The table compares MP, Aged, and Military pension (retirement pay) increases from 1989 to 2008. MPs link to the greater of the CPI, Male Total Average Weekly Earnings (MTAWE), or the salary of a Parliamentary Back-bencher. The Aged link to the greater of the CPI or MTAWE, while increases for the Military are linked to the CPI only. In 2001 the Australian Bureau of Statistics said the "CPI is not a measure of the cost of living." Ex-service personnel are not getting a fair go, and the value is dipping below the Aged pension.

The enabling legislation for the DFRDB scheme, the Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act), as first passed by the Parliament, did not contain Part XA, which provides for the indexation of DFRDB pensions in line with changes to the Consumer Price Index (CPI). These sections were added to the DFRDB Act by the Defence Forces (Retirement and Death Benefits Amendments) Act 1977. The reason why these particular arrangements were inserted into the DFRDB Act by the Fraser government, was to seek consistency in the manner in which all Commonwealth retirement income streams (i.e. pensions or retirement pay) were indexed. It is obvious from the previous indexing graph, that by indexing the DFRDB pension to the CPI, military superannuation pensioners have suffered a permanent disadvantage, as increases in wages (MTAWE) have by far exceeded increases in the CPI. At the commencement of the DFRDB in 1973, the scheme (as described by the Jess Report) was meant to be a retirement pay of 35% of pay on retirement, and indexed to the cost of living.

But here is the real issue...

Between 23 October, 1986 and 20 October, 1989 the CPI grew at a higher rate than the MTAWE, so the government passed the Superannuation and Other Benefits Legislation Amendment Act 1986, amending the legislation governing the operation of the DFRDB to discount the pension increase by 2 per cent from 9.2 per cent to 7.2 per cent (that is, the full CPI increases were not passed on to DFRDB recipients). There was no later increase in the DFRDB to make up for this period of discounting. The reason... "it was a budget measure in response to the unusually high rates of inflation of the period combined with a shortfall in government revenue." In other words the government even reneged on the condition of service of maintaining full indexation in line with the CPI, and it was the ex-service personnel that would be penalised for their temporary revenue shortfall.

Many members of the Australian Armed Forces (AAF) made compulsory contributions of 5.5% of (after tax) earnings into the Defence Force Retirement and Death Benefits scheme (DFRDB). After 20 years service, the members were entitled to a Retirement Pay of 35% of their salary on retirement, and the pension was protected by aligning it with the cost of living. Members were allowed to commute 4-5 years of their pension as a lump sum, and their pension was reduced by an amount that would ensure the lump sum (loan) was repaid within their life-expectancy. In most cases the life expectancy was 72 (male).

However there is no provision to revert to the full value of retired pay once the lump sum has been repaid. Comsuper, the agency tasked with administering the DFRDB scheme, have not changed their life-expectancy tables since 1972, even though the current life-expectancy, due to the advances in medical science, is now 78. Upon reaching the age of 72 the reduced pension (repayments) simply continue. To put this into perspective its like a normal home loan, but the loan repayments will continue after the loan has been repaid. Despite many attempts to correct this injustice towards ex-service members, including a number of reviews/inquiries, the government still refuses to act fairly and correct the situation.

This case is not an isolated one, as over 53,000 ex-service personnel are in exactly the same boat.