According to news reports, Robert McClelland is retiring from Federal Parliament with an indexed pension of $225,000 per annum. He just misses out on the gold card that would offer free transport.
The Federal Parliamentary pension is indexed to Parliamentary pay increases. Assuming that McClelland lives to his full life expectancy as a 55-year-old (according to ABS Life Tables), he will survive another 27.5 years.
The present value (discounting for an average CPI of 2.5%) of his pension (excluding any residual that would flow to his spouse) is therefore just under $9.5 million. It is actually more than this given that the surviving spouse is entitled to receive a pension equal to 5/6 of the main pension.
Who says Australian politicians are underpaid?
What a bitchy thread this is. McClelland has represented his electorate for 17 years and represented it well. A politican’s salary is a very small fraction of that earned by executive managers of multinationals. His pension is also very small beer compared with what executives retire on.
He had the ability to reach great heights in the corporate world and has sacrificed riches to do that. He richly deserves his pension.
hammygar
30 Jan 13 at 8:22 pm
Indded. In no other profession are golden handshakes such a large multiple of annual salaries. And remember how Rudd campaigned against that very concept and even passed laws on it?
Milton Von Smith
30 Jan 13 at 8:26 pm
Put the violin away, Kero Boy. No one stuck a gun to his head and told him he had to run for parliament…I say that of course with the requisite disclaimer seeing it the Liars party. It’s quite possible there was a gun put to his head.
Higher salaries seemed to have attracted the worst batch of Liar party rats in loving memory so there is correlation there but the wrong way.
In any event talk to us about parliamentary comp when there’s a shortage of candidates otherwise shut up.
JC
30 Jan 13 at 8:33 pm
Hammy – for most ALP politicians the highest possible pay they can receive is in Federal Parliament. While McClelland is not a bad guy, I have no doubt that he is considerably more wealthy having moved to Parliament than if he had stayed outside.
Samuel J
30 Jan 13 at 8:33 pm
They’re basically unemployable.
JC
30 Jan 13 at 8:34 pm
Quite so. May as well pay the f*ckers peanuts, because all we ever seem to get is monkeys…
Rabz
30 Jan 13 at 8:36 pm
It is indeed a mega-sum when compared to what a capable private sector executive might get – oh, and Hammy, no one in the private sector gets indexed life pensions commutable to the spouse upon death.
Having said that McLelland was a reasonably capable performer.
Can we run the ruler over Slippery Pete’s benefits, noting that his bride is considerably younger than him and will collect the residual?
It could be even greater if Slippery runs off with a younger man in retirement.
Leigh Lowe
30 Jan 13 at 8:38 pm
I can’t see how it would be that much. The base salary is $190k. The parliamentary pension is paid as a proportion of the current MPs salary. For 17 years service, it’s 72.5%. Ministers also get paid 72.5% more than backbenchers.
His pension would be something like 0.725*(13/17 years at $190k) + 0.725($190k*1.725*4/17).
I make it to be $160,000. Although if he served in other roles in parliament, that would bump the pension up a bit.
Either the SMH has done the calculation based on his entire parliamentary career (with all the other allowances), or they can’t do basic maths.
boy on a bike
30 Jan 13 at 8:39 pm
Not sure JC ….. If you roll in the free hookers and the property re-zoning it adds up.
Leigh Lowe
30 Jan 13 at 8:39 pm
Unless you’re Eddie Obeid.
boy on a bike
30 Jan 13 at 8:40 pm
Hammy
Politicians are not CEOs and even CEOs get paid too much. Thats up to the shareholders to argue nut we are taxpayers and dont expect tp pay CEO rates for some of the grafting scum that make it up the politician ladder (and there have been plenty of those).
The decnt politicians carry the risk for the scum I am afraid (spread the risk)and that results in lower pay for them, but to compare politicians salries to CEOs is a deeply flawed argument.
Many are not real leaders. They are in the politics game for what they can rip out of it and many are basically lazy and self serving.
Aliice
30 Jan 13 at 8:44 pm
Except the Obeids of this world whoo use their political position not to be happy with politicians wages, but to insider trade on rexonong applications.
Aliice
30 Jan 13 at 8:46 pm
sorry – Jarrah will be here in a minute to complain about my spelling (or someone else).
That is rezoning applications above.
For the Obeids the business of government and its rezonings and tenders became their primary family business. Insider trading anywhere else.
What a scumbag he was. Any chance of jail on the horizon for the Obeids at all?
Aliice
30 Jan 13 at 8:50 pm
Leigh,
It was SamJ who said that. Just recall next time I always refer to Hammster as Kero boy.
JC
30 Jan 13 at 9:01 pm
I am surprised these sorts of unfunded pensions are legal, they are exactly the sort of thing that is bankrupting councils and governments all over America. Or is this something unique only to parliament?
Eitherway they should put the $9 million into a super fund and pay it out of today’s budget. Not have him leeching onto the budget of the next 10 parliaments…
Mundi
30 Jan 13 at 9:27 pm
The only reason these pensions are unfunded Mundi is vecause they used to be funded from the contributions of youngsters entering the public service hence were deemed cash rather than accrual.
