Basic superannuation benefit entitlements are increased each January to compensate for increases in the Consumer Price Index (CPI).
As illustrated in Table 2, the indexation adjustments since 1970, when the SRBA first came into force, have served to protect the value of superannuation benefit payments against inflation.
Indexation starts on the first of January of the year after someone retires.The first indexation adjustment is prorated to the number of full months of the previous year after the person retired.
If an employee's last day of remuneration is September 29th, he or she will be deemed to have ceased to be employed on September 30th and will therefore be entitled to indexation for the three remaining months of that year (i.e. October, November and December). If he or she worked an extra day, the retiree would only be entitled to November and December's indexation payments because he or she would be deemed to cease employment on October 1 and her first retirement benefit day would be October 2nd, because retirees only get indexation payments for complete months.
If that employee's immediate annuity was worth $