MP’s superannuation blasted in the Senate

Many of Australia’s politicians have superannuation benefits that far exceed anything their constituents can expect.

And that, according to one of them, is part of the reason why politicians are held in such low respect in that country.

So which MP said that?  You are right. It was Nick Xenophon.

So why doesn’t this South Australian independent Senator do something about it?  Especially, as he admits himself, he is a member of one of those privileged superannuation funds.

Well, he has tried, at least.  In the Senate this week, he moved an amendment to the government’s budget bills, that he believed would have brought those privileged funds, known technically as defined benefit schemes, at least a little closer to the funds that the rest of us have.

That is schemes, as we have learnt all too painfully over recent months, that can develop big holes in their payouts, if you are unlucky enough to retire shortly after a stock market crash, like the one that occurred last September.

In the May budget this year, the Rudd government cut deeply into the concessions it offers Australians, to encourage them to save for their retirements, through superannuation.

The Treasurer, Wayne Swan, said he had been forced to do that, to make up some of the revenue shortfall that the government will suffer this financial year as a direct result of the global economic crisis.

Those cut backs, though, did not affect the privileged few, who are in defined benefit schemes.  That is people who know, in advance, precisely how much their superannuation funds will pay them, when they retire.

Senator Xenophon said their benefits should be curtailed too.

Politicians, who entered one of Australia’s parliaments before 2004, are mostly in defined benefit schemes, of this kind.

Senator Xenophon, who was in the South Australian parliament, before he became a Senator is among them.

The government, though, rejected his proposed amendment.

The former superannuation minister, Nick Sherry, reminded Senator Xenophon that many people, besides politicians, are also members of defined benefit schemes.

He said these included Qantas pilots, many public servants, judges and members of Australia’s military forces.

But most private defined benefit schemes closed their books to new members, many years ago, Senator Sherry said.

People joining the Federal public service today generally don’t have defined benefit schemes available, these days,  either.

Coalition Senators, too, voted against Senator Xenophon’s amendment.

In fact, it won only two votes.  That of Senator Xenophon himself and his cross bench colleague, the Family First Senator, Steve Fielding.