Military Super Indexation

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1 – INDEXATION – AUSTRALIAS DEFENCE FORCE PERSONNEL SHORT CHANGED

Members of military superannuation schemes are unfairly treated when compared with all other Australians:

  • They paid a higher compulsory percentage of their pay than public servants. They receive a lower average super pension than public servants.
  • Their super pensions are taxed until death. The vast majority of Australians pay no tax on their super pensions after age 60.
  • On the members death, surviving spouses receive 62.5% of their loved ones DFRDB pension. Surviving spouses of pre-2004 Federal MPs receive 83%.
  • Military super pensions do not keep pace with the cost of living. They are indexed using an outdated formula that erodes pension purchasing power. This formula is based solely on the Consumer Price Index (CPI). The Australian Bureau of Statistics (ABS) states "CPI is not a purchasing power or cost of living measure."
  • In 1997 the Government abandoned the solely CPI indexation formula for Age and Service pensions by adding a wages indexation factor. In 2009 the Government continued to protect the purchasing power of those pensions by upgrading the indexation mechanism to be based on the greatest of CPI, the Pensioner & Beneficiary Living Cost Index (PBLCI) and the wages based measure (Male Total Average Weekly Earnings (MTAWE).
  • After 20 years using CPI to index a $20,000 commencing pension, the military superannuant receives far less than they would have received had their pension been indexed in the same way as the Age & Service pensions.
  • Military retirement and disability 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.


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John Ison 11.02.2014 (15:29:59)  
DFRB/DFRDB contributor changing to MSBS on discharge Yes No  

I served continuously with the Regular Army from 24 Jan 64 to 25 Jan 93 inclusive. I contributed to DFRB/DFRDB until about 7-10 days before my discharge (having accepted a voluntary redundancy package). I had been advised that it would be wise to change to the newly introduced MSBS because it would provide around $2.50 per fortnight in pension payment. more than DFRDB. Naturally I took the advice, as, I am aware, did many others of the same voluntary redundancy group.

Having paid into DFRB/DFRDB for one week short of 29 years, will I be included in the over 55 years DFRB/DFRDB group for which fair indexation seems to be about to be announced? If not, what steps can be taken to correct this seeming injustice?

John

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John,

I am sorry for the long delay in replying to you.

The fact is that you made the decision to change to MSBS therefore you will not be a beneficiary of the Governments new DFRB/DFRDB indexation policy. .

1. Having paid into DFRB/DFRDB for one week short of 29 years, will I be included in the over 55 years DFRB/DFRDB group for which fair indexation seems to be about to be announced?

The answer is NO. The government's commitment is to DFRB/DFRDB recipients aged >55 only.

2. If not, what steps can be taken to correct this seeming injustice?

The answer is to make one's voice heard. Join DFWA or another ADSO member organisation and encourage your peers to do the same. Write to your local federal MP. Write to your state senators (all parties). Be assertive but not abusive. Keep informed. Know the facts. Don't give up.

 
   
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Peter \\\"Wally\\\" Law 23.04.2015 (18:16:45)  
MSBS Yes No  

The truth is that everyone was enticed to join MSBS with the carrot of a retention bonus. I had served just on 15 years and it made economic sense at the time to transfer as my sums based on the available information was that the outcomes would be comparable. So I took the bonus and extended the family home. If I had a crystal ball back then - then my decision would be different. Borrow to fund the extension and gain teh benefits of DFRDB indexation. You win some and .....

 
   
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Colin V Alexander 21.10.2013 (20:19:10)  
Defence super -DFRDB Yes No  

I live in a state of constant bewilderment at how easily the government so often retreats from its obligations to defence men and women and their families with total disregard for its duty of care for those affected and the impunity it enjoys. Over at least four decades it has unilaterally breached terms of contract with our DFRDB members and manipulated ABS standards to further reduce entitlements to meet its own needs. This was begun by Gough Whitlam when he politicized DFRDB superannution by confiscation of our contributions and used them for Party purposes. He put Party ego ahead of the welfare of veterans and their families. This opened the door for subsequent Labor governments to act in a similar manner. It is my view that senior public servants simply looking to meet their “dividend” obligations (ie reduce ministerial budget bottom lines) under government orders are the originators of most changes enacted by the ALP. The PS is in fact the PSU and their views on Defence benefits dovetail with that of the ALP. The PS has taken advantage of this situation and Defence personnel are now treated as public servants as evidenced by, amongst other issues, the Matthews review, issue of Public service numbers to all defence members and placement of union officials on the DFRDB Board. These action were simply a slap down of all that have served this country in a Defence uniform. The way I am seeing information received “The unique nature of military service” now only means that if you gain “Qualifyin g service” recognition you will receive a higher level of pay (HDA) for that period and recognition under the Veterans Entitlement Act 1986 if injured or KIA.. This also suits the beliefs of PS fat cats as they have always fought against defence members receiving benefits greater than PS members.# This is a position totally contemptuous of the spouses and families who give up so much in supporting their partners/parent that go off for long periods to participate in the defence of this great country. For members killed or injured in training and the impact on families, or, for example living for long periods of time in Asbestos laden ships, whether in peace or war which placed a threat of Mesothelioma over them for the rest of their lives also reflects a position of disdain. Some members might remember how Adm David Martin, and later, Governor of NSW died. It was not pleasant to watch.

The time is well overdue for “the unique nature of military service” to again be recognised for what it means. This includes a return to a separate working superannuation fund for veterans.

