State Super has announced that there are to be no changes to State Super pensions this financial year, as legislative amendments allow the fund to offset a negative Consumer Price Index (CPI) against next year’s CPI.
In a statement, State Super said that each year in October people’s pensions were adjusted to reflect the percentage movement in CPI from one June quarter to the next June quarter.
“This adjustment most often results in an increase in your State Super pension,” it said in a message to members, “but your pension can be decreased if the CPI is a negative amount.”
“Annual adjustments to State Super pensions were introduced in 1974, and under the scheme rules, where a negative CPI was less than -1.0 per cent, the legislation allowed for no adjustment to be made in the current year,” it said.
“In July 2020 the Australian Bureau of Statistics (ABS) released the CPI from the June quarter 2019 to June quarter 2020, and for the All Groups Sydney index it was -1.0 per cent.”
State Super said that this would have resulted in a reduction to people’s pensions if the legislation had not been amended to increase the threshold to -1.1 per cent.
“[This ensured] that State Super pensions will not be reduced by the negative CPI rate for this year but will be offset against next year’s CPI adjustment,” it said.
“This is the first time that the CPI for Sydney has been negative since adjustments to State Super pensions commenced in 1974.”
State Super said the negative CPI rate for 2020 could be attributed to the economic consequences of the COVID-19 pandemic, with the fall in the June quarter of 2020 the biggest fall in the 72-year history of the CPI.
