Latest news with #PSS
News.com.au
3 hours ago
- Business
- News.com.au
‘Like winning lotto': $300,000-a-year public servant pensions under fire in super tax battle
Would a 90-year-old need a half-a-million-dollar per year pension to live on? As debate swirls around Labor's controversial superannuation tax changes, critics have set their sights on lucrative taxpayer-funded lifetime pensions paid to former high-ranking public servants and politicians which can stretch into hundreds of thousands of dollars per year. Politicians who entered parliament before the October 2004 election, including Prime Minister Anthony Albanese and opposition leader Sussan Ley, are still accruing benefits under the Public Sector Superannuation Scheme (PSS), a defined benefit scheme which pays out an annual pension — indexed to inflation and calculated by a formula including the member's average salary and years of service — when the member leaves office or retires at 55. 'It's like winning lotto,' said veteran fund manager John Abernethy, founder and chairman of Clime Investment Management. 'These guys are giving themselves lotto wins and then complain about paying tax on the income.' Treasurer Jim Chalmers' proposed tax changes, known as Division 296, would double the rate from 15 per cent to 30 per cent for superannuation balances over $3 million and, most controversially, include unrealised gains on earnings on assets held by funds such as shares, farms and property. Labor first announced the crackdown on tax concessions for very large super balances in 2023, but the legislation was blocked by the previous Senate. The changes look likely to become law as a deal with the Greens looms. Only around 80,000 Australians, or 0.5 per cent of the population, currently have super balances above $3 million, but industry groups have warned that if the threshold is not indexed to inflation it could eventually capture the majority of Gen Zs entering the workforce today. The measure is expected to initially claw back $2.7 billion a year and nearly $40 billion over a decade. 'What we need to do is make sure that our superannuation system is fair,' Prime Minister Anthony Albanese said this week. 'That is what we are setting out to do.' Division 296 will also be applied to defined benefit pensions to ensure 'commensurate treatment' as high-balance super funds — although unlike super account holders, those eligible will be able to defer the payments until they retire. Interest will be charged annually on the deferred tax liability at the 10-year bond rate, currently at around 4.5 per cent. Treasury estimates that 10,000 members with defined benefit interests will be impacted by the new tax in 2025-26, 'representing approximately 1 per cent of the total population with DB interests'. The Australian Council for Public Sector Retiree Organisations (ACPSRO), which represents more than 700,000 retired public servants, has flagged a possible challenge to the new law, arguing it's unfair. ASCPRO notes that unfunded pensions, which do not receive the 'generous and open-ended taxation concessions' available under regular superannuation, are already subject to normal income tax. Recipients who will be captured by the $3 million threshold are already paying a marginal tax rate of 45 per cent on that income, and Division 296 will likely take their marginal tax rate to 60 per cent, according to ASCPRO. 'I'm not stepping away from the fact that these are very wealthy people at the top of the public service — either retired High Court judges, Commonwealth department secretaries, deputy secretaries — it's a very small percentage but it's the principle of the thing,' said ASCPRO president John Pauley. 'Nowhere has the government explained to defined benefit pensioners how they're benefiting from tax concessions at present and therefore why it's fair, just and equitable for this additional tax impost to be paid on top of the tax they're already paying.' A person in an accumulation scheme who would be affected by the tax has the option of moving their assets out of super into another tax-effective vehicle such as a family trust, Mr Pauley argues, whereas those receiving defined benefit pensions have no such option. 'You're at the mercy of the government of the day,' he said. ASCPRO also takes issue with deferred interest being slugged on future pension payments. 'There is zero asset sitting behind these schemes — if you're unfortunate enough to get run over by a car two years into your pension there is nothing there [to leave to beneficiaries],' Mr Pauley said. 'This is the ultimate self-licking ice cream for the government. They are wanting to make people pay tax, not on unrealised capital gains, they're wanting people to pay tax on a hypothetical gain on an asset which doesn't exist, either during the accumulation phase or during the pension.' Mr Pauley estimated that for the roughly one million households receiving defined benefit pensions, the average was only in the range of $50,000. 'Teachers, nurses, police officers, members of the Defence Force, the bureaucrats who do the day-to-day work of government,' he said. 'Yes there's a few who are on very high incomes who have access to a defined benefit pension, [but] this wasn't something that is optional for them. When you signed up to work with the public sector it was a part of your workplace contract.' Mr Abernethy, however, argues any overhaul of super concessions should also include going back to the drawing board on the $166 billion unfunded liability 'black hole', which has continued to blow out beyond forecasts as existing members continue to accrue benefits prior to retirement. 