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Tuesday, 27 April 1965

Senator GORTON (Victoria) (Minister for Works) . - by leave - In view of their interest in the Defence Forces Retirement Bene ti ls Scheme, the Government believed that honorable senators would wish to know now that it has decided to introduce legislation to amend the Defence Forces Retirement Benefits Act in respect of those who joined the forces before 1959. The main cause of concern among these members has been that, as the Act now stands, an increase in pension entitlement shortly before retirement, resulting from a promotion or increase in pay, may mean a high rate of fortnightly contribution. This is caused by the short period within which these servicemen must meet the additional cost of their share of the higher pension entitlement.

The proposed variation is confined to the pre-1959 entrants to the scheme because the contributions of those joining the forces since that date are expressed as a uniform percentage of pay throughout service and they do not face this difficulty when their pay is increased towards the end of their service. The Government has decided that, in future, a pre-1959 entrant to the scheme whose pension entitlement is increased will have the option of electing to receive the Commonwealth's share of the increase in that pension entitlement without having to contribute for his own share. I might here point out that whilst the share provided by the Commonwealth varies according to age on retirement it amounts, on the average, to 77i per cent, of the cost of all increases in pension entitlement. Once having made such an election, the member will then receive all subsequent increases in pension entitlement on this noncontributory basis.

The Government has also decided that, because some members' contributions had increased substantially as a result of the June, 1964, increases in pay, this option of freezing contributions and electing to receive the Commonwealth's share of an increase in pension entitlement without a matching contribution will be available with effect from the date immediately prior to those increases in pay. A period of three months will be available for this election in relation to the June, 1964 increases in contribution.

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