This article is from the September 10 issue of The Herald Sun Digital Edition. To subscribe, visit http://www.heraldsun.com.au/.
Call to curb MPs’ perks
POLITICIANS are being urged to cut back some of their own superannuation tax breaks before hitting the retirement savings of millions of ordinary Australians.
As MPs argue about restricting how much people can put into super, a new analysis by financial strategist the Marinis Financial Group estimates more than $1.5 billion a year could be saved if they remove an “obscene” tax break for retired politicians and other public servants.
Hundreds of thousands of public servants with defined benefit superannuation schemes, which were closed to new members by the mid-2000 s, were granted a 10 per cent tax offset on their retirement pension income a decade ago even though members paid no tax on their super contributions or fund earnings during their working years.
“They’re among the most generous schemes in Australia, and probably the world, and they don’t need an extra free kick,” MFG managing director Theo Marinis said. “The pensions they get have never, ever been taxed, anywhere, but politicians want to start clobbering people who have been taxed the whole way.”
Defined benefit pensions typically pay a percentage of a person’s previous salary for the rest of their life, unlike most Australians’ super, which is a finite amount that drops as it gets spent in retirement.
Finance commentator Robert Gottliebsen has renewed his call for a parliamentary inquiry.
“The cost of those defined benefit pensions is rising by $6 billion a year and there is a $400 billion to $600 billion shortfall,” he said. “That increase in costs is conveniently buried and not included in Budget figures.”