Retirees cash in at public expense

Thousands of federal public servants who received redundancy packages in recent years were close to retiring but held out for a final, taxpayer-funded bonus.

One of Australia's top superannuation specialists says the practice is a widespread rort that unlocks lucrative benefits for retirees but wastes many millions of public dollars.

An analysis of five years of data, detailing 8760 redundancies, shows most payouts (62 per cent) under the Rudd and Gillard governments were given to staff aged over 50, and more than one in five to employees over 60.

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By comparison, only 30 per cent of the Australian Public Service workforce is aged 50 or older, and only 6 per cent is over 60.

Dixon Advisory executive chairman Daryl Dixon, who specialises in government super, said he regularly advised older public servants to keep their job until they were retrenched.


''The ethics is bloody ratshit but you'd be silly to leave other than with a redundancy,'' he said.

''For many, it really is hitting the jackpot. It's a year's salary, very favourably taxed or not taxed at all, together with access to very generous super benefits.

''It's a waste of government money but it happens all the time.''

Public servants who are members of the now-closed Commonwealth Superannuation Scheme usually retire just before they turn 55, as most receive bigger pensions if they do. If they retire after 55, a redundancy payout can significantly boost their pension, sometimes by hundreds of thousands of dollars.

Members of the closed Public Sector Superannuation Scheme also have a powerful incentive to be retrenched, as it allows them to access their pension before the retirement age of 65 - even if they find another job.

The Public Service Commission advises government agencies ''to avoid creating employee expectations of receiving a redundancy payment to depart''.

However, Mr Dixon said such expectations were common, as the practice of offering golden-handshake bonuses had existed for years.

The federal government made $825 million in separation and redundancy payments in the five years to June 2012, though that amount includes payments to staff in military and other non-APS government workplaces.

The Australian Quarantine and Inspection Service was the agency mostly likely to retrench staff who were near the optimum retirement age.

Of the 199 AQIS staff who were offered packages in the five years examined, half were over the age of 60 and 85 per cent were over 50.

An agency spokesman said most of the payouts were offered to meat inspectors, who tended to be much older than the average public servant. ''The decision to offer voluntary redundancies is based strictly on business priorities,'' he said.

The Foreign Affairs Department also tended to give payouts to older staff. A spokesman said the department used redundancies to save money, adding it was ''not possible to predict when DFAT employees are about to retire, given there is no mandatory retirement age for members of the APS''.

The Minister for the Public Service, Gary Gray, said staffing decisions were a matter for individual agency heads.

''However, age is not a factor in managing retrenchments, nor could it be under anti-discrimination legislation,'' he said.

''There is no longer a specified maximum retirement age in the APS and it would be difficult, therefore, to make any judgments about the likelihood that an employee will retire in the near future.''


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