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MPs' super reform is crucial to restoring faith in the system

By Peter Andren - posted Saturday, 31 March 2001

If there is one issue that emphasises the divide between parliamentarians and those they represent, it is the difference in standards applying to superannuation.

There is one set of rules for MPs, another for the rest of the community.

While the present Federal Government has made much of the right to freedom of choice in areas like education, health insurance and union membership, when it comes to freedom of choice in arranging their own super it's a different story.


MPs' super (both state and federal) is based on an act of the Commonwealth Parliament, the Parliamentary Contributory Superannuation Act 1948(Cth), introduced by then Prime Minister and Treasurer Ben Chifley.

He said then that the "loss and insecurity" associated with parliamentary service was deterring potential candidates from standing for Parliament. In an era of post-war full employment, where jobs for life were the norm, that wasn't such a bad argument.

However, to use that excuse today, to argue that MPs have an insecure life and can't easily integrate back into the working world is a nonsense. We should accept the same vagaries of the real world and free market as anyone else, where millions of workers have to cobble together a portfolio of casual or part-time jobs to stay afloat.

To suggest MPs are "unemployable" after politics is more a sad reflection on the public perception of politicians than any indication of the true situation. My predecessor retired at a relatively young age after serving as a minister and since then has been well rewarded in the business world.

While any employer is required under the Superannuation Guarantee legislation to contribute 8% of an employee's salary or wages to an approved fund, the effective cost to the Commonwealth of MPs' super payouts is 69% of their salaries. This is the last figure available from the Australian Government Actuary who reports the notional contribution rate of the scheme to Government every three years. The 1999 figure is unavailable, said to be "confidential".

This outrageously generous top-up from consolidated revenue means that any member defeated or losing preselection after eight years is eligible to a pot of money providing an indexed pension for life equal to half the back-bench salary (currently $92,500), or relevant ministerial salary.


Or they can take half of that in a lump sum and convert the balance into a similar pension.

These options of course are not available to the general worker because lump sums are just not allowed prior to the preservation age of 55 or 60, or the sum available is so small that no-one could afford to retire and live on the pension it would generate.

The 1998 retirement of defeated Queensland Senator Bill O'Chee after 9 years service, highlighted the excessive and indefensible generosity of the scheme. He is estimated by Business Review Weekly to have contributed $107,000 towards his super, with the taxpayer funding at least $1.28 million over the expected course of his life. Ian Sinclair, former Minister and Speaker, retired after 35 years with his own contributions topping $1.2 million and taxpayer subsidy of $480,000, which is nearer to community standards, but still very generous.

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This article was first published in The Canberra Times on 7 March 2001.

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Peter Andren was the independent member for Calare (NSW).

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