Unfunded is accounting sleight of hand but it may be true the youngsters entering are fewer and the pensions of the older have become so much more generous and to that extent its true. They are now partially unfunded (which basically means they cant afford the pension / retirement payouts they have generously awarded themselves whilst in successive governments).
Some will do well but its like the aeroplane pyramid game…last ones on will be the first to miss out.
Its all bullshit but what is the real con is how generous they are now.
Aliice
30 Jan 13 at 9:34 pm
The salaries of executives are many, many times that of politicians. They don’t need indexed life pensions. Their assets on retirement are multiples of the capital sum needed to pay McClelland’s pension. Most executives get sacked and get huge payouts. I think sometimes they angle to be fired – it’s so lucrative.
hammygar
30 Jan 13 at 9:55 pm
I wonder more about Julia. How much money does she have? Who knows what is where. She was with a law firm. The paper work disappeared. Other paperwork has disappeared. Is this a smoke screen because McClelland was a Ruddite?
stackja
30 Jan 13 at 9:56 pm
You really are deluded Hammy. The average executive (not CEO) gets much less than the average backbencher.
Samuel J
30 Jan 13 at 9:58 pm
It’s not that long ago that politicians got nothing on leaving parliament. Menzies was practically flat broke when he retired. He’d given up a very lucrative practice at the Bar to become an MP.
boy on a bike
30 Jan 13 at 9:59 pm
Most politicians wouldn’t make it in the private sector. Drink that kero hammy. It’s not too late.
Tiny Dancer
30 Jan 13 at 10:00 pm
I can’t help thinking that the hammybot is some Pythonesque parody. Do people really think like that any more? Honest question.
Lazlo
30 Jan 13 at 10:02 pm
Kero Boy,
Are you out of your fucking mind. Most executives earn nowhere near what McClelland is earning you idiot.
McClellend’s total earnings for the 17 years of work will total around… in today’s dollars… $13.5 million using Samj’s life estimate.
Most executives earn nowhere near that you eggnog. Shut up.
JC
30 Jan 13 at 10:12 pm
He had the ability to reach great heights in the corporate world and has sacrificed riches to do that. He richly deserves his pension.
The Hamster might be having us on (probably), and regardless of whether the calculation of his pension is correct, I believe it would be correct to say Teh Left would be divided on this extreme level of salary. The latte left would believe he ‘richly deserves’ multiples more than his constituents and taxpayers could ever dream of, and there would still be elements in the western suburbs who would be completely offended. Regardless, a large slab of Teh Left would say that as a senior public official, he deserves a retirement substantially better than anything the people he represents are going to get.
However, the vast majority of the right would say that is too much, and if he wanted money like that he should have stayed in the private sector rather than take it from taxpayers pockets (with all risk being assumed by his constituents and not him, unlike his constituents who may lose lots of their retirement savings in another GFC).
How the tables have turned on who represents the workers, and the nature of good political representation. The latte left no longer have anything to do with the poor. In fact, they look down upon them.
John Mc
30 Jan 13 at 10:28 pm
backloading of pay is a common method of deterring employee malfeasance.
why do you think the police and large private employers used pension vesting.
Jim Rose
30 Jan 13 at 10:40 pm
Didn’t Howard get rid of the (effectively) defined benefits schemes for politicians? Of course existing MPs were grandfathered in. Their current scheme is generous, but not nearly as much as so as the long term politicians of all persuasions will get when they retire.
Chris
30 Jan 13 at 10:40 pm
.
Its compost mate.
The worms ate it.
Blewitt blew it by not using enough plastic bags …… Fuckwit
Leigh Lowe
30 Jan 13 at 11:00 pm
I’m with Hammy on this. But only because McClelland is a good bloke.
Abu Chowdah
30 Jan 13 at 11:12 pm
CEO’s get sacked all the time. I’m at a loss as to what in God’s name a current ALP high-flier has to do to get sacked.
Create a slush fund to commit fraud? That’s okay? Rock spider? No worries. Use the union credit card to pay for hookers? Go you good thing! Encourage brown people to drown? All good.
Tracey
30 Jan 13 at 11:21 pm
That was Latham’s proposal.
Fisky
31 Jan 13 at 3:23 am
And he walked away with the OLD scheme, as I understand it.
Abu Chowdah
31 Jan 13 at 3:30 am
Tracey,
Possibly the only thing a Labor politician could do to get the arse would be to suggest cutting spending, deregulate and cut taxes for ‘da rich’.
And what would be the odds of that?
Catfeesh?
31 Jan 13 at 7:20 am
McLelland is a third generation ALP hack. His father was part of the Whitlam government sacked by Kerr and his grandfather part of the Lang NSW government sacked by Governor Game … Just another hereditary ALP grandee.
Life as a backbencher and a minister is all he has ever aimed for and he got there. No tears for him missing out on supposed “riches in the private sector” he had no interest in working in. Just another third generation sucker on the public teat.
Matt
31 Jan 13 at 8:58 am
Economy measures I propose
1. Abolish senate.
2.abolish state governments.