'Just pay out the bloody benefits today and cap it at $3 million, if the government is saying $3 million is more than you should have in super,' he said. 'How about we have a come-to-God moment and say, 'If your net present value of your future pension is $10 million, I'm sorry, $3 million is more than enough. It's a windfall, guys, now you've got to look after yourself.' It would save the taxpayer a fortune.' He added that '[if someone says] that requires a complete renegotiation of what people thought they were entitled to — yes it does, come in spinner!' 'That's exactly what you're doing in super,' he said. 'Current taxpayers weren't even alive when these pensions were set. We've got $240 billion in the Future Fund, if that's not enough to clean out this liability and get rid of it then we better know now.' He suggested complaints about paying additional tax on defined benefit pensions were an apples-to-oranges comparison. 'Imagine I come up to you on the street, I don't know who you are, and promise to pay you $100 a year indexed for the rest of your life,' he said. 'Then in five years I say, 'Look, mate, I'm only going to give you $90.' Am I going to get angry? I didn't contribute to it, you're just taking $10 off my cashflow.' Mr Abernethy, in an op-ed last month, outlined what he saw as the 'diabolical issues' with defined benefits. He cited the example of a high-profile former politician, senior ADF officer or High Court judge in their early 70s who receives a $300,000 defined benefit pension this year. Assuming 3 per cent indexation, Mr Abernethy pointed out that at 75 years old the pension rises to $327,000, at 80 it rises to $380,000, at 85 it rises to $440,000, at 90 it rises to $510,000 and at 95 it reaches $590,000. 'Think about the numbers and you see that over the 10 years to 85, the pension receipts aggregate to about $4 million, and over the 10 years to 95 it aggregates to over $5 million,' he wrote. 'Would a 90-year-old need $510,000 a year to live on? Therefore, is it likely that these funds would flow from the beneficiary to others in a type of living estate? Is that what defined benefit pensions designed to do and are they consistent with Australia's superannuation policy?' Defined benefit schemes were phased out after former Treasurer Peter Costello realised the payments would explode the budget bottom line in future years if not closed off. The PSS has been closed to new members since 2005, while the earlier Commonwealth Superannuation Scheme (CSS) was closed in 1990. The CSS is a hybrid accumulation-defined benefit scheme, with some benefits linked to final salary and others based on an accumulation of contributions with investment earnings. For military personnel, the defined benefit schemes are the Defence Force Retirement and Death Benefits Scheme, the Defence Forces Retirement Benefits Scheme and the Military Superannuation and Benefits Scheme (MSBS). Following the closure of the MSBS in 2016, all defined benefit military schemes are now closed to new members. The schemes are unfunded or partially funded, meaning the payments come directly from tax revenue, to the tune of about $20 billion a year. In 2006, the government established the Future Fund with an initial contribution of $60.5 billion that included the proceeds from the sale of Telstra. The Future Fund was originally supposed to start paying out pensions in 2020 to take the burden off the taxpayer, but successive governments have delayed drawing from the fund. In November, Labor ruled out taking a dividend from the fund until at least 2032-33, when the savings pool is expected to have reached $380 billion. The announcement came as the Treasurer directed the Future Fund to prioritise investments in renewable energy, housing and infrastructure, sparking warnings that he was politicising the independently managed sovereign wealth fund. Former Labor Climate Change Minister Greg Combet, who was appointed chair of Future Fund by Dr Chalmers in January 2024, said the decision to defer withdrawals 'provides the Future Fund with the confidence to provide more focus and resources to the areas of national priority identified in the new investment mandate that align with our risk and return hurdle'. In an op-ed for The Australian Financial Review, Mr Combet said 'as of today, the value of the Future Fund covers about 79 per cent of the estimated APS superannuation liabilities' — suggesting the liability had grown to about $290 billion. The Future Fund was valued at $237.9 billion as at December 31. The most recent federal budget estimates liabilities for civilian superannuation schemes, including the CSS and PSS as well as pensions for judges, at $166 billion in 2024-25, rising to $179 billion by 2028-29. Including military superannuation schemes, the total figure was $303 billion in 2024-25 and $341 billion by 2028-29. Treasury's PSS and CSS Long Term Cost Report, published last year, forecast that the unfunded liability for the schemes would peak at $190.5 billion in 2033-34 before declining to $62.4 billion by 2060. As of June 30, 2023, there were a total of 100,574 CSS members, including 1333 still currently employed, and 214,793 PSS members, 54,870 still employed. 'People who are in public service are entitled to a payout, but that payout should have been calculated and created with a logical and fair mechanism,' Mr Abernethy said. 'Saying to someone you get paid your pension based on your average wage when you leave, you tell us when you want to get it … that's not fair. You create these different tiers of benefits. Society's got to sit back and say, what's fair and what's affordable? Everyone's trying to get at fairness in the super system, but there's only so much money in the pot.'
