Nearly 35,000 public sector pensioners around Australia have had their pensions either reduced or cut off entirely since the beginning of the month, Centrelink has confirmed.
Retirees groups say the cuts have left many below the poverty line and welfare advocates say it is unfair to "move the goalposts" after people have already retired and have little or no ability to change their circumstances.
The decision to include most of public sector "defined benefits" superannuation payments into the income test has provoked fury among retirees but the government says the move is about making their treatment the same as that of former private sector workers.
Under the new rules, the amount of income from state or federal defined benefits super schemes that can be exempted from Centrelink's income test has dropped from 50 per cent to 10 per cent.
Access to the age pension has either been drastically reduced or cut off completely for tens of thousands of former teachers, nurses, police officers and firefighters as well as state and Commonwealth clerical workers.
The Department of Human Services has confirmed that nearly 35,000 pensioners had been sent word that some or all of their age pension would be cut, effective from January 1.
"34,820 letters were ... issued to customers in mid-December, notifying of a new payment rate or cancellation of their payment from 1 January 2016, as a result of changes to their income and assets," a departmental spokeswoman said.
The Australian Council of Public Sector Retiree Organisations is furious that the changes will cut the incomes of retirees who contributed to their super all their working lives and is urging pensioners to vent their displeasure to their local federal politicians.
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The council's national president Richard Griffiths bitterly disputes the government's position that the rule changes correct and "anomoly" and says the pain will begin to be felt on Thursday, the first payment pension day of 2016.
"Obviously many retirees in the ACT and surrounding electorates will start to feel the real impact of the 10 per cent cap policy on their bank accounts next Thursday," Mr Griffiths said.
"The policy seems to have been based on either a misconception or prejudice."
But Social Services Minister Christian Porter is adamant that the changes bring defined benefits pensioners into line with most other retirees.
"This change is about ensuring fairness in how income is treated when deciding how much taxpayer income support a person should receive," a spokesman for the minister said.
"Defined benefits are a generous form of income for the income test.
"We are fixing an unintended consequence of a previous change to enable fairer assessment of a person's need for income support.
Sydney's Welfare Rights Centre agrees with the government that the new rules will promote consistency but says they should have been "grandfathered" to avoid an unfair impact on those who had already retired.
"The thousands of retirees who will be negatively impacted are not in a position to change their circumstances," the centre's director Aaron Neal said.
"They made retirement decisions based on the rules currently in place and are unable to reverse those decisions.
"Many of these people aren't wealthy retirees, and the average annual income drawn from defined benefit schemes is only $27,550.
"Couples impacted are often living on modest incomes, so there will need to be some belt-tightening all around.
"Pensioners and superannuants contacting our Centre are upset that the Government failed to introduce grandfathering provisions.
"Grandfathering would have avoided the financial harm that people are experiencing as a result of these changes."