Iron Mark has pledged to close down the most generous super schemes in the country – those for the judges and politicians.
Mark Latham pulled out his big superannuation announcement today and you can read all the details here.
Iron Mark has pledged to close the highly lucrative superannuation
schemes for Federal MPs, judges and the Governor-General to new
entrants, though his cabinet closed down plans to strip existing
members of their benefits.
The only group of pollies Crikey is aware of that voluntarily cut their
superannuation entitlements was the Kennett government in 1993 and even
the great Victorian dictator came close to his first and only Cabinet
defeat on that one.
Over the last month we have been investigating the unfunded
parliamentary and judicial super schemes around the country. This
is how it unfolded:
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MORE ON UNFUNDED SUPER
Sealed section January 21
Tortfeaser, a cardigan-wearing guru on unfunded public service
superannuation, has earned himself a free sub with this insight into
The unfunded Parliamentary and judicial schemes are a drop in the
bucket compared to the potential cost to the budget of the public
service schemes. Civilian Commonwealth Government employees are either
members of the Public Sector Superannuation Scheme (PSS) and the
Commonwealth Superannuation Scheme (CSS or receive Superannuation
Guarantee equivalent benefits through arrangements under the
Superannuation (Productivity Benefit) Act 1988.
Figures below refer to the PSS and CSS schemes that cover the vast
majority of Commonwealth employees. I’ve included some detailed info on
these schemes below.
Total assets: $9,805 million
Total unfunded liabilities: $58.4 billion at 30 June 2002, estimated at $56.0 billion at 30 June 2004
Number of members: 169,669 at 30 June 2002
Estimated annual cost to the Commonwealth: $2,748 million at 30 June 2004
There also exists the Defence Force Retirement and Death Benefits
Scheme (DFRDB) and the Military Superannuation and Benefits Scheme
(MSBS). The DFRDB and MSBS are the schemes for Defence Force personnel;
the DFRDB was closed to new members on 1 October 1991 when the MSBS was
established and existing DFRDB contributors were given the choice of
transferring to the new scheme or remaining as members of the closed
Total assets: $806 million at 30 June 1999 (MSBS)
Total unfunded liabilities: $23.7 billion at 30 June 1999
Number of members: 51,552 at 30 June 1999
Estimated actual Commonwealth employer cost: $1,350 million (year ending 30 June 2004)
CRIKEY: That makes about $80 billion in unfunded liabilities and $4
billion in annual cash costs to the budget – all for public servants
who aren’t even serving the public anymore. No wonder the Howard
ministers always took about reducing total debt rather than the broader
and more honest figure of total liabilities.
INSIDE THE FEDERAL PARLIAMENTARY SUPER SCHEME
Sealed section January 16
Our offer of a free sub for really good information on judicial or
political super schemes has yielded this excellent summary of the rort
that is the Federal Parliamentary scheme.
Firstly, can you believe that is completely unfunded? Not one dollar
has been set aside to cover the liabilities of this extraordinarily
generous scheme. Wasn’t the Howard Government going to bring
responsible financial management? Cozzie, is anybody there?
Then you have the even more extraordinary situation in which we have no updated financial information beyond 1996.
The total liabilities of the scheme as at June 30, 1996, were $371
million. At that time, the scheme had 224 contributors, 226
ex-contributor pensioners and 86 spouse pensioners.
That makes 536 people sharing in $371 million so each had an average
taxpayer funded benefit of $692,164 way back in June 1996, three months
after the Howard Government came to office.
Taxpayers spent $17 million paying benefits to the members in 1995-96
but we apparently don’t have any breakdown or disclosure of the $100
million plus that has been paid out since then.
VIC AND NSW POLLY SUPER FUNDING – A STUDY IN CONTRASTS
Sealed section January 13
More details have emerged on the Victorian Parliamentary super scheme.
There are 132 members who are currently in Parliament and a further 159
retired MPs or surviving spouses.
