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Thursday, 7 May 1970

Mr BURY (Wentworth) (Treasurer) - I move: That the Bill be now read a second time.

The purpose of this Bill is to bring the formula that determines the category entitlements of more senior members contributing under the Defence Forces Retirement Benefits Act into line with the corresponding formula in the Superannuation Act. Between 1963 and 1969 the formulae in the 2 Acts were comparable, producing maximum pension entitlements tapering down from 70% of salary or pay for the lower paid members of each scheme to approximately 50% of salary or pay for members at the highest level. With effect from 4th June 1969 the formula in the Superannuation Act was varied to produce a pension entitlement for staff at the highest level of approximately 60% of salary, if all available units were taken up on a contributory basis.

The change now to be made to the formula in the Defence Forces Retirement Benefits Act will have a similar effect. The change is to operate from 4th June 1969, the date from which (he Superannuation Act formula was varied. The change does, however, have some implications for the Defence Forces Retirement Benefits Fund.

Unlike the superannuation scheme or that part of the defence forces retirement benefits scheme relating to members who entered the scheme before 4th December 1959, the contribution rates of members who have entered the scheme since that date, that is, post-1959 members, are fixed as percentages of pay. Consequently, the change in the formula and the resultant increases in entitlements of post- 1959 members in higher categories will not be matched by an increase in contributions to the Fund.

Only the entitlements of officer members will be affected by the formula change. As the rates of contribution for post-1959 officer members have been determined separately from those applying to post-1959 other rank members, the contribution rates applicable to post-1 959 officer members will be examined in conjunction with the quinquennial investigation of the Defence Forces Retirement Benefits Fund as at 30th June 1969 to see whether there is a need to vary the rates because of the change in entitlement levels. As I said earlier, members who entered the scheme before 4th December 1959, that is, pre-1959 members, contribute on a different basis from those who have entered the scheme since that date. Since 1965, pre-1959 members have had the right, when faced with an increase in contributions, to elect to limit their contributions. Thereafter, additional category entitlements, when they become available, are granted without additional contributions, the benefit accruing from these additional entitlements being a proportion of the corresponding contributory benefit.

Pre-1959 officer members who have not already exercised their right to limit contributions will be able to do so, if they wish, in respect of the additional contributions that will become payable in respect of the additional category entitlements flowing from the formula change. The Bill also extends this right to pre-1959 officers serving on 4th June 1969 who have since retired on pension or, if they have died, to their widows or orphan children to whom pensions are being paid. I commend the Bill to honourable members.

Debate (on motion by Mr Crean) adjourned.

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