fail to maintain purchasing power.
 
The DFWA has been pre-eminet in fighting the case for fair indexation of military superannuation.  A summary of the issue can be found here.. 
 
We have had some success with our "Fair Indexation" Campaign we ran before the 2013 Federal Election, with the Government in 2014 legislating to provide for fair indexation for all DFRDB superannuants over the age of 55 .. but that still leaves all MSBS and those DFRDB recipients under the age of 55 struggling with inadequate CPI indexation of their entitlements.
 
A number of related Research Papers and Government Reports linked to the issue of Fair Indexation are available on this site.  In addition, some related articles are shown below.
 

Further information on the Fair Indexation campaign, including the new indexation arrangements for DFRB and DFRDB superannuants that took effect on 1 July 2014, can be found on the ADSO website.

PRIVATE MEMBERS LOBBYING - JIM HISLOP AND HERB ELLERBOCK.

Reduction of DFRDB Benefits.  On 16 February 2017 Herb Ellerbock made a detail submission to expose a gross reduction and denial of recipient benefits in the Defence Force Retirement and Death Benefits (DFRDB) scheme. Some aspects apply equally to recipients in the Defence Force Retirement Benefits (DFRB) scheme.  Read his detailed submission here.  A response from Government was received.and does nothing to suggest the Government will re-visit the issue, and no reference is made to updating the long out of date life tables. Read the considered rebuttal of the Governmen's response here.  It is clear that the issues were not analysed in any objective manner, and simplly relied on the bureaucrats feeding the same rubbish to the Minister that has been the hallmark of this matter for decades.

- an Executive Summary of the submission includes a link to an online presentation and is well worth a look

December 2018 update: since the above submission was released, their position has changed in the light of new evidence... read their latest here.. 

14 January 2019: Read the article in The Australian here !

Please note that their website provides regular Updates on their lobbying and is the best site for updated information

 

SUPERANNUATION LOSS CALCULATOR

for indextaion pageA superannuant can 'Calculate their own Loss', courtesy SCOA.

THE ISSUE IN SUMMARY

2001 Senate Review Committee concluded that the original intent of Commonwealth was to provide retirement pay/pensions that maintained purchasing power and that CPI was insufficient to meet that contractual criteria. More than a decade on and they are still "spinning their wheels".

The present military superannuation payment represents an unacceptable minimal level.  Governments must maintain the real value of these payments by adopting an appropriate method of indexation.

Military pensions were originally indexed by the CPI to maintain their value relative to national wages. In the last 15-20 years, national standards of living have increased in real terms, which are not reflected if relying on the CPI in its present form. Acknowledging this, in 1997 the then-Government changed the method of indexing the Aged and Service Pensions from CPI to a combination of CPI and Male Total Average Weekly Earnings (MTAWE) and the present Government further extended this formula to include the "Pensioner and Beneficiaries Living Cost Index" to keep pace with increase in prices and improvements in community living standards.

Military retirement and invalidity pensions now stand out as being more harshly treated than almost every other long-term Commonwealth payment that is subject to regular indexing to maintain its value.

We want the Federal Government to adopt the same percentage increase and the same frequency as used for Age and Service pensions for all components of Military retirement pensions (DFRB/DFRDB/MSBS) including the total reversionary pension for partners of deceased military superannuation pensioners.

Click on this image for a bigger version

Click on this image for a bigger version

Note: In this graph, 'Male Total Average Weekly Earnings' (MTAWE) is the base constant (along the zero line) against which the relative cumulative percentage increase or decrease exists with respect to other classes of Commonwealth pensions or superannuation entitlements as shown.

 

Links to some Indexation related matters prior to 2014 are below:

234 Update - October 2008
New Patron-in-Chief - Pension Indexation - Income and Assets Tests - WA Quilt - Claiming Tax Deductions for Pre-1983 Excess Contributions and Undeducted Purchase Price - Submarine Workforce Sustainability Review - DFWA NSW Branch Raffle - Graded Other Ranks Pay Structure (GORPS) - Defence Force Remuneration Tribunal (DFRT) - Vietnam Veterans Family Health Study
PDF
233 Update - September 2008
Retirement Pension Indexation - Understanding of military retirement pensions by Treasury - Reversionary Spouse Benefits - Minister for Veterans' Affairs, Mr Griffen - Review of Military Superannuation - Strategic Review of the Defence Community Organisation (DCO) - Defence Reserves Association - Vietnam Verterans' Family Study - Undeducted Purchase Price (UPP) Balances - Administration of ex gratia payment to F-111 deseal-reseal workers - Inquiry into ADF mental health services
PDF
232 Update - August 2008
Agent Orange and prostate cancer - Australia's future tax system inquiry - Farewell to their Excellencies! - Salary sacrificing and pension indexation - Suicide in the ex-service community - DFRDB superannuants disadvantaged - again! - F111 Deseal - Reseal Program
PDF
16 July 2008
REVIEW OF PENSION INDEXATION ARRANGEMENTS IN AUSTRALIAN GOVERNMENT CIVILIAN AND MILITARY SUPERANNUATION SCHEMES JOINT SUBMISSION BY: RETURNED AND SERVICES LEAGUE OF AUSTRALIA DEFENCE FORCE WELFARE ASSOCIATION NAVAL ASSOCIATION OF AUSTRALIA ROYAL AUSTRALIAN AIR FORCE ASSOCIATION
PDF
Media 14 May 2008
2008-2009 Budget Response - Sort of OK as far as it goes for Service personnel.
PDF
Media 1 May 2008
Budget Day – Time for Fairness for Military Retirees? - Pension Indexation
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Media 28 February 2008
Report of the Review of Military Superannuation DFWA’s Initial Concerns
PDF
Mike Kelly 21 February 2008
LABOR CANDIDATE DECLARES CHANGES TO COMMONWEALTH SUPERANNUATION AS TOP PRIORITY
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10 January 2008 Parliamentary Library - P0801102051
Military Superannuation - Myths And Reality - Parliamentary Library - P0801102051
PDF
1 November 2007
Open Letter To The Prime Minister And Leader Of The Opposition - Indexation - Commutation - Tax - Unique Nature
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