- 1.6% adjustment for PSS, CSS, and MSBS indexed pensions
- 1.6% adjustment on the indexed portion of DFRDB pensions for recipients aged less than 55
- At least 1.6% adjustment on the indexed portions of DFRDB and DFRB pensions for recipients aged 55 and over
The Australian Bureau of Statistics has released the Consumer Price Index (CPI) data for the March 2024 quarter showing that the index has increased to 137.4 from 135.3 for the September 2023 quarter.
This should result in an increase of 1.6% for indexed pensions from the Commonwealth Superannuation Scheme (CSS), Public Sector Superannuation Scheme (PSS) and Military Superannuation and Benefits Scheme (MSBS or MilitarySuper) from the first pension payday in July 2024.
The indexed portion of pensions from the Defence Force Retirement and Death Benefits (DFRDB) and the Defence Force Retirement Benefits (DFRB) schemes involves different rates of indexation depending on the recipient’s age at the adjustment date.
DFRDB and DFRB recipients aged less than 55 years receive the CPI-linked adjustments (i.e. 1.6% in this case) on the indexed portions of their pensions.
The indexed portions of DFRDB and DFRB pensions for recipients aged over 55 years of age (except Associate Pension recipients) is the greater of the CPI increase, the change in the Living Cost Index for pensioner and beneficiary households, or the increase needed to maintain the value of an indicative pension with 27.7% of Male Total Average Weekly Earnings (MTAWE). DFRDB and DFRB recipients aged 55 and over will therefore receive at least 1.6% on the indexed portion of their pensions in July 2024.
See also: DFRDB pension increases
A pro rata increase will apply to any indexed pensions started less than six months before the increase date.
Historical CSS, PSS and MSBS indexed pension increases
| Date of increase | Rate |
| July 2024 | 1.6% |
| January 2024 | 2.0% |
| July 2023 | 3.3% |
| January 2023 | 3.6% |
| July 2022 | 3.5% |
| January 2022 | 1.5% |
| July 2021 | 1.1% |
| January 2021 | 0.0% |
| July 2020 | 1.0% |
| January 2020 | 1.1% |
| July 2019 | 0.5% |
| January 2019 | 0.8% |
| July 2018 | 1.1% |
| January 2018 | 0.8% |
| July 2017 | 1.0% |
| January 2017 | 1.1% |
| July 2016 | 0.2% |
| January 2016 | 1.1% |
| July 2015 | 0.4% |
| January 2015 | 0.9% |
| July 2014 | 1.3% |
| January 2014 | 1.6% |
| July 2013 | 0.6% |
| January 2013 | 1.9% |
Its about time the goverment got rid of the cpi for pension increases this is so out of date, how can petrol jump 20 cents a litre overnight and electric bills rise by many dollors and the cpi is a lousey 0.08%.a review should be held to get rid of this old out of date system.
The problem remains with the Consumer Price Index (CPI) data is that it is controlled by the ABS and the ABS decide what goes IN and what they take OUT.
There is no connection with the real inflation rate that real people pay !!
1.1% is too much. Can I give some money back to the government, please.
Too much? Are you for real. The real annual cpi is closer to 10%pa.
Any economist can tell you that
The average increase for private health insurance will be 2.74% and council rates always go up by 2% each year.CPI is based on the odd electrical appliance you might buy every 5-10 years.
Donate it to a worthy charity!!
Because the ABS take into account techonolgy such as Mobile phones, whereas the latest model iphone can be $1200 and next year its worth $800.
Don’t just get rid of it.
Fix it or replace it with something better!
So Centrelink payments increase 6% and we get CPI
It is just poor legislation that creates a minimum. The entire process is poor. Pension less allowances on FAS wow. Now Mark McGowan retires and get 275K + PA. This is suck a kick in the guts to ex service people. CPI corrupted politicians Index if you ask me.
when I took my indexed pension in 2005 it was equivalent to the average salary. In 2019 it is nothing like it. How misled was I.
Hi Les, Is there any entity who provides guidance around PSS pensions other than Financier Planners?? And if there is a group lobbying for increased CPI or another calculation system. Thanks in advance.