3.abolish paid local councillors.
4.reduce politicians pay and perks by 50per cent
5. Make politicians serve one term then never allowed to stand again.
6.pay one termers no super or perks.
7 . Reduce pensions of already retired govt,”workers ” and pollies by half.
8.privatise most public service departments.
Borisgodunov
31 Jan 13 at 9:04 am
mclelland is a barrasite – so the ‘private sector’ for him would have constituted this country’s most infamous sheltered workshop – ‘the bar’.
Rabz
31 Jan 13 at 9:05 am
Firstly anyone who thinks Robert McClelland is going to reach the average lifespan hasn’t seen a photograph of him (regretfully).
You should be more concerned about Bronwyn Bishop, who I think will probably beat the Queen Mother. In fairness to Bron I doubt that she will ever claim her pension but will probably die of a heart attack aged 104 while making a point of order.
I don’t think they are underpaid, but is their pay really that outrageous? A good barrister should have no difficulty clearing a backbencher’s salary I would have thought. Most people here go on about how high the tax rates they are paying are, so I assume many of you are in the top band (180 000 +). Some of you have so much capital you say you don’t need to work (good for you).
After seeing how much University VC’s got paid (generally between 700 000 to 1.1 million a year) I suggested that any organization that was either largely state owned or reliant to a large extent of state grants should be legally prevent from paying anyone more than the PM’s salary – around $400 000 I think.
Grey
31 Jan 13 at 11:00 am
Grey- there are some barristers making that money..a suburban lawyer would earn a fraction of that. The fools in parliament are incapable, in many cases of speaking clearly let along carrying a plan to fruition and would not succeed in private practice. In my profession I would be struck off for much less. A job where Craig Thompson’s kind can be reasonably successful is not one paying close to seven figures when all benefits are added in.
Rob
31 Jan 13 at 11:09 am
50,000would be Overpaying ANY of these Clowns! Put them on the dole!
Borisgodunov
31 Jan 13 at 11:10 am
Sorry that should be- not one that SHOULD be paying seven figures
Rob
31 Jan 13 at 11:10 am
test
Grey
31 Jan 13 at 11:58 am
Or just keep reelecting the bums until they die of old age…
ar
31 Jan 13 at 12:01 pm
Sirocco
31 Jan 13 at 12:27 pm
He did a good job as AG. One of the best, and not a totalitarian creep.
Compare and contrast.
Abu Chowdah
31 Jan 13 at 4:31 pm
i.e.; Roxon… Lavarch…
Abu Chowdah
31 Jan 13 at 4:32 pm
This is clearly a big payout. However it is a product of the old remuneration and entitlements system that was removed for MP’s first entering parliament at or after the 2004 election. New MP’s don’t get this allocated pension but instead get a 15% payment into a superannuation fund along the lines of other Australian employees. The old system will continue for the old crop of MPs until they are all dead but it will at least wind down over time.
TerjeP
31 Jan 13 at 4:34 pm
p.s. The above reform was Mark Latham’s suggestion when he became opposition leader. John Howard decided he agreed and the reform was introduced and passed.
TerjeP
31 Jan 13 at 4:37 pm
And as noted, Latham is enjoying his indexed pension, the crazy fucking shitbird.
Abu Chowdah
31 Jan 13 at 4:46 pm
Why would you dicount by the (expected)CPI – besides to try to dishonestly/incompetently exaggerate the PV? Are you assuming the risk free rate is zero?
Basic finance
31 Jan 13 at 5:17 pm
Basic dickhead
Can you put money in the bank above the inflation rate? Do you know what an IRR or MIRR is?
.
1 Feb 13 at 9:03 am
Ah… Mr(s) Dot you don’t seem to understand basic finance. An IRR is a discount rate that when applied to net cash flows provides a present value equal to the initial amount invested. the point of the current piece is to try to estimate the PV of the future cash flows in which case you need the required rate of return which allows for all of risk, loss of purchasing power and opportunity cost (the last being the risk free rate of return in real not nominal terms). The use of only the expected rate of CPI as a discount rate shows at best poor knowledge of valuation principles but at worst is an example of self-serving behaviour that attempts to prove a point through bungled calculations.
Oh, and yes I can invest with a bank at a rate that exceeds the expected CPI figure – just jump on any of the major banks list of TD rates and they will leap out to you.Thanks for making my point in another way I guess?
Basic finance
1 Feb 13 at 8:03 pm
Sorry that was discount rate of course.
Basic finance
1 Feb 13 at 8:03 pm
“New MP’s don’t get this allocated pension but instead get a 15% payment into a superannuation fund along the lines of other Australian employees.
Nothing like in line with other Australian employees TerjeP. Until 30th June the super guarantee for MOST Australians is 9%. Why does an incoming MP with no experience and in many instances no qualifications to enter Government rate 6% over the odds?
Tracey
1 Feb 13 at 8:19 pm
Yes. Well. Sorry.
If only Stern was as honest and rigourous as I demand of Sam J.
.
2 Feb 13 at 11:33 am