The scheme has been fully funded for the past 5 years and has $190
million in assets which equates to $652,921 for each of the 291 members.
This is not as generous as the federal judges scheme which has 200
members and $339 million in liabilities – equating to a staggering $1.7
million for each judge. This is almost three times as generous as the
Victorian Parliamentary scheme.
The Victorian scheme became fully funded thanks to the following
additional contributions authorised by the Kennett government and some
excellent investment returns as follows:
1996-97: $18.45 million injection and 19.9 per cent investment return.
1997-98: $18.1 million injection and 13.9 per cent investment return.
1998-99: $8.1 million injection and 7.8 per cent investment return.
The Carr Government is way behind their Victorian counterparts as their
parliamentary scheme still has a $115 million unfunded liability and
annual taxpayer contributions are projected to rise from $10 million to
$15 million over the next three years.
Meanwhile, a subscriber explains the cutback in military super which
still comprises the majority of the $85 billion unfunded for current
and former federal government employees.
“I used to be in the army, where from about 1989 onwards, anyone who
joined up would have to go for the new ‘super’ scheme where they would
have to work till retirement age rather than the 20 year pension
available to those who joined prior to this date.
One of the reasons I heard around the traps was that a ‘new’ scheme had
to be introduced because the old one was costing the govt. too much
money and that the old scheme was linked to the politician’s and any
changes for the ADF would have similar effects on that of the polly’s
Finally, a subscriber writes:
“Here’s a nice little summary of how a federal politician’s super works:
Those charts and tables sure show how generous it is. Looks like Peter Andren tried to change it too.
Check it out, Davo”
VICTORIAN POLLIES ARE FULLY FUNDED FOR SUPER
Sealed section January 12
Details are starting to come in about the various judicial and
political superannuation schemes across the country but today we’re
focusing on the Victorian Parliamentary scheme. It is fully funded and
has about $190 million in assets set aside to keep several hundred
current and retired politicians in pensions for life.
When Joan Kirner left office in 1992 it was estimated the total
liability was only $80 million but this has soared because a higher
proportion of retired members opted for the generous pension ahead of
the lump sum.
Kirner was a complete disgrace with super funding as she even borrowed
the majority of the assets from the parliamentary scheme to help fund
the budget deficits when the Loan Council was refusing to approve
increases in borrowing limits.
Jeff Kennett deserves credit for reducing Victoria’s overall unfunded
liability for superannuation from $18 billion to about $11 billion but
the pollies did get special treatment with an extra $100 million being
pumped in to make it fully funded.
However, at least the Victorians can claim that all the old defined
benefit schemes are fully paid. This includes judges, cops, firies and
This less privileged public servants in the new accumulation scheme
only enjoy about 40 per cent funding because unfunded liabilities have
risen a couple of billion under the Bracks government to about $13
billion although they are scheduled to be fully funded by 2035.
Meanwhile, a subscriber has summed up how many of us feel about the hypocrisy of parliamentary super schemes:
“Your pursuit of the superannuation issue is welcome and appropriate.
When the rest of us battle with the open markets to eke out a
retirement income, with the attendant burden of new Government
surcharges on contributions, it is hardly an equitable situation that
politicians and judicial appointees continue to enjoy this level of
protected benefit whilst forever raising the bar for the rest of us.
The politicians are the very people who have seen fit to close off all
defined benefit schemes for their employees, recognising the
unsustainable nature of the benefit, but continue to exempt themselves
whilst taking from the very same purse they seek to protect. Go figure!!
For my part, I believe all new judicial appointments/elected
representatives should be provided with an overall package and the
allocation to super, cars, salary etc would then be a matter for them
individually. This approach would reflect the true value (and
cost) of what is on offer and may possibly lead to interest being shown
by higher callibre people if the true value was revealed.
They often quote what the PM or Premier gets paid but in package terms
they are probably worth two or three times the quoted salary.
Good on you Crikey, Subscriber 4275″
Check out more sealed section material on this issue here.