The government has implemented significant reforms to the pension system, introducing changes to streamline benefits and calculation methods. Effective immediately, following recommendations from the Pay and Pension Commission 2020 (PPC).
One major change involves a new method for calculating pensions. Instead of basing pensions on the last drawn salary before retirement, future pension amounts will now be determined by the average of pensionable earnings over the final 24 months of service. This revision is expected to disadvantage new pensioners compared to the previous system.
In another reform, individuals entitled to multiple pensions will now be required to choose only one pension to draw. However, federal government employees entitled to a pension will no longer be eligible to receive additional pensions. An exception allows spouses who are pensioners or in-service employees to claim the pension of their deceased partner alongside their own.
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The government has also adjusted rules for pension increases. Future increases will be calculated based on the “baseline pension,” defined as the net pension amount at the time of retirement (gross pension minus the commuted portion).
Each approved increase will remain as a separate amount until the federal government decides on any additional pensionary adjustments. Furthermore, the baseline pension will be reviewed every three years by the Pay and Pension Committee. For existing pensioners, as of January 1, 2025, their current pension will serve as the baseline, including any restored commuted portions.
