Plenty of reasons for Rudd to stay on

KEVIN Rudd has a powerful financial incentive to stay in politics.

By InvestSMART · 23 Jul 2010

By InvestSMART ·
23 Jul 2010

Comments

KEVIN Rudd has a powerful financial incentive to stay in politics.

A quirk in the parliamentary rules means if he left now he would get nothing until retirement age. One extra term in Parliament, or even just a few more months, would give him an annual salary of $118,000 indexed for life.

The Parliamentary Superannuation Scheme handbook says an MP will only get an annual pension on retirement if he or she has served for 12 years or been defeated in an election. Mr Rudd was elected in October 1998. He is three months short of the required service, without which he is entitled to nothing more than his contributions back, plus a supplement that slightly more than doubles them. But he isn't able to get it until he retires, some time after turning 55. He is 52. If he can stay a few more months he will get 60 per cent of a backbencher's salary (which works out at $78,600) plus 18.75 per cent of the prime minister's loading ($39,300) a year indexed for the rest of his life. That's $117,900 a year, climbing in line with MPs' salaries, without ever having to lift another finger. If he stays.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

Why does Kevin Rudd have a financial incentive to stay in politics?

A quirk in the Parliamentary Superannuation Scheme means an MP must serve 12 years (or be defeated at an election) to get an annual pension on retirement. Kevin Rudd was elected in October 1998 and is three months short of the 12-year service requirement, so staying a few more months or an extra term would qualify him for a lifetime indexed pension of about $118,000 a year.

What is the 12-year rule in the Parliamentary Superannuation Scheme?

The 12-year rule says an MP will only receive an annual pension on retirement if they have served at least 12 years in Parliament or have been defeated in an election. MPs who leave before meeting that threshold do not receive the regular annual pension entitlement.

How close was Kevin Rudd to meeting the 12-year service requirement?

Kevin Rudd was elected in October 1998 and, according to the article, was three months short of the required 12 years of service. That means just a few more months in Parliament would make him eligible for the annual pension.

How much would Kevin Rudd's annual pension be if he qualifies under the scheme?

If he qualifies, the pension calculation in the article works out to about $117,900–$118,000 a year. That is shown as 60% of a backbencher’s salary ($78,600) plus 18.75% of the prime minister’s loading ($39,300), indexed for life.

What happens if an MP leaves Parliament before reaching 12 years of service?

An MP who leaves before 12 years does not get the annual pension. They are entitled only to have their contributions returned, plus a supplement that slightly more than doubles those contributions, but they cannot access the full pension until retiring (some time after turning 55).

Does being defeated in an election count toward qualifying for a parliamentary pension?

Yes. Under the Parliamentary Superannuation Scheme, an MP who has been defeated at an election qualifies for the annual pension even if they have not completed 12 years’ service.

When can former MPs access their parliamentary pension or contributions?

The article explains that the annual pension is payable on retirement, which for MPs occurs sometime after turning 55. If an MP leaves before qualifying for a pension, they can get their contributions back (plus a supplement) but not access the full pension until retirement age.

Is the parliamentary pension indexed and will it increase over time?

Yes. The article states the pension is indexed for life and will climb in line with MPs’ salaries, so the annual amount would increase over time with pay adjustments for MPs.