Defence members are not Public Servants simply because they sign their lives over to the government for the protection of this country. Conversely the PS seeks the protection of defence members and all the laws of the land for themselves and their families but denies defence members recognition of the “Unique nature of military service”... It is simply not good enough for defence members to be treated this way.

# How it all Began -Australian Defence Forces Schemes 1909-1979 - Supplement to Vol XI, No 4, November 1979 issue of Regular Defence Forces Welfare Association “CAMARADER IE”

If I am incorrect in any way. Please let me know.

 
   
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Darryl Genrich 18.09.2013 (13:31:25)  
Indexation, post commutation Yes No  

DFRDB Super Pension. Have been wondering for sometime how indexation is calculated post commutation. i.e.Is it calculated on the original full pension value or only on the reduced value post commutation?
Would much appreciate clarification.

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The information is taken from the DFRDB Book 2012, Page 13 and 14.

Commutation amount and retirement pay increases.

If you commute less than the maximum entitlement, and you elect to commute between four and five times your retirement pay, the total amount of the remaining retirement pay is CPI indexed. However, if no election is made to commute, or you elect to commute less than four times your retirement pay, CPI indexation will only be applied to your notional retirement benefit, which is the rate of retirement pay that would be payable if you had elected to commute four times retirement pay. The only amount indexed is that which you would have taken if you commuted and it is calculated on the commuted amount. Even if you chose not to commute the difference between the amount had you commuted and what you receive is not indexed.

We know that COMSUPER has chosen not to continue with this book but the information is still good.

 
   
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Terence Dillon 24.06.2013 (02:59:31)  
Military Super Yes No  

When I started paying into my military super in 1959 I was told
that my life expectancy was to 70 years old. How is it that I am now 73 and still paying.

 
   
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Jack Pettigrew 23.06.2013 (16:51:46)  
Yes No  

I see that Tony Abbott has pledged to fix the unfair indexation, but only for DFRB and DFRDB recipients. Us MSBS superannuants have been cut loose - if the pledge is honoured. Dont hold your breath.
It makes me sick every time a politician laments another diggers death in public, while in private they dont care about the unfair indexation.
And as for Warren Snowden, he labels any request for a review of this system as a stunt.

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Regardless of the Election result ADSO will continue its campaign to secure fair indexation without exclusions for all military superannuation schemes. We are confident the Coalition will deliver on their pledge in their first budget in Government.

 
   
       
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Daryl Roe 14.03.2013 (14:55:44)  
DFRDB Yes No  

Just read this. I am happy he is promising again, but dont count the chickens until it is done.
http://www.dailytelegraph.com.au/money/superannuation/abbott-promises-better-deal-for-military-super/story-e6frezci-1226597294113

 
   
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Kelvin Liddiard 07.03.2013 (12:57:51)  
Submission to Goverrnment re Unfair Indexation Yes No  

1. Can I ask if consideration has been given to asking for the 15% taken from us during Whitlams time will be returned to us.
2. Those of us who commuted some of our DFRDB have since paid it back, why has our DFRDB not been reinstated to full pension status.
3. These questions really need to be incorporated in the submission as we will only have one attempt addressing this injustice. There wont be another opportunity as the Government of the day regardless of who is in power will not entertain additional submissions for the wrongs of the past.

 
   
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wayne crowhurst 29.11.2012 (00:23:38)  
hmas success Yes No  

I,as leading seaman shipwright, had the misfortune , to be !crash drafted! to the newest and the worst ship i have ever been on. The main deck was so rusted , it was left as the navy had commissioned it for admirables inspections, The major fire system, a 250 mm canife line designed to handle 3 to 11 bar of hot and cold sea water, was " PUT" together, using mild steel nuts& bolts. FURTHER MORE...the main isolation valves on same said line, stripped out the thread on the shaft and were rendered inoperable,beca use the wrong material was used. AND THAT WAS ONLY THE START, Im not even mentioning the problems the OMNIPURE reclaimation system...

 
   
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Steve Alder 10.10.2012 (20:15:01)  
Food For Thought Yes No  

Hi.

I had the honour of serving in the RAAF for twenty-three years after enlisting in 1964. Like all concerned veterans and their immediate families Im deeply concerned about the erosion of our superannuation contributions and pension payments.
In my opinion, statistical graphs, and the like, are good in picturing and presenting increases, decreases , when looing at the declining real value of the military superannuation that is currently linked to the CPI. Successive governments over the past decades have been full of hollow promises and fixing this gross inequity by putting this "problem" into the "too-hard" and "expensive" basket. I believe that the following scenario is worthy of further pushing to the wider Australian public and our political leaders.
A convicted criminal serves, at tax payer and government expense, twenty years or more incarceration. They get a minimal payment whilst in jail but pay no real tax to the government . On release, and once reaching age 65 years they apply for the government Age Pension which is then quickly granted and they sit back in the knowledge that this pension will increase and guaranteed to keep pace with inflation.
One the other hand, the retired Service Veteran faithfully served and gave twenty years or more in the dedicated service of our Country, paying tax all the way along. What can they look forward to ? More of the same erosion by having their payments continually linked to the so-called CPI. I believe that all politicians should have a very close look at their own positions in relation to their generous superannuation benefits and get in touch with reality. Im sure that Peter Criss would be particularly interested in my particular views and perhaps keep this one in mind when filling his ammunition magazine for the next sortie.

 
   
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