The Combined Pensioners and Superannuants Association (CPSA) has launched a campaign for defined benefit pensioners who received a shock in their first 2016 Age Pension payment.
On behalf of DB pensioners CPSA is proposing to write to federal Treasurer Scott Morrison, federal Shadow Treasurer Chris Bowen, and Greens leader Richard Di Natale, to point out several problems with a new restriction on DB income that can be excluded from the pension income test.
"As a result of a Budget measure supported by the Coalition, Labor and The Greens, the maximum 'tax exempt amount' is limited to 10% of the defined benefit pension. It was previously not subject to a maximum," a CPSA statement said.
CPSA said in 2007, the Howard Government introduced a measure whereby after-tax contributions of $150,000 per year could be made to super and it has now become clear "that measure was never intended to allow people who were contributing to their defined benefit super to load up their 'tax exempt amount'."
"CPSA has spoken with people with 'tax exempt amounts' of more than 60% who conceded to loading up their super to increase their 'tax exempt amount'," CPSA said.
"The government describes the reduction to 10% of the 'tax exempt amount' as a measure seeking to manage an unintended consequence of the Budget 2007 measure. In plain English, an unintended consequence is a stuff-up."
CPSA has been contacted by "many" defined benefit pensioners who also didn't have the funds to top up their defined benefit super but "paid modest contributions at personal sacrifice at the time in the belief that when the time came to draw on their pensions, the government-of-the-day would honour its obligations."
CPSA and other associations representing DB pensioners have said one of the problems under the new rule is not being able to reverse retirement decisions made well-before the legislation existed.
CSPA said defined benefit pensioners who did not contribute up to $150,000 a year to their super after May 2007, or are on a low or modest defined benefit pension and have lost the Age Pension because of the new 10% rule, can contact the association about writing to federal parliament on their behalf.
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Read more about...
, Age Pension
, Combined Pensioners
, Superannuants Association
, The Greens
, Howard Government
, plain English
, Richard Di Natale
, Shadow Treasurer Chris Bowen
, Treasurer Scott Morrison