Not so super

retired women on a benchMore than 1000 retired Uniting Church ministers have had their retirement incomes slashed by federal government superannuation changes that came into force on 1 January.

Changes to the tax treatment of defined benefit super schemes mean more than 80 per cent of retired members in the UCA Beneficiary Fund are losing thousands of dollars a year, principally because it will now be harder for them to receive the age pension.

The scale of lost income varies with initial feedback suggesting most losses in a range of $5000 to $8500 and some as high as $10,000 a year.

Retired ministers, and in many cases their widows, are struggling to adjust to their change in circumstances with the Uniting Church Beneficiary Fund fielding reports of financial hardship.

One late minister’s wife describes herself as “being forced into a survival situation again” at the age of 76, while other former ministers are reportedly considering selling out of retirement villages they live in.

The changes are bad news too for ministers in defined benefit schemes who are close to retirement, as they won’t be able to rely on the age pension to top up their income as they might have expected.

As of 30 September last year there were 637 Uniting Church ministers contributing to Beneficiary Fund defined benefit schemes.

Collateral damage

Uniting Church ministers are the only clergy in Australia caught up by the changes, which the federal government brought in to improve the fairness and sustainability of the pension system.

“As far as we can tell, we are the only mainstream church that operates a defined benefit superannuation scheme for our clergy, so Uniting Church ministers are uniquely affected,” Bruce Binnie, chair of the Assembly’s Employer Committee, said.

“I believe that the effect on Uniting Church ministers is an unintended consequence of the government’s legislation.

“So we are appealing to Social Services Minister Christian Porter to review the legislation and exempt ministers from its effects.”

Advocacy efforts

Outgoing Assembly general secretary Rev Terence Corkin wrote to Mr Porter in November last year to ask him to review the legislation in light of the potential for significant reductions in income and quality of life for UCA ministers.

Mr Porter responded just before Christmas but made no commitment to review the legislation.

Bruce Binnie, who’s coordinating the Church response, is hoping to win an exemption for retired ministers.

“Members of military superannuation schemes have been exempted from effects of the legislation.

“Given the relatively small number of members in our scheme and their circumstances, I’m hopeful that the minister will be able to find some way of relieving the impost that has been placed on pensioner members of the Beneficiary Fund,” Mr Binnie said.

Uniting Church ministers, or their families impacted by the changes, are being urged to contact their local federal Member of Parliament to voice their concerns.

Assembly general secretary Colleen Geyer says the Assembly will continue its dialogue with Mr Porter in the hope of improving the situation for ministers who have been unfairly disadvantaged.

UCA Beneficiary Fund

The Beneficiary Fund operates three defined benefit schemes – two that closed to new members in 2004 and another that opened two years ago.

“The members that are most affected belong to the first two schemes, particularly those with long periods of service and whose pension is based on a ministerial stipend that was much lower at the time,” Mr Binnie said.

Defined benefits schemes are regarded as more generous than regular ‘accumulation’ super schemes. Rather than a lump sum or an annuity limited by contributions, defined benefit members usually get a guaranteed lifetime pension that is a percentage of their final salary. Many older schemes also offer “reversionary” pensions which transfer to a spouse or partner after a member’s death and to other dependants after their death. With Australians living longer, the cost of the public sector defined benefit schemes has come under particular scrutiny in recent years.

If you are a Beneficiary Fund member experiencing hardship as a result of the federal government superannuation changes, please call the Mercer Super Trust helpline on 1800 682 535 or Centrelink on 132 300.

Copies of correspondence between the Assembly general secretary and Mr Porter are available on the Assembly website.

Photo by Alex Proimos via Flickr.

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