Policy Issues

Some Defined Benefit Pensioners will lose or have reduced their part Age Pensions from January 2016 30 Nov 2015

Do you receive a part Age Pension? If so this is important information for you.

Note This information is only relevant to people who receive a part or full Australian Government Age Pension in addition to their RBF Contributory Scheme Life Pension (which is a defined benefits pension)

If you receive a part Age Pension in addition to your RBF Contributory Scheme Life Pension, you would have recently received a letter from Centrelink advising of changes to the assessment of income from defined benefit income streams and that your part Age Pension could be affected from the 1st January 2016.

The amount of your Tax Free Component that you can deduct from a Centrelink income test will now be capped to a maximum of 10% of your defined benefit life pension.

This is as a result of recent legislation passed by the Federal Parliament. The Minister for Social Services at the time, Hon Scott Morrison (now Federal Treasurer) indicated that this measure was aimed at reducing the amount of part Age Pension being paid to wealthy defined benefit superannuants.

However advice that we obtained from RBF at that time was that this new change would impact largely on Tasmanian RBF Contributory Scheme Life Pensioners with very low or modest incomes.

The average RBF Contributory Scheme Life Pension is $32,000 and the average reduction in part Age Pension will be around $2,150 per year. Some TASS members have already advised us their part Age Pension will be cut by more than $5,750 per year.

RBF assessment is that the change will impact most on the 65 to 74 age group. If you are older than this the impact should be significantly less for you.

Evidence since provided to the Senate Committee by the Commonwealth Department of Social Services is consistent with the RBF advice that the greatest number of people to have their part Age Pensions reduced or cancelled will be those on low to modest incomes with 68 % of those to be affected having incomes of less than $35,000.

The Department advice is that approximately 46,000 Australia wide will receive a reduced Age pension (on average a reduction of $2150 per year/ $82.70 per fortnight ) and 1700 will have their part Age Pension cancelled all together.

The Department advice also showed that the number of so called wealthy defined benefit superannuants that this was aimed at are negligible. Introducing this new measure Minister Morrison referred to wealthy superannuants on pensions of $120,000. According to the Department, of the 47,700 defined benefit superannuants to have their part Age Pension reduced or cancelled, only 385 receive a defined benefit superannuation pension exceeding $70,000. That represents less than 1% whereas 68 % have a defined benefit income below $35,000.

Unfortunately, this legislation for some reason was rushed through the Parliament without proper scrutiny of its unintended consequences. It is also the only legislation passed this year dealing with pensions that comes into effect from 1st January 2016. Other pension changes do not commence until 1st January 2017 and other pension changes are to be grandfathered.

TASS at the time made representations to the Senate Select Committee on Social Security and to most Tasmanian Federal politicians making them aware that this legislation was going to affect low to modest RBF Contributory Scheme Life Pensioners receiving a part Age Pension. Unfortunately it appeared that everyone took at face value the claim by the Government that this was aimed at wealthy defined benefit superannuants.

Since it is not going to impact on the wealthy as stated, apart from a handful, TASS believes the legislation needs to be reviewed as a matter of urgency. TASS has written to the new Prime Minister, The Treasurer, the Minister for Social Security, the Leader of the Senate and various other politicians.

TASS has had recent meetings with Andrew Wilkie, Senator Eric Abetz and Senator Carol Brown who have all now agreed to raise this matter on our behalf with the Prime Minister, The Treasurer and the new Minister for Social Services.

If you are concerned, it would also be helpful if you contact your Tasmanian Federal Members to express your disappointment with this attack on low to modest RBF Contributory Scheme Life Pensioners. The Government continues to say it will not make any changes to superannuation in this term of Government. The savings to the Government from this measure are miniscule compared to the billions of $'s in revenue being foregone on generous superannuation tax concessions which flow largely to the top 20% of households.

We deserve a lot more answers and support particularly from our Tasmanian Federal representatives.

There is more information regarding this matter in our recent edition of Super-News.

We would welcome your support to bring your concerns to as many Parliamentarians as possible.

Contact details can be found in the White Pages or on the www.aph.gov.au website.

Please note this does not affect your RBF Contributory Scheme Life Pension, but it may affect any part Age Pension you receive.

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