Korea Herald
27-05-2025
- Politics
- Korea Herald
Travel bans imposed on former PM, finance minister
Travel bans for ex-PSS top officials also extended Former Prime Minister Han Duck-soo and former Finance Minister and Deputy Prime Minister Choi Sang-mok have been banned from leaving the country for their alleged connection to former President Yoon Suk Yeol's botched martial law attempt in December 2024, according to the police on Tuesday. The announcement by the Korean National Police Agency comes a day after the KNPA's National Office of Investigation conducted interrogations that lasted approximately 10 hours with Han, Choi and former Interior Minister Lee Sang-min regarding their involvement in the martial law debacle. During interrogations, the former ministers were reportedly questioned about whether they made false statements about the process of receiving martial law-related documents on the night martial law was declared, based on police analysis of surveillance footage of the presidential office's Cabinet meeting room and hallway. According to the Korean National Police Agency, a travel ban had already been imposed on Han and Choi around the middle of May. Lee's exit ban, which was already in place since December last year, was also extended. The police also announced on Tuesday that it has extended the travel bans placed on Yoon's former chiefs of the Presidential Security Service, including former PSS chief Park Chong-jun, former PSS deputy chief Kim Seong-hoon and former head of the PSS' bodyguard division Lee Kwang-woo. The decision comes after the police obtained secure phone server records on May 23, including calls and texts exchanged between Yoon and government ministers, military officials and PSS personnel. The police announced three days later that it had detected signs that some call records of a secure phone held by Yoon had been remotely deleted. Though police officials were quoted in local media reports saying that the PSS is believed to be responsible for deleting the records, they are still in the process of narrowing down a suspect. The police plans to move ahead with investigations by looking into when the three individuals first became aware of Yoon's plan to declare martial law, and whether they knew about the plan in advance before martial law was officially declared.
&w=3840&q=100)
Business Standard
22-05-2025
- Business
- Business Standard
Govt to have a say in new payments regulatory board with a significant role
In a major overhaul of the payments ecosystem, the Centre has notified the 'Payments Regulatory Board Regulations, 2025' to pave the way for a new Payments Regulatory Board (PRB) which will have significant representation from the government, and replace the Board for Regulation and Supervision of Payment and Settlement System (BPSS). The BPSS is a committee of the central board of the Reserve Bank of India (RBI) that exercises powers on its behalf, to regulate and supervise the payment and settlement systems in the country. The new regulatory entity, PRB, will be assisted by the Department of Payment and Settlement Systems (DPSS), a department in the RBI. According to a notification published on May 21, the composition of the Board will be in accordance with Section 3 of the Payment and Settlement Systems Act (PSS), 2007. Along with the RBI governor, who will be the Chairperson, the RBI Deputy Governor in charge of payment and settlement systems, and an RBI officer nominated by its central board, the Board will include three members nominated by the central government. Additionally, the PRB may invite persons with experience in the fields of payment and settlement systems, information technology, law, etc., to attend its meeting either as permanent or as ad hoc invitees, with the principal legal adviser of the RBI to be a permanent invitee. 'As I see it, there will be three nominees from the government and three from the RBI, with the governor having a casting vote. With this shift, the government will also have a significant role in the payment ecosystem. The industry will have to see if it appoints secretaries or independent experts from outside,' an industry executive with the knowledge of the matter said. Under the extant BPSS structure, the RBI governor is the chairperson of the board, that also includes a deputy governor, not more than three directors of the central board nominated by the RBI governor, two executive directors nominated by the governor, as well as the RBI's legal adviser. The notification states that the PRB may delegate any or all its powers or functions to the Chairperson of the board, or a member of the board, or a sub-committee of the board, or officers of RBI as it may deem fit and necessary for the efficient administration of the functions of the board. The PRB is required to meet at least twice in a year, and the meetings will be presided over by the chairperson or in his absence, by the deputy governor. The notification states that each member of the board will have one vote, and any item of business requires voting, then such an item will be decided by a majority of votes. In the event of an equality of votes, the chairperson, or in his absence, the Deputy Governor, will have a second or casting vote. In 2017, an inter-ministerial committee for finalising amendments to the PSS Act, 2007, had recommended, in a draft report, the creation of an independent regulator PRB to deal with payments related issues, with the chairperson appointed by the government in consultation with the RBI. Consequently, RBI in a strongly-worded dissent note said there is no case for having a regulator for payment systems outside the central bank. According to the RBI's dissent note in October 2018, PRB should be headed by the RBI governor, with the government nominating three members to the board, and a casting vote for the governor. 'The overarching impact of monetary policy on payment and settlement systems and vice versa provides support for regulation of payment systems to be with the monetary authority," the dissent note had stated. According to the notification published on Wednesday, the nominated members on the new board cannot be above 70 years of age; a member of parliament or any state legislature; have material conflict of interest with any other payment system and are unable to resolve such conflict, among other things. 'The composition of the board would have members from areas such as technology and payments systems. This implies that the board may want to look at the ecosystem from a holistic perspective by adding more members who may not directly be regulators,' an industry executive said. 'This board was under discussion. There is a fintech department, then there is DPSS, and other things. This new board may sit above everything else so that there are common standards in place to coordinate things,' a senior industry executive said.
