Terms of Reference
This review considered the indexation of pensions from the following Australian Government superannuation schemes:
- The Commonwealth Superannuation Scheme (CSS)
- The Public Sector Superannuation Scheme (PSS)
- The Defence Force Retirement and Death Benefits Scheme (DFRDB)
- The Defence Forces Retirement Benefits Scheme (DFRB)
- The Military Superannuation and Benefits Scheme (MSBS)
- The scheme under the Superannuation Act 1922
- The scheme under the Papua New Guinea (Staffing Assistance) (Superannuation) Regulations
Australian Government superannuation pensions in these schemes are indexed twice yearly, in line with increases in the All Groups Consumer Price Index (CPI) for the weighted average of the eight capital cities. Pensions are increased in January, according to that CPI increase in the 6 months ending on 30 September of the previous year, and in July, according to that CPI increase for the six months ending on 31 March of that year.
Some stakeholders proposed that indexation of these pensions should be changed to align with the indexation of means-tested income support payments such as the Age Pension, which increases in line with Male Total Average Weekly Earnings if this is higher than CPI, and which the Government has also proposed to link to the living cost index for age pensioner households.
The review considered and reported on whether the current CPI pension indexation methodology in these schemes should be changed, having regard to:
- the occupational nature of those schemes;
- the form and value of the benefits payable under those schemes;
- indexation arrangements in similar defined benefit schemes in Australia;
- the interaction with government safety net benefits; and
- the full cost to the Commonwealth.
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