History of Lawful Pension Benefit

The impact of the changes in the Pension Benefit can assessed by using the example of a typical male officer who is retrenched at the age of 52 after 26 years of service with a Final Average Salary of $100,000 {averaged over the last three years of service}.

This example is based on a recent survey of members of the fund who are no longer in the service of the sponsoring Employer.

It is assumed that the commencing salary was $31,820 which was increased a rate of 4.5% per annum.

If the original Trust Deed made on the 23 December 1913 contained no Power of Amendment, the pension formula could not be amended by a Deed of Variation and so the pension benefit would be:

[1/60] times [Years of Service] times [Salary averaged over 28 years of Service] or

[0.467] times [28] times [$61,359] = $28,634

However the original Trust Deed did contain a Power of Amendment and the first amendment the pension formula eliminated the first 10 years of service from the averaging period.

By 1949 the pension benefit was determined as:

[1/60] times [Years of Service] times [Salary averaged over 18 years of Service] or

[0.467] times [28] times [$73,725] = $34,405

The 1958 consolidation Deed of Variation changed the pension formula to:

[Years of Service]/[Age when Leaving Service] times [Final Average Salary]

where [Final Average Salary] was initially the average of the last 10 years of service.

The pension factor for a male officer with 26 years of service who was retrenched at the age of 52 therefore increased from 0.467 to 0.500, and  the pension benefits would be determined in 1958 as:

[0.500] times [$86,353] = $43,177

from 17 January 1961, the averaging period was reduced to the last 7 yearsof service, therefore the pension benefit became:

[0.500] times [$91,869] = $45,934

From 1 October 1965 the averaging period was reduced to the last 5 years of Service, therefoer the pension benefit became:

[0.500] times [$95,817] = $47,909

Finally, from 18 May 1970 the averaging period was reduced to the last 3 years of Service, and therefore the pension benefit became:

[0.500] times [$100,000] = $50,000

These results are summarised on the following graph.

Pension Graph
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