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Tuesday, 9 October 1973
Page: 1808

Mr Oldmeadow asked the Minister for Defence, upon notice:

(1)   Why was the notional adjustment method of adjusting retired members' pensions, as recommended in the Jess Report, not continued by the Government for those members who will remain within the provisions of the DefenceForces Retirement Benefits Act.

(2)   Did he say that the recent cost of living increase applied to the pensions was an interim adjustment only and that final increases to retired members were yet to be determined; if so, what did this statement mean.

(3)   On what reasonable grounds could the surplus of $4 million be transferred to the new composite fund before the quinquennial review due in 1969 and a terminal review in 1972 determined the equity of retired members.

(4)   It is possible to use the $4 million to be transferred to the composite fund to provide the basis of notional adjustments to retired members.

(5)   On what premise can a member retired in 1971 be expected to exist on a lesser basis than one retired in 1973 when in the past they have contributed equally in relation to their income.

Mr Barnard - The answer to the honourable member's question is as follows:

(1)   and (2) When I introduced the various retirement benefits Bills in the Parliament on 25 May 1973, I explained that provision had not been made for post-retirement adjustments of pensions in the way envisaged by the Jess Committee because the whole question of adjusting benefits payable under the old and the new schemes was still being examined in the light of recent developments in other Commonwealth pension schemes. As the examination was expected to take some time to complete and there had not been adjustment to existing pensions since October 1971, the Government decided on an immediate increase using a method of adjustment which was both simple and capable of early implementation. I made it quite clear at that time that this was an interim measure only and that I would be announcing full details of the method to be adopted, which would apply in the future in respect of all eligible pensioners, as soon as the present inquiries were complete.

(3)   The Fourth Quinquennial Investigation of the DFRB Fund for the period 1964-1969 disclosed an actuarial surplus of $ 14.9m, of which $3.4 m was attributable to pensioners. The then Treasurer, when announcing the results of the investigation on 26 October 1972 advised, however, that the surplus depended on the continuation into the future of the old scheme and that if any of the conditions and assumptions taken into account by the Actuary were varied, the conclusions reached would need to be revised. Because of the changed circumstances arising from the introduction of the new scheme, I have arranged for a fresh investigation of the Fund to be made as at 30 September 1972 and I will be announcing the results when the necessary information is to hand.

(4)   Historically, there has not been any association between the Fund and post-retirement pension adjustments, the costs of which have always been met from Consolidated Revenue.

(5)   Leaving aside the question of post-retirement pension adjustments which are relevant in this particular context, comparisons made in relation to contributions and benefits arrangements provided at different points of time by conceptually different schemes will inevitably reveal what appear to be inequities in treatment as between individuals. The point of the matter is that arrangements made in respect of a person's retirement are traditionally in terms of the contributions, benefits and salary applying to him at that time.

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