ABC Presenters’ Pension Paradise

A deep secret about the star players of our ABC is not what they’re paid – we know that – but the size of their taxpayer-funded pensions on retirement or redundancy from the ABC.  Take  ABC presenter Quentin Dempster, newly terminated. He was on a paypacket in 2011-12 of $291,505, according to the pay data inadvertently leaked by ABC administration in a glorious own-goal a year ago. “My salary is commensurate with my skills and abilities,” Dempster clarified.

Last  month, a little item appeared in The Australian  in Sharri  Markson’s Media Diary, under the heading “Quentin on a Good Wicket”. She remarked: “While it is very sad to see local journalism disappear from 7.30 on Friday nights, people shouldn’t be too devastated for outgoing ­experienced host Quentin Dempster. His defined benefit super ­income likely to be about $150,000 a year.”

An outraged Dempster fired back, without denying the $150,000:

“Breach of Privacy

Your publication of the calculated quantum of my employee super income income (Media Dairy [sic], 8/12) following my sacking was attributed by your reporter to “ABC Sources”. This is an invasion of my personal privacy, a breach of Clause 11 of the Journalists’ Code of Ethics. It places me  at an immediate disadvantage in any job negotiation as I seek to sustain my livelihood.

Your reporter ignored my objection on privacy grounds when she telephoned me on Sunday evening. Transparency must be consistently applied. This was selective, vicious and unfair and coated in smarm. Quentin Dempster, Ultimo.”

Still smarting, he tweeted, ” I want/need work.”

On the one hand, I do feel sorry for Quentin, aged 63, suffering what he calls an ‘industrial execution’ and now trying to sustain his 30-year ABC-type lifestyle by supplementing a $150,000 ABC lifetime-indexed pension with a new job. On  only  $300,000 a year,  it clearly wasn’t easy to save for a rainy day.

Maybe he could cut living costs in Sydney by relocating to his acclaimed beach house near Burnie, except that it’s often occupied by holiday-makers paying $2950 a week rent.[i] Quite likely, he’ll be taken to the bosom of the University of Technology’s School of Independent Journalism in Sydney. His view that Rupert Murdoch is Tony Abbott’s “puppet master” would be considered quite normal and entirely sane there. (He thinks we are governed by a “Murdoch-Abbott duumvirate”).

Dempster also thinks  the ABC’s juvenile skit by Kirsten Drysdale last November about Abbott ‘shirtfronting’ Putin was not grief-intrusive to MH17 victims but mere “satire over our prime minister’s tabloidism”. And her satire was “following a great tradition at the ABC”, he said.  So I guess Dempster, who can dish it out, can suck it up about his pension  disclosure.

Actually, anyone (including a potential employer) can get a reasonable estimate of an ABC ex-presenter’s pension from  Table 4 of the publicly-available ready reckoner for the Commonwealth Superannuation Scheme (CSS) members. Someone of Dempster’s age and with  30 years at the ABC could expect 48% of final salary as a pension. Based on a 2011-12 salary of $291,000 the CSS pension would be $139,680 a year, CPI-indexed for a lifetime. Someone getting $150,000 a year pension, conversely, maybe had a final salary of $312,500.

When a Commonwealth defined-benefit pensioner dies, a  surviving spouse continues the indexed pension for his/her lifetime but at a reduced rate of 67% to 85%, or (in our hypothetical above case), $100,000-127,000 a year.

The principal’s pension figures don’t include a payout  based on an ABC staffer’s own contributions (5-10% of salary), plus an employer top-up of a 3% annual “Productivity Component” (don’t laugh!) for all CSS members, plus earnings.[ii] That separate payout can involve combinations of  lump sum and non-indexed pension.

The Commonwealth defined-benefit super scheme for ABC people involves an annual employer contribution  of about 20% of ABC members’ salary. In 2005 it was an astounding 28.2%. Too good to last, it was closed to new entrants in mid-1990. (Its defined-benefit successor the Public Service  Super Scheme – with many ABC participants —  lasted until 2005). But the ABC’s old hands could continue with the plush CSS scheme, while ABC post-2005 newcomers have had to console themselves with  relatively stingy defined-contribution (accumulation) super.

So let’s play Guess My Super! for the ABC crew’s old-timer stars, those who joined in the days of the compulsory CSS scheme.

First, some warnings.  To get a hypothetical payout, we just plug into the Commonwealth’s ready reckoner  the star’s salary, age and years of service – the latter two numbers  can involve a bit of sleuthing.[iii] The pension in the case of serving ABC stars, would be as if they retired today.  They are lifetime, indexed, and with reversionary rights to a surviving partner. To add spice, I also mention the speaker bureau fee the bigshots command, thanks to their ABC branding. Here we go:

Kerry  O’Brien. Aged 69, he joined the ABC in  1989 and continued to host Four Corners in 2014. His 2009-10 salary was  $365,000.  The reckoner shows a maximum benefit factor at age 65, so taking that age and 25 years service, the pension would be 45% of salary or  about  $164,000.  Speaker fee: $10-15,000.