Harps, not really, but plenty planners me included will provide fee for service advice. The key is not to ensure whoever you see knows what they are talking about. There is a Commonwealth Super Members Association which is effectively a lobby group. JB
Perhaps you could join SCOA in Western Australia which is the last remaining Body, as mentioned, who continue to lobby the Commonwealth regarding CPI. Michael Cain is the Secretary. Please goggle
Average w/e in 2005 was approx 1000per week, so your indexed pension was greater than 50000 pa. In 2021 the average w/e was approx 1700 per week , equivalent to approx $80000 pa. What is your annual pension in 2021?
I got 14.5K
So I am up to 23K
Basically had no chance in hell to think of retiring even though I was young. Head so full of problems but I left it all as had to and took what was given and don’t expect the government to really help its ex service members once they have broken them.
When people whinge about define benefits…
When people whinge about define benefits…they have been ripped off by their super fund trustees. It is called a breach of trust
Bull crap. Ur pension can be paid about your purchase price. Will u complain then, u going to ask them to stop paying h now all the money is exhausted. Through another $20 in Queen of the Nile champ.
My understanding is that after a great deal of effective lobbying by former members of the ADF that their pensions were increased by either the increase in average weekly earnings percentage or the CPI whichever was the greater!
Old Age Pensions are increased by the percentage increase of average weekly earnings as it reflects the correct increases in the cost of living. The CPI does not. Some time ago the Federal Gov attempted to align old age pensions to the CPI but the outcry forced them to abandon the idea. Too many items are excluded from the calculations of a CPI to correctly reflect an accurate rate of the increased cost of living. Commonwealth employees on a CSS pension can look forward to an ever decreasing ability to maintain their purchasing power.
too true ! real CPI should be based on health care, groceries, utility bills and council rates. these are always going up in price.
1.1% is too much. Can I give some money back to the government, please.
Can’t find the DFRDB increase (and for over 55s)
On Sun, 22 Dec 2019 at 10:15 pm, blog.superinfo.com.au wrote:
> Les commented: “Can’t find the DFRDB increase (and for over 55s)” >
Hi Peter. I’ve added a page for DFRDB pension increases. I’ve also add information about the indexation arrangements applicable from 1 July 2014. More info is available from https://blog.superinfo.com.au/2019/12/29/dfrdb-pension-increases/.
Hi Les
I believe the Pensioner and Beneficiary Living Cost Index (PBLCI) for the same period was 115.5 for September quarter compared with 114.5 for the March quarter. This would produce an increase of 0.9%, which is less than the 1.1% CPI. I haven’t performed the Male Total Average Weekly Earnings (MTAWE) calculation, which is the third formula to compare for DFRDB pensioners over 55, but based on previous history, the DFDRB increase would look to be all-round 1.1% for January 2020. I hope this helps and wishing a safe and Merry Christmas to our veterans as well as everyone in the broader ADF and APS community. Kindest wishes, Dan Blackman
We are too old too few and the govt does not give a stuff for ex service individuals. I think they will be happy once we are all dead.
Petrol has gone up, rent has gone up, groceries have gone up, electricity has gone up, yet these miserly pension increases are so small and it’s way too little to live on. The increase amounts are too low for the average person receiving a CSC pension. Increases should go up the same as the government social security system works (automatic increases to the pension every 6 months).
Bureau of stats is showing Dec 2020 increase of .9% and March 21 .6% so why are we getting 1.1% not 1.5%
Thanks for the question. The reason for this is that the CPI rate went negative for the September 2020 quarter, which resulted in no CPI change for the January 2021 update. This means that the last positive index rate was March 2020 and therefore the reference period should be March 2020 (index number 116.6) and March 2021 (index number 117.9), i.e. (117.9 – 116.6)/116.6 = 0.011 or 1.1%
In regards to blackmd reply to Greg . If we are going to backtrack 12 months instead of 6 months to avoid using a negative index rate, why not backtrack 12 months for January 2021 CPI to avoid negative index rate? ie September 2020 116.2 and Sep 2019 115.4. Seems these rules and figures are pretty rubbery.
Thanks for your comment Megan but the original issue revolves around the Australian CPI is NOT representative of REALITY and has not been accurate for some years hence the campaign by Military Pensions being more ACCURATELY indexed. This occurred just before the Federal election.
