A Slap in the Face

Indexation on the Service Pension, the TPI,
other veterans disability pensions, the War Widows Pension, the
Income Support Supplement and equivalent MRCA payments to be cut back


Vietnam Veterans Unhappy

Vietnam Veterans Unhappy

We fought for ten years for fair indexation for the TPI Pension. We won concessions along the way and in 2007 we succeeded in having fair indexation applied to the whole pension.

Now, because of those successes, the TPI Pension is worth some $5,000 a year more than it would have been without them.

In yesterday’s Federal Budget it was announced that, in 2017, should the Coalition win the next election, that fair indexation will be stripped back to its previous unfair form.

That means that over time, that hard won $5,000 extra a year will be eroded away. And the erosion will continue after that.

And not only the TPI Pension will suffer. The Service Pension, other veterans disability pensions, the Income Support Supplement, the War Widows Pension and the equivalent MRCA payments will also have their fair indexation scrapped and replaced by unfair indexation.

This is a slap in the face for war veterans.

What is ‘indexation’?

Present indexing of the Service, TPI, other veterans disability pensions, the Income Support Supplement, the War Widows Pension and equivalent MRCA payments keeps them abreast of community income standards. To put that another way, the present indexation method keeps pensioners up with Australia’s rising standard of living.

Twice a year the percentage increase in the cost of living and the percentage increase in the average wage are calculated. In simple terms, the greater of these two increases is then applied to all those pensions and payments.

What did our troops fight for?

What did our troops fight for?

Say the cost of living in the previous six months rises by 1% and the average wage goes up 2%, then, in simple terms, these veterans’ pensions are increased by 2%.

And nearly always the average wage rises more than the cost of living. This has been so for many, many years. It is why Australia’s living standard has been rising.

So if our pensions had not been able to mirror rises in the average wage they would be much less than they are now and would be falling further and further behind community income standards.

But this is what will happen in 2017 should the Coalition win the next Federal election. Our pensions will be indexed only to cost of living increases, condemning them to fall further and further behind those community income standards.

Perhaps the government is hoping no-one will understand what is happening. After all the concept of ‘indexation’ is a complicated one and there will continue to be six monthly rises in the pension. So even though those rises will be less than they would have been, the government may hope the difference may not be noticed.

But whether noticed or not, over time the degraded indexation compounds, and pensioners’ financial position deteriorates significantly.

But, I hear you say, our pensions are hardly lavish. Surely it would be a mean act to reduce their real value. Yes, it certainly would be a mean act. But that is what may happen.

And it is not only ‘indexation’ which is under threat. ‘Thresholds’ are also to be attacked in 2017.

This attack will affect Part Service pensioners; that is those who have other income from wages, investments or military superannuation.

Part Service pensioners are affected by a means-test free area. This is the amount of their own income they can receive before the means-test kicks in. Presently this is $156 a fortnight for singles. After that means-test free area, the Service Pension reduces by 50 cents for every extra dollar of income the Part Service pensioner receives. That means-test free area is presently indexed so that it rises in line with the cost of living. The Coalition, should it win office at the next election, will suspend those indexation increases for three years. Thus the Part Service pensioner’s income will not keep up with cost of living increases.

The Coalition will also suspend indexation increases for the assets test threshold and the deeming threshold, meaning those thresholds will not increase with increases in the costs of living. Once again, these suspensions will condemn Part Service pensioners’ incomes to fall behind rises in the cost of living.

It’s a way of reducing the value of the pension.

Perhaps the government may believe you wouldn’t notice because there will be no actual money decrease in your pension. It is just that increases that could have occurred to keep your income abreast of the rising cost of living, will not happen.

As you can see these changes are insidious because they are complex and easily overlooked. But they matter, as they will seriously erode pensioners’ financial position over time.

That the government would do this to its war veterans and war widows is disappointing.




Permanent link to this article: https://vietnamvetssc.org.au/a-slap-in-the-face/


    • Garry Lee on May 19, 2014 at 7:59 am
    • Reply

    Who is Jan ?

    • Jake payne on May 18, 2014 at 2:29 pm
    • Reply

    ADSO canvassed Rudd’s Labor party and we were told we’d get nothing, especially if we “bagged” them. Abbott’s Coaition vowed to “RESTORE” fair indexation to our DFRB/DFRDB pensions for 55 yrs and over members from 1st July 2014. We now find out that while the DFRB/DFRDB fair indexation will be restored, but ALL other pensions will “revert” to the LOWER increase from 2017. This equates to more LIES & BETRAYAL from this Mob. WHO THE HELL DO WE TURN TO????? ADVP still does NOT have sufficient members to form a *registered* Political Party, and the larger parties are maneuvering to increase the 500 number to 1,500 members for basic registration of a Political Party. Do we HOPE for a DD in the near future???? Or recommence Lobbying the current bunch of LIARs???? NOT HAPPY, JAN !!!!!!!!!!!!!!!! 🙁 ;(

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