The Hindu
13-05-2025
- Business
- The Hindu
Karnataka High Court dismisses plea of PhonePe against making disclosure to police for probe
Observing that 'the duty to protect data must yield, where public interest and criminal investigation intersect,' the High Court of Karnataka has said that digital payment intermediaries such as PhonePe has no complete immunity under the law from disclosing confidential information about transaction details/account credentials of registered users to the police for investigation in a criminal case. 'The protection of consumer privacy cannot eclipse the lawful imperative of investigating officers to secure evidence and take the investigation to its logical conclusion. Confidentiality must coexist with accountability,' the court observed. Justice M. Nagaprasanna made these observations while dismissing a petition filed by PhonePe Pvt. Ltd. Summons questioned The company had questioned the summons issued by CEN police station, Bengaluru Rural district, asking the company to give certain information about transactions on a complaint lodged by a person alleging that he had lost money in 2022 while using several digital payment gateways while transferring various amounts to online cricket betting apps. It was contended by PhonePe that digital payment intermediaries had immunity from disclosing information to anyone, including the police, except the courts, under the provisions of the Payment and Settlement Systems (PSS) Act, 2007 and the Bankers Books Evidence (BBE) Act, 1891 which is made applicable to the Payment and Settlement Systems Act, 2007. Statutory authority 'Section 22 of the PSS 2007 Act, no doubt, permits a payment gateway to keep the documents involved in payment system confidential. Exceptions are carved out in the statute itself. The provision itself carves out that except where such disclosure would be required in obedience to the orders passed by the court of competent jurisdiction or a statutory authority in exercise of power conferred under the statute,' the court noted. Hence, the court said that the investigating officer was a statutory authority, who was acting in terms of the powers conferred under the Code of Criminal Procedure while conducting investigation, and therefore the contention that details could not be divulged could not be accepted. Even the provisions of the BBE Act, 1891 itself made provision for disclosure of information, the court pointed out.
Daily Record
05-05-2025
- Business
- Daily Record
Twenty-three North Lanarkshire schools to benefit practical sustainability water usage initiative
As part of its commitment under the Public Sector Scotland (PSS) Framework, water retailer Business Stream has provided free water butts to the schools. Twenty-three North Lanarkshire schools are set to benefit from a practical sustainability initiative that aims to inspire young minds while helping cut water usage. As part of its commitment under the Public Sector Scotland (PSS) Framework, water retailer Business Stream has provided free water butts to the schools. The water butts, which capture and store rainwater for outdoor use, are expected to save up to 2000 litres of water a year in each school. Sophia Goring, head of environmental, social and governance (ESG) at Business Stream, said: 'This innovative water-saving project, not only helps schools reduce water consumption but also provides a practical, hands-on learning opportunity for young students to understand environmental sustainability. 'By introducing water butts into primary schools, we're empowering the next generation to become environmentally conscious citizens.' Each school is encouraged to locate and secure their water butt in a safe and practical area, ensuring it supports outdoor learning and gardening activities while adhering to health and safety guidelines. As part of the rollout, local authorities will also be invited to share feedback and case studies from participating schools, capturing the environmental and educational impact of the initiative for future learning and reporting. The initiative underlines Business Stream's wider environmental commitment. Since launching its 'Make A Positive Difference' (MAPD) vision in 2019, the organisation has delivered more than 30 ESG-focused initiatives. Sophia added: 'This initiative is a perfect example of how small, practical actions can deliver long-term benefits for both people and planet. 'We're committed to helping our public sector customers meet their environmental goals, and this is a fantastic way to encourage sustainable thinking from a young age. 'Our hope is that these water butts become a lasting resource for schools, both as a tool for reducing water usage and as an opportunity to bring sustainability to life for children in a fun and hands-on way.' *Don't miss the latest headlines from around Lanarkshire. Sign up to our newsletters here.