Hi Megan. The governing rules of the scheme provide for the CPI index results for the September and March quarters to be used each year as these are the latest published results available to use for the respective January and July pension update calculations. The June and December figures are always disregarded.
Where the index goes negative between the previous March quarter and the current September quarter, there will be a no CPI increase for the January pension update. The next positive CPI pension increase will be applied when the index for following March or September quarters increases above the last highest September or March quarter. The method is consistent in that only the March and September quarters are used, and the June and December quarters will never be used.
The big issue is why the indexed pensions from 1922 scheme, CSS, PSS, and MSBS (MilitarySuper) schemes receive CPI indexation whereas the Commonwealth Parliamentary pensions are linked to current salaries paid to Commonwealth Parliamentarians, i.e. parliamentary pensions are indexed with changes to the current rates of parliamentary salary and allowances.
Surely there is a lobby group we can join to change this ridiculous CPI increase system? Can anyone advise?
If you do the math on a typical CSC pension – at a marginal tax rate of 34.5% (with medicare levy), even with the 10% tax offset you will only ever see around 80% of the full CPI increase. For people such as myself who took the full pension – on taxed + untaxed contributions, the indexed component is only 70% at best, so for every percentage increase in CPI only around 55% is realised. The situation is of course even worse for those who made post tax contributions during their working life.
The implication of the above is that a high inflation future will quickly erode a CSC pension. The logical way forward is to make the entire pension tax-free for those who have reached pension age. Additionally, reduce the threshold for Age pension benefits for those who hold limited savings – including other super assets.
So it was 117.9 for March Quarter and no 119.7 for September. That is a difference of 1.8, not 1.5 So why isn’t the increase 1.8%
Thank you for your question. The index change between the two values is 1.8, but this is not equal to 1.8%. To derive the percentage, we need to divide the index change by the index number for the earliest quarter and multiply the result by 100 (to convert the decimal into a percentage).
In this example, it would be 1.8 / 117.9 x 100 = 1.5% when rounded to one decimal place.
Interesting assertions people are making.. which appear to be based on *assumptions*. Couple of observations:
1) when we were working we never got a pay rise twice a year, and
2) comparing CPI to Wage index is somewhat fraught e.g.
https://www.abc.net.au/news/2018-11-01/fact-check-have-wages-grown-steadily-over-the-past-decade/10447492
I am still working as an APS5 in the Defence Dept and have an inclination to take my lump sum and place over time, the sum and add it to my accumulation super, then into a RIS and not take the PSSdb pension when I exit. I see that getting a 10% pension at 65 with bad indexation, rates poorly against long term average super returns of 10% where (a) I keep my capital in my control, (b) Nil tax on RIS income, (c) I keep my full TBC and not suffer the Treasury 16 times ‘fiddle’ which would halve my TBC RIS maximum impacting my private super efforts. Obviously, the treatment of Public Servants for both wage cases and for retirement incomes is unfair and counter to common sense but this is so political there is not much to alter it. Why would they for either side of the ballot box? Look at the politics relating to the military where I work with reservists that commonly have incomes exceeding $150,000pa (and more) and they pay not tax at all on that income. No wonder they got a better indexation deal mentioned elsewhere on this blog page. Any decision that is a one time event with no opportunity to revert is there for a reason, that reason may or may not serve you well. To those that have posted a comment of their experience I thank you, the service you offer to others is to be valued and applauded. Many people who are not defined members often say that those that are, are in the best fund and there is some truth to that where you are a rising star and can lever an elevated FAS against a BM giving exponential rise in fund value for the accumulation phase. It is the pension phase that has the risky decline. Even the accumulation phase has a great potential for stagnation too where I offer the government can theoretically make more value than the contributing member toward the end of that phase when considered with market returns.
I think the principal’s comment by Dan as to the difference where the Parliamentary Scheme is designed with a difference tells you everything you will even need to know about how and why.
We have a very long way to go here. Oh the bliss in ignorance of youth.
With a CPI rise of 3.5%, and the likelihood that it will be similar in January 23, is it better to take a PSS pension now instead of delaying retirement for a better FAS3 and an extra multiplier of 0.31…. My calculations say it’s a number of years (20) to recoup the difference in pension gained over 1yr compared to the extra pension received if taking it a year later.
