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does nothing to suggest the Government will re-visit the issue, and no reference is made to updating the long out of date life tables.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:

247 Update - February 2010
Accident and Death Insurance for Serving Members - Release of Service records - Military Superannuation: ABC Q&A Program
PDF
246 Update - December 2009
Meeting with Minister Tanner - Responses from members of parliament - Release of the ESOs Major Issues Paper - Veterans who Reside Overseas - Correct Reference to Casualties - ADF Families Survey
PDF
18 November 2009
Fielding Speech - Extract From Hansard Senate
PDF
11 November 2011 Thornton
A Brief Analysis of the “Net Cost” of Improved Indexation
PDF
Fact Sheet 1 - Military Superannuation Indexation
3 October 2013 Fact Sheet 1 Military Superannuation Indexation: The Issue In A Nutshell
PDF
245 Update - November 2009
Military Rehabilitation and Compensation Commision - Indexation: meeting with Minister Tanner - DVA Advocacy Review - Unique Nature of Military Service
PDF
244 Update - October 2009
Response to Matthews - ADF Deaths on Operational Service
PDF
30 September 2009
RESPONSE TO THE REVIEW OF PENSION INDEXATION ARRANGEMENTS IN AUSTRALIAN GOVERNMENT CIVILIAN AND MILITARY SUPERANNUATION SCHEMES (THE “MATTHEWS REPORT”)
PDF
Fact Sheet 3 - Government Indexation Inquiries
December 2009 - Fact Sheet 3 Government Inquiries Relating to Indexation
PDF
Mike Kelly 10 September 2009
Government Civilian & Military Superannuation Schemes
PDF


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