 | Fleet Air Arm |
| Fleet Air Arm |
Updated 4 July 2010
A Coalition Government would introduce new indexation arrangements for Defence Force Retirement and Death Benefits Scheme (DFRDB) members, according to a Coalition media release.
Under a Coalition government, from 1 July 2011, those DFRDB members aged 55 years or older would have their military superannuation pensions indexed to the greater of the Consumer Price Index (CPI), Male Total Average Weekly Earnings (MTAWE), or the Pensioner and Beneficiary Living Cost Index (PBLCI).
Widows of DFRDB superannuants would also benefit from the announced changes, accordi9ng to the statement.
"This is a fully-costed and fully-funded policy. Savings already identified by the Coalition will be used to offset the $98 million cost over the forward estimates. A further $100 million will be invested into the Future Fund as a first step towards funding the new arrangements beyond the forward estimates.
"This change brings into line the indexation of DFRDB superannuation with the aged pension. Currently DFRDB superannuation is indexed according to the CPI.
"If the indexation rate had increased in line with the aged pension, military superannuants would have received an extra $28.40 per fortnight to their pension (if they received the full pension rate) in March this year," the statement said.
Tim McCombe, National President of the Defence Force Welfare Association, said the new indexation would be the same for Service, Age, Widow etc pensions; that is, indexation increases would be in line with increases in the average wage or cost of living whichever is the greater. The new indexation would begin in July 2011.
However, the policy included no increase in pensions to compensate for the erosion of value caused by past unfair indexation, he said.
Also, the policy did not include increasing the percentage of the pension widows receive. Presently, that percentage is 68% compared with 82.5% for the widows of politicians.
Neither did the announcement include making superannuation pensions tax free as many other superannuation pensions have been made, nor using up-to-date life expectancy tables which influence important calculations.
"Without these other issues being addressed, the benefit to many superannuants may be marginal.
This is because many DFRB/DFRDB pension recipients also receive a means tested Part Service Pension. Any increase in DFRB/DFRDB pensioners will reduce the Service Pension by 50cents for every dollar. And that means-testing will be done on the before-tax value of the superannuation. For those over 65, the benefit may be even more marginal because, after that age, the Service Pension as well as the superannuation pension may be taxed," he said.
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