Regarding the suggestion 🤔 that the CSS/PSS pension has a higher value the NON Public service pension schemes. We all recall the endless pay negotiations where management endlessly reduced the increase because of the pension. Public servants paid a great amount in the lowered pay rise which has a cumulative effect on the employer contributions.
Is the css/pss pension likely to increase in January 2023 by 4 per cent in line with the cpi increase to aged pension payments recently announced by the government. Diane October 2022
Hi Diane. The January CPI increase for CSS/PSS pensions is usually determined by changes between the March and September quarter CPI values. The Australian Bureau of Statistics is set to release the September 2022 quarter results later this week and we will shortly after publish the exact rate of any CSS/PSS pension increase.
For background though, the June 2022 quarter was approximately 1.8% higher than the March quarter, which means that if the September CPI number was at least as high as the June number (i.e. we didn’t have negative inflation over the last three months), the CSS/PSS CPI increase in January 2023 will be at least 1.8%, but even more if September is higher that the June number.
I cannot understand how CSS/ PSS pension can be set thru CPI. It’s so unfair and WHY are we taxed on our pension when we are over 65?? Mainstream pensions are not yet we are taxed throughout – WHY IS THIS SO??
CPI indexation has been addressed many times but read on if you want to know how this was determined. The following is taken from Parliamentary Research Paper no. 16 2007–08.
On 5 March 1974, the then Treasurer, the Hon. Frank Crean, MP, announced that the Government had decided to seek the benefit of outside actuarial advice on his proposals for a new superannuation scheme for Australian Government employees (CSS). The subsequent report on the Treasurer s proposals was compiled by Mr G. L. Melville and Professor A. H. Pollard and commented specifically on the post-retirement indexing of Commonwealth superannuation pensions. This reference to an independent expert followed the policy of the previous McMahon government. Professor Pollard was commissioned by the previous government to review the methods for indexing all Commonwealth superannuation pensions, including military pensions.
This report recommended that, under the proposed provisions of the CSS, it would be appropriate to index the government financed pension to be increased automatically and annually by the percentage increase in the Consumer Price Index .
This recommendation was made against the background of the then current Commonwealth superannuation scheme (the 1922 scheme). The 1922 scheme main features were that it:
– did not pay a lump sum benefit
– paid an un-indexed pension financed by the contributions (and associated investment earnings) of the employee, and
– paid an irregularly indexed pension financed by the government.
To maintain the overall value of both pensions the government financed pension was indexed by 1.4 times the relevant increase in the CPI, though not at annual intervals.
Melville and Pollard argued that since the proposed superannuation scheme (the CSS) was generally to pay a lump sum in addition to an indexed pension there was no need to index this pension by 1.4 times the CPI increases. That is, the standard benefits paid by the CSS would not include an un-indexed pension. Accordingly, only CPI indexation was necessary in respect of the government financed pension paid by the CSS. This view was subsequently accepted by the government and incorporated into the features of the CSS.
Paul, what’s the better alternative to CPI? I think the 3.6% pay rise in January and 7.1% overall in the past 12 months is superb!
Error in 2nd para: “from the first pension payday in July 2022” should be “from the first pension payday in January 2023”.
Good spotting. Thanks Simon
The CPI system is not floored but the basket of goods and services are probably out of date and most probably not relevent to todays expenditure. Is there adequate research being done for an updated basket of goods and services especially with the changing times? A systematical approached needs to be done on monthly and quarterly expenditure for commodity items to ensure they are applicable to everyday purchases and services. I would ask is the commodities groups still applicable, are quality adjustments applied correctly, data collection managed effectively and on time. Are the staff skills enough to know how to monitor changes in todays economic environment. Me thinks a review needs to be undertaken and an overhaul on they way the CPI is analysed.
Very well explained Paul. There are too many inconsistencies with the present system. We all worked very hard to achieve our pensions and at the very least they should be maintained using the most up to date method of calculating cpi. DIiane
When will the next quarter be calculated for the July 2023 cpi adjustments. What months does it take into account?
