Federal Public Servants Super costing 80% of payroll
The budget papers released in tonight's Federal Budget show annual cost of superannuation for government employees and required public servants pensions of $8.1 billion compared to the annual wages cost for government employees of $10.3 billion. Pension cost for public servants are thus 80% of payroll. The budget also shows unfunded accrued liabilities for federal public servants are still increasing ($82 billion in 2001-02, $89 billion in 2005-06).
If the media read far enough into the budget to get to this story they would no doubt make it a diatribe against public servants. But alas this is not the key point. Public servants have had well designed pension schemes which provide generously for them and their spouses. It has been easy to do this because the cost was not funded and the taxation powers always provided protection against insolvency.
And so we come to the key point. The key point is that non-public servants on similar pay have 6.3% of their payroll put away for pensions. The dichotomy between 80% and 6.3% is the real story and how to get the 6.3% lifted to 20% required to fund similar pensions is the challenge. Current politicians have not the wit nor will to face up to this and resort to trivial point scoring instead.
Posted Tuesday, 14 May 2002
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