Who will benefit from a change to Indexation

25 May 2012

Some critics of the Fair Go Campaign say that the vast majority of military superannuation pension recipients will receive nothing  from  a change to indexation. The following answers that criticism.

The Campaign’s primary military superannuation objective is to restore military superannuation indexation to its original service condition being “to maintain the purchasing power of retirement pay“.  That condition of employment applied to most Commonwealth employees (excluding Federal Court Judges and Federal MPs) and also Commonwealth income support recipients.

With the Government’s 1997 change to the indexation method for Aged, Service  and other income support payments only, to include a wages component (CPI and 25% of MTAWE) to maintain its purchasing power, the military and APS superannuation schemes were the only Commonwealth pension payments left with CPI. Later in 2009, the Government further enhanced the Aged/Service pension indexation formula by increasing the MTAWE component to 27.7% and adding a new factor the Pensioner and Beneficiary Living Cost Index (PBLCI): military and APS superannuation schemes continued to remain pegged to CPI only.

That is unfair, unjust and is a breach of the military “employment contract”

The consequence has been and remains a financial loss to ALL military superannuates. You can calculate that loss here.

That wrong needs to be corrected regardless of the financial circumstances of any particular individual. To that extent, fair indexation as sought, is a benefit for all military super recipients.

Clearly, with such a broad range of military retirees receiving military superannuation, there are variations in financial status, living circumstances and ability to maintain a certain standard of living. Within that cohort there are:


  • some who may be eligible for a means tested service pension and other Commonwealth income,supportpayments including concessional benefits if they are Age 60 or over,
  • some who may be eligible for a means tested old age pension and other income support payments including concessional benefits if they are Age 65 or over,
  • some who receive NO Commonwealth income support because they EXCEED the income and assets means test limits.

Those who receive additional Commonwealth income support (pension) payments will receive a net benefit from an increase to their military superannuation payment because for every $1 increase, their other pension entitlements are reduced by fifty cents for a single pension and twenty five cents for each person in a couple. There is no reduction to their supplementary allowances.  Widows and widowers will also benefit from the 25 cent taper rate and will therefore be significantly better off with a net increase of 75 cents for every $1 increase in the military super pension.

Under the income test tables for Service and Social Security Age Pension Transition Ready Reckoner for couples their combined assessable income has to reach $2,958 per fortnight ($76,908 pa) before they lose their age/service pension entitlement. For singles, their assessable income has to reach $1,828 per fortnight ($47,528 pa) before they lose their age/service pension entitlement.

In relation to Pensioner Concession Card (PCC) from either Centrelink or DVA to service pensioners, age pensioners and war widows and widows receiving an income support supplement, to maintain their eligibility they must be receiving at least $1 (the minimum fortnightly payment). The DVA PCC has the same status as a PCC issued by Centrelink. Both cards provide access to the same concessions.

In relation to the Commonwealth Seniors Health Card (CSHC), if the retiree has a Pensioner Concession Card (PCC) from either DVA or Centrelink, they are not eligible for the CSHC. The PCC provides the same concessions as the CSHC.

A CHSC issued from DVA may be available to eligible persons not receiving an age pension, service pension or income support supplement from DVA or a pension or benefit from Centrelink if they meet the seniors’ health card income test of not greater than $50,000 per year for single persons and $80,000 per year (combined) for couples.


There may be some people who receive a net loss depending on their individual financial position (assessable assets/other assessable income) and personal living circumstances, but if there are such cases, they will be in the higher income levels where safety net provisions cease. This should not affect the great majority of military super recipients, almost 90% of whom receive less than $30,000 pa in military super pensions. Most, if not all of these cases would gain a net benefit from fair indexation, regardless of their eligibility for age or service pension supplementation.

The Fair Go Campaign has always acknowledged the existence of the safety net for those who are eligible. But this should not be used by the Government as a cop-out to deny fair indexation of military super benefits. 

The purpose of the Fair Go Campaign is to restore the vested property of ADF members that was a promised condition of service on enlistment. If Governments had honoured their obligations over the past twenty years, the Fair Go Campaign for fair indexation would not exist.