Policy objectives
The GSA Council has reviewed the Association's policy objectives following our successful campaign for everyone to receive a full cost of living adjustment and to make the annuity tax exempt in Australia - and following our unsuccessful quest for tax cut compensation.
Where the opportunity arises, further action on the following issues will be considered:
- Remove double tax on annuities paid overseas: the annuity is now to be made tax-free in Australia but this has yet to be achieved in respect of other countries.
- GSF contributions based on a fair definition of remuneration: an issue for some current contributors, this will be pursued in conjunction with the PSA and other state sector unions.
- Variable allowance: seek to remove the abatement.
- Full cost of living adjustment for pre age 60 retirees: seek to remove the $1000 limit on the payment for the period before age 60.
- Eliminate delay in paying cost of living adjustments: this remains a significant employee/employer issue.
Other issues to be pursued when the opportunity arises include: compensation for tax reductions, anomalies in the NPF DBP scheme, and increasing the survivor annuity to 60%.
Objectives resolved
As a result of representations made by the Association, the Government has in recent years resolved a number of anomalies. These include:
Cost of living adjustments for those on the Old Scheme (pre-1985) were increased to at least 90% from July 2006 and to 100% from April 2009; cost of living adjustments for those who retired before age 60 were improved from 2004; and the double tax impost on annuitants living in Australia is to be removed.
Detail on any of these issues can be obtained from the Executive Officer.
Media release 17 February 2010
Government superannuitants hit again, twice
The President of the Government Superannuitants Association Allen Hair reports alarm among the 75,000 current and former government employees that the annuities to which they contributed during their working life could again be eroded by income tax cuts. And hit by an increase in the goods and services tax as well.
Since 1990 when Parliament unilaterally changed the way private superannuation schemes were taxed, annuities paid from the Government Superannuation Fund (GSF) and the National Provident Fund (NPF) have been reduced by 30% and 40% respectively to offset the tax-paid status of the annuity. These reductions are not reviewed when tax rates are changed.
Successive governments have refused to acknowledge that reductions made in personal tax rates create an anomaly for their former employees. Their response has been that the 1990 legislation should not be changed. As if to deal with the anomaly, governments have argued that those over 65 years of age also receive New Zealand Superannuation. However, a contractual arrangement between employer and employee in private contributory superannuation schemes such as the GSF and NPF has no connection with New Zealand Superannuation.
This income tax anomaly is now compounded by the government's intention to increase GST to fund income tax cuts, from which annuitants receive no benefit. However, the Prime Minister has given an assurance that those on lower incomes will be compensated for an increase in GST in some other way. Allen Hair notes that the people the GSA represents are predominantly on low incomes, with over half receiving an annuity of less than $14,000. He believes that these annuitants must therefore be candidates for compensation for an increase in GST.
Accordingly, the Association calls on the government to make provision for an adjustment to GSF and NPF annuities to offset an increase in GST, thus honouring the Prime Minister's undertaking.
ENDS