Tony Jones. Tony is the ABC’s current top-paid presenter ($355,789 in 2011-12), who presides over  the  Q&A circus. Aged 57 and with 29+ years of ABC service, his pension would be $141,212. Speaker fee, $15,000+.

Jon Faine. He has been with the ABC since 1989, hosting the Melbourne  774 breakfast radio show since 1997. His age (this took some sleuthing) is 57. 2011-12 salary, $285,249 – later renegotiated to $300,000. Years of service, 25. The pension   would be $109,000.  Speaker fee:  $10-15,000.

Fran Kelly. Host of   ABC Radio National Breakfast. Age 57 and with  26 years with ABC. Salary $255,000. Pension would be $95,013. Speaker fee, $15,000-plus.

Ian Henderson. Joined the ABC in 1980. Presenter ABC    TV News Victoria weeknights since 1992. Age 61. Years of service, 34. Salary $188,533. Pension would be $88,459.

Jonathan Holmes*. Age 67. With ABC 1982-2013 – 31 years. Left the ABC’s Media Watch in mid-2013. Salary 2011-12, $187,380. Pension would be $94,158. Speaker fee, $15,000-plus, as well as whatever he pockets for regular columns in the Fairfax Press. His notes of complaint to Quadrant are submitted free of charge. (*see Jonathan Holmes latest note below)

Geraldine Doogue. Age 62. Years with ABC, 24. Salary 2011-12, $182,013. Pension would be  $75,280. Speaker fee, $5000-10,000.

It’s a long time since 1990-95, but the ABC’s total defined-benefit old-timers are still costing the ABC and taxpayers a bomb. The 2014 ABC annual report shows its defined-contribution actuarial  costs were $40m that year, compared with only $31m for its people on accumulation super. Over the past six years, ABC actuarial costs for “Defined Benefits” totalled $212m;  while “accumulation scheme” costs totalled only $150m.

What this suggests is that there are still hordes of long-serving ABC staffers looking forward to a lifetime of indexed-pension luxury. These future expenses for all the federal public service, including the ABC types,  fall on the taxpayers, hence the need for that Future Fund nest-egg which currently totals $101 billion.

Across the Commonwealth Public Service, about 16,000 are on the CSS scheme (their average salary is above $100,000), plus 115,000 ex-bureaucrats on lifetime indexed CSS pensions. Unsurprisingly, there’s an unfunded CSS liability of about $60b, close to half a million dollars per current and retired member.

Whereas normal Australian workers can’t afford retirement at 55, ABC and others in the CSS   super scheme can go out   in style at 55 with a fat super deal known as 54/11 (i.e. get out just before your 55^th birthday, and do better than if you continued to work to 60 or 65).    As one official report put it, “it is not surprising that the schemes have a sharp decline in membership around age 55 and that very few PSS or CSS members work past age 60.”

About 40% of CSS members aged 50-54 typically plan to grab the 54/11 option.   A classic example was Treasury Secretary Ken Henry, who went out on 54/11, according to the Liberal’s Bronwyn Bishop. As financial planner Theo Marinis, of the Marinis Financial Group, Adelaide,  puts it, the 54/11 device “has the potential to provide as much as $200,000 or more in additional retirement benefits over the pensioner’s lifetime, with the effect that most Commonwealth Public Servants who are 54 and 11 months of age would often need to work an additional five years or more in their current job in order to be better off financially in retirement.” The 54/11 weirdness arose by accident in the scheme and has never been corrected.

For the PSS members (e.g. employees who joined the ABC between 1990 and 1995) things can also go well. Marinis writes:

“Over the last 20 years I have shown dozens of PSS member clients how under their scheme they can take a lump-sum and choose to pay off their house, go overseas on a holiday and / or make other lifestyle and recreational purchases… draw down the pension they require until they are 65 and still be eligible (effectively double dipping) for significant social security pensions!”

For a 55-year-old CSS member with $200,000 combined contributions,  the 54/11 formula generates a $46,250 lifetime indexed pension. A non-public servant going out with a $200,000 super nest-egg would be lucky for it to last five years at a $46,000 annual payout rate. The official report gives an example of a CSS member on $70,000 salary with 30 years service. The standard age-55 lifetime-indexed pension would be $26,250; the 54/11 version is given at $34,687. That member would have to work till age 59 before his pension reached the 54/11 level. Any extra member contributions above 5%, interest and Employer Productivity Component  of 3%, can be taken as a lump sum or non-indexed pension, up to a maximum of  20% of  final salary.

Another lurk is ‘Resign and Return’. The  54/11 retirees can be re-hired by their department boss on a part-time, consulting or contract basis, further boosting the retirees’ nest-egg. Some years back, when surveyed, nearly a third of the 54/11 retirees said they went back into their jobs under various arrangements.

Many ABC big-name presenters joined the ABC between 1990-95 and  were enrolled in the Public Sector Super Scheme (PSS). These members cost the ABC nearly as much  for super as a ratio of salary, as the CSS tribe. But calculating the benefits on retirement is impossibly complex for any outsider.

Tony Thomas blogs at tthomas061.wordpress.com

Quadrant reader Jonathan Holmes writes: