I have long criticised the way public service pay is determined, advocating more rigorous market comparisons to attract and retain the right staff, rather than the prevailing methodology of agency-level "productivity"-based adjustments (which defies the way productivity affects remuneration in the market, and inevitably leads to gaming, differences in pay and conditions for the same work in different agencies, and overly complex administration across the APS).

Yet I am also concerned about recent criticism (in a series of articles in The Australian in April and from the Institute of Public Affairs) of the 15.4 per cent employer contribution for superannuation that APS employees receive, which is clearly a lot more than the 9.5 per cent that private sector employees generally receive.

The explanation for this apparent inconsistency is that total remuneration should reflect the market (which I assume the institute and The Australian would support), but that the superannuation component of public servants' pay has long been closer to good-practice retirement-income policy than prevailing private-sector super arrangements.

The first and most obvious point is that the 9.5 per cent most often used in the private sector is the minimum allowed under the law, and this minimum is legislated to increase over time to 12 per cent.

Some critics suggest the minimum contribution should remain 9.5 per cent. The Henry tax review is sometimes cited as finding that even 9 per cent would be sufficient to fund adequate retirement incomes for most Australians. Not mentioned is Ken Henry's assumption of increased tax concessions for super, when those concessions have since (and appropriately) been constrained; nor that, for most people, Henry assumed a very significant reliance on age pensions as well as super.

Work undertaken in late 2016 for the independent Committee for Sustainable Retirement Incomes by Phil Gallagher, the former head of Treasury's retirement incomes modelling unit, revealed that under the current tax and means-test arrangements, 12 per cent is required if those earning incomes in their working years up to the median are to receive net income in retirement of 65 per cent or more of their pre-retirement net income (70 per cent is a common benchmark of adequacy, in terms of ability to preserve living standards during retirement). Those on incomes above the median need to save more to gain a net income replacement rate of 65 per cent or more, as they will not be eligible for as much (if any) of the age pension. Most of these need to save at least 15 per cent, and more if they plan to start transitioning to retirement before age 67.

It would not be appropriate to increase the cost of labour until the economy (and labour market productivity) allows, nor to force employees to reduce their consumption while wages remain stagnant, but the target of 12 per cent as the minimum employer contribution remains appropriate.

Most APS employees will have incomes over their working lives above the median, and hence should be encouraged to save at least 15 per cent, not 12 per cent.

A second point rarely acknowledged is the reforms that were made to public service super since the 1980s that ensured the public sector continues to model prevailing best practice. These reforms were in response to changes in the workforce and society more generally, and to broader economic and public sector reforms.

In many ways, the Commonwealth Superannuation Scheme was a model of good practice at the time it was introduced. It offered secure and adequate pensions for (mostly male) breadwinners on the basis they would work in the public service for life. It was affordable, according to the actuaries at the time, despite being unfunded and promising significant and secure benefits. By contrast, super was rare outside the public sector, provided lump sums only where it did exist, and these were not necessarily linked to retirement and not readily convertible into secure lifetime incomes.

The world was changing, however, including for the public service, and super needed to adapt to a more mobile workforce, less reliant on those pursuing lifetime public service careers and involving many more women. Vesting and preservation rules had to be changed, and a more portable system introduced. Moreover, changing life expectancy was increasing the CSS's future costs. This led eventually to the CSS closing in 1990 and the opening of new scheme, the Public Sector Superannuation scheme.

The PSS was, in 1990, again a model of good superannuation practice: it still delivered secure and adequate retirement pensions for those staying in the APS to retirement (though less generous than CSS pensions), while also ensuring that all public servants were effectively accumulating savings for retirement however long they remained in the public service. Again, while not fully funded, actuarial advice determined that the promised benefits were affordable, equivalent to employer contributions of about 15 per cent on average.

Private-sector practice remained very weak, though reforms to vesting and preservation regulation removed some of the worst practices, ensuring employees could retain the contributions employers made and that these were more likely to be directed to retirement (or at least age 55) rather than consumed earlier. But lump sums were still not converted into lifetime pensions, despite government measures in 1983 to remove tax incentives and to facilitate the sale of indexed annuities.

Broader public sector reforms in the 1980s also led to more transparent identification of the value (and cost) of superannuation in public service remuneration (in terms of equivalent employer contributions). This ensured that total remuneration could be readily identified and included in agencies' running costs rather than having super financed separately, facilitating an "even playing field" for consideration of competition through contracting out and promoting more efficient use of public resources.

As mentioned, changes in life expectancy in old age were becoming increasingly apparent in the 1980s, requiring recalculation by actuaries of the equivalent employer contribution of the unfunded public sector schemes. These revealed in particular that the CSS cost was considerably higher than previously estimated. Moreover, the unfunded liabilities that had previously been assumed could be met by future government revenues were rapidly increasing.

By the early 2000s, it was decided that these challenges would best be met by closing the unfunded PSS and opening the fully funded PSSap, and by establishing the Future Fund, financed by privatisations and budget surpluses to meet liabilities from the unfunded public sector schemes. The PSSap employer contribution was set at the level estimated to apply to the PSS on average: 15.4 per cent. This, of course, avoided any suggestion of a reduction in public servants' remuneration (assessments around that time suggested public service pay, for most, was broadly in line with the market). It also preserved savings sufficient, according to PSS arrangements, for secure and adequate retirement incomes, particularly if employees made extra contributions.

The PSSap, which opened in 2005, had the added value for the government of leaving more financial risks with employees. It also ensured full portability without the former problem of artificial formulas to calculate the value of "accumulated entitlements" for those leaving the APS before the promised retirement pension would have kicked in (leading to the infamous "54/11" practice, where some CSS members calculated that the formula's lump sum before age 55 exceeded the pension promised if they stayed beyond age 55).

The PSSap scheme remains superior to most of those available in the private sector, which, at 9.5 per cent, won't deliver adequate retirement incomes for most employees. In my view, however, the PSSap went too far by removing the provision of lifetime indexed pensions in retirement; these could have been made available for purchase from the accumulated savings under the scheme. Instead, the PSSap follows private practice in this respect, which is yet to offer the sort of fully secure indexed lifetime pensions that were always at the heart of public sector super (and of social security, here and overseas). The Commonwealth Superannuation Corporation does now offer some retirement income products, and the government is slowly moving to press all funds to offer so-called "comprehensive income products in retirement" with a system of defaults or guided products for retirees in different circumstances.

In summary, while the APS super schemes did require considerable reform over the last 30 years, particularly with regard to financing, they have throughout represented far better models of good superannuation practice than the private sector schemes prevailing at the time. Over the whole period, there has been much ill-informed criticism of the schemes when the more serious public issue has been the adequacy and security of super for those outside the public sector.

That remains the case. Rather than reduce the 15.4 per cent employer contribution for APS employees, the government should improve its broader retirement-income policy. The proviso is that public-sector total remuneration should be based more strictly on relevant market comparisons.

Andrew Podger is an honorary professor of public policy at the ANU, and a former departmental secretary. andrew.podger@anu.edu.au

Correction: An earlier version of this article incorrectly said the Public Sector Superannuation Accumulation Plan does not require its members to place the full 15.4 per cent employer contribution into their super. It is required to do so.