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Retirees cash in at public expense

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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.

  • Interactive: See the data for your agency here

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.

Minister for the Public Service, Gary Gray.

Minister for the Public Service, Gary Gray. Photo: Alex Ellinghausen

''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.''

112 comments

  • When I last worked in a payroll area in the C/W Commonwealth, there was a rule that prevented people from receiving a redundancy payment that exceeded the amount they would receive in salary if they worked to retirement age . Does this still apply?

    ''However, age is not a factor in managing retrenchments, nor could it be under anti-discrimination legislation,''
    I also like the way that this very pertinent sentence is buried at the bottom of the article so that it's read (if it's read at all) after many readers' minds have been clouded by the sort of anti public servant outrage that this article plays on.

    Commenter
    Mike Micanopy
    Location
    Gnilabura
    Date and time
    March 04, 2013, 7:57AM
    • Hi Mike. Re: Gary Gray's points. His views are at the bottom because he's not directly responsible - this is about the administrative decisions of agencies, not ministers. Also, no one's suggesting it's illegal to offer redundancies to people of a certain age, so the point about anti-discrimination legislation is a little irrelevant - it would never be invoked.

      Commenter
      Markus Mannheim
      Location
      Canberra
      Date and time
      March 04, 2013, 9:43AM
    • Markus - if an organisation undergoing restructure took a decision not to make workers aged over 60 (or some other abitrary age) redundant, that would be discrimination under the Act, would it not? A redundancy approach should be blind to the age, gender etc of the affected employees. By using the word 'rort', the article is somehow implying that what ought to happen is that workers approaching retirement age should not be made redundant.

      BTW, anyone made redundant in their 50s and then getting new employment but nevertheless raiding their super just because they can will probably live to regret it.

      Commenter
      rudy
      Date and time
      March 04, 2013, 10:08AM
    • People SHOULD be outraged, for this is an outrage. Pretending that such lavish is available to all is obscene.

      It is yet another example of the rarefied air that others are receiving in an egalitarian country.

      Never has Orwells saying proven so true: "All animals are equal, but some animals are more equal than others".

      Dont pretend it is "Procedurally Correct" or "the Right Thing" for it is not. It is a result of snouts firmly placed to the trough.

      Commenter
      evanism
      Date and time
      March 04, 2013, 10:11AM
    • "Snouts in the trough"? Really? Workers over 50 who were employed in the public service and are therefore probably considered unemployable getting a reasonable redundancy payout?
      Given that they're probably made redundant due to some kind of political ideology rather than a sound business decision, it's a good thing that they're not forced onto the dole too early! Unemployment benefits come out of taxpayer funds, too - and redundancy payouts are capped.

      Commenter
      MerriD
      Date and time
      March 04, 2013, 10:32AM
    • I see, so, they've paid more in redundancy payments, than they'll receive by throwing single parents off the parenting payment.

      Therefore, single mothers are now forced to prostitute themselves to pay for public servants handshakes.

      Commenter
      sarajane
      Location
      melbourne
      Date and time
      March 04, 2013, 10:47AM
    • Hi sarajane. Maybe you can point some of these desperate single mothers that you obviously intimately know in my direction. I may be able to help some of them with my very lucrative handshake.

      Commenter
      beria
      Date and time
      March 04, 2013, 11:19AM
    • By the way, it is unfair to pretend it is only government that hands out attractive redundancy packages. The private sector does too and they are often most lucrative for the failed CEO's and other senior employees.

      Commenter
      Straight Talker
      Location
      Churchill
      Date and time
      March 04, 2013, 12:57PM
    • What about Glen Stevens 30% pay rise ?

      Commenter
      enno
      Location
      sydney
      Date and time
      March 04, 2013, 1:46PM
    • MerriD, "sound business decision"... it is NOT a business. It is a political institution paid for by forcibly extracting taxes from productive profitable private enterprises. This "business" you speak of is the exact opposite. It is a parasitic leach on the economy.

      Second, "employed in the public service and are therefore probably considered unemployable" well, you have hit the nail right on the head here. So its not the positions thats redundant, but the person themselves?

      Is the APS a defacto unemployment cue? It sounds like it is. The every APS employee is now, henceforth, known to be unskilled and unemployable.

      This perfectly matches real world expectations.

      Commenter
      evanism
      Date and time
      March 04, 2013, 2:26PM

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