The July increase is based on the December 2022 and March 2023 quarters. We will
Find out what the December 2022 quarter cpi increase is on 25 January when it’s published by the bureau of stats
Hi Kathy. Thanks for your comment and helping out. The CPI numbers used will be those for the Sep 2022 and Mar 2023 quarters. The June and December quarters are disregarded for the purposes of the increase.
Ok I’m confused now. The September quarter was 1.8% but we received 3.6%. If the June quarter wasn’t included where did the other 1.8% come In?
You’re right with your comment Kathy. It will be the Oct-Dec Qtr and Jan-Mar Qtr CPI figures that makes up our super increase in July 2023.
Many thanks Coops. I can see where you are both intuitively coming from. To avoid any confusion though, the increase will be the percentage difference between the index number published for the Sep 2022 quarter and the index number published for the Mar 2023 quarter, e.g. the Sep 2022 index number was 128.4 and if the Mar 2023 number were 132.5, the calculated CPI increase would be 3.2% when rounded to one decimal point. (NOTE: I have used these figures to demonstrate an example only, I have no idea what the real CPI number for March will actually be — we’ll have to wait for the ABS to assess this.)
Adding the published percentage changes for each of the Dec 2022 and Mar 2023 quarters will get you close, but as this method applies additional rounding at two points along the way, using it can mean the result is slightly understated or overstated compared to the CSS/PSS legislated method.
Thanks again and I hope this clarification helps.
Yes, apologies you’re right, recognising the ABS and CSS Legislation calcs to get the exact figure, the main aspect is that the pension rise should mostly be within 0.1/0.2 of both figures added together.
There is currently talk about the government coming after defined benefit recipients. I am concerned (as I’m sure everybody else is) about what the government might do. I was thinking they may change the tax rules and was wondering what the reasoning is behind the 10% offset that is given to PSS recipients who are over 60? And of course any other thoughts you may have on what the govt might be thinking of changing.
I believe the 10% offset is meant to placate CSS DB pensioners who don’t get a mostly tax free pension like a lot of other “normal” pensioners. The reason we are different is that CSS contributions are not taxed on the way in and the pension is “unfunded”. Don’t worry they won’t take this away from us.
I was asking about PSS. Is that different to CSS with regards to taxation? You seem to be saying the CSS pensioners were getting a worse deal than PSS so they decided to give PSS a tax offset? Im confused.
Same for PSS and CSS contributions, neither are taxed on entry.
History shows that the the last time we had sustained high inflation the Hawke Government took action to dock, or lower the CPI pension increases by 2%.
The Superannuation and Other Benefits Legislation Amendment Act 1986 amended the legislation governing the operation of the CSS, DFRDB and DFRB from 23 Oct 86 to discount the 1986 pension increase by 2 per cent from 9.2 per cent to 7.2 per cent. This policy continued till 20 Oct 89 (that is, the full CPI increases were not passed on to pensioners). There was no later increase to make up for this period of discounting.
These actions were undertaken as a budget measure in response to the unusually high rates of inflation of the period combined with a shortfall in government revenue. The rates of increase in CSS pensions were also discounted in the same way during this period.
Did it include PSS? I thought if it was in the legislation they wouldn’t be able to change it.
PSS was not affected at time as not in existence. PSS essentially started on 1 July 1990. That is not to suggest that it could not be affected now.
Hello.
Just looking at your table heading “Historical CSS, PSS and MSBS indexed pension increases” I believe that this table should be headed as “Historical CPI figures” as not all resulted in a pension increase.
As always, thanks for the quick pension update following September quarter 2023 CPI release. It really helps with planning and is much appreciated.
Given inflation is running at 5.4% and pss is supposed to keep up with inflation, how can the half yearly pension increase only be 2% in January. Shdnt it be 2.7%?
The cpi pension rise for the previous 6 months was 3.3%, so add 2% this time and it’s 5.3% – pretty close to the 5.4% ; )
Blimey, we will be back to pension rises similar to enterprise agreements next year :). It was good while it lasted.
Remembering it’s not really a pay rise, indexation only keeps our buying power the same so that we don’t go backwards…….and that any non-indexed pension keeps on losing buying power over our lifetime.
The CSS is still subject to tax – of the taxable untaxed component. Assuming a typical marginal tax rate of 32.5, you will only ever get 75.5% of a CPI increase, allowing for the 10% offset and Medicare levy.