Submission to the Review of Indexation Arrangements in Australian ...

The income taper cuts off at an annual income of approximately $39,507. That is, an
individual (who is not a member of a couple) with an annual PSS or CSS pension of
under $39,500 would receive a part-rate Age Pension, provided they had no other
income and assets below the asset test threshold. In this context, Table 3 shows that
some 89% of civilian superannuation pensions at 30 June 2007 were below $40,000
per annum.
A separate test applies for couples. The maximum rate of pension for 20 March to
19 September 2008 is $456.80 for each member of a couple (or around $11,876 per
annum). Where a couple did not have other income and had assets below the assets
test threshold, the couple would receive an Age Pension of approximately $23,752 per
annum.
Where one member of a couple had a PSS or CSS pension of $10,000 per annum the
annual part-rate Age Pension payment would be approximately $22,250 per annum
(combined). 25 If one of the couple had an annual PSS or CSS pension of $20,000 the
annual part-rate Age Pension payment would be approximately $18,250 per annum
(combined). Where a couple receives an annual PSS or CSS pension of
approximately $66,000 or more there would be no payment of the Age Pension.
Changing the superannuation pension indexation method
Changing the indexation method for pensions to a higher rate of indexation, will
increase pensions payable over time. However, for those civilian scheme pensioners
who do qualify for a part-rate Age Pension, their total income would not increase by
the full increase in the pension, as there would be a reduction in their part-rate Age
Pension because of the taper rate for the Age Pension.
The total income benefit in changing the indexation method for superannuation
pensions would, therefore, be greater for those CSS and PSS members with
superannuation pensions that exceed the income test threshold. It would also be
greater for those members receiving a CSS or PSS pension that is less than $138 a
fortnight for a single person. This latter category is likely to be people who did not
have a long period of employment with the Australian Government. Table 3 shows
that these two categories of members comprise a small proportion of all civilian
superannuation pensions.
25 This assumes that the couple had no other income, and had assets below the asset test threshold.
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