Taxpayers face bill of up to $1b to fund MPs’ retirements

That means retiring Labor MPs Jenny Macklin and Wayne Swan will also be eligible after they leave Parliament in May.

More than 25 other MPs who intend to contest the next election –including Tony Abbott, Kevin Andrews, Peter Dutton, Anthony Albanese and Tanya Plibersek – will also be able to claim the benefit when they either retire or lose an election.

After the 2033 peak of $59 million, the scheme will start to tail off as former MPs and their spouses die.

The total accrued liability, or the value of future benefit payments to scheme members, will reach $912 million in 2020 but could go as high as $1.03 billion according to modelling done by the Finance Department.

There were 339 retired MPs and 84 spouses eligible for the scheme in 2017, the department found.

Ministers and backbenchers elected prior to 2004 and who have served in Parliament for eight years and lose an election, or serve 12 years and retire, are also entitled to claim the benefit.

That includes MPs Maria Vamvakinou, Russell Broadbent and Gavin Marshall, who have never served in a ministerial office.

They could be eligible to take home $110,000 a year when they retire.

According to the Australian Securities and Investments Commission, an ordinary Australian retiree on a modest superannuation package is likely to receive up to $40,000 a year. An aged pensioner receives a maximum of $25,000 a year.

Departing Labor MP Kate Ellis, who joined Parliament after the 2004 election at the age of 26, will just miss out.

Communications Minister Mitch Fifield, who was elected only months earlier to a casual vacancy prior to the election, will be eligible, making him as much as $220,000 a year better off based on his current salary.

Pensions for parliamentarians who were elected between November 10, 2001, and October 9, 2004, are payable at age 55 under the first tranche of changes to the scheme passed by the Howard government.

Those elected before 2001 such as Mr Pyne, Ms Bishop and Mr Scullion are payable from the date of retirement. Mr Ciobo was elected in 2004.

The pension starts at 50 per cent of an MP’s wage and goes up to a maximum of 75 per cent, with increases for every year they serve after eight or if they serve in a ministerial role.

As retiring ministers, Mr Pyne, 51, and Mr Ciobo will be able to claim at the upper threshold, a pay packet that could have been reduced if they had served out another term in opposition on a lower wage.

MPs elected after 2004 get 15.4 per cent of their total salary paid by the government into a superannuation fund of the MP’s choice.

Former prime minister John Howard scrapped the pension scheme in 2004 after coming under pressure from then Labor leader Mark Latham.

Mr Latham, who is a candidate for One Nation in the forthcoming NSW election, has continued to claim the pension, worth an estimated $80,000 a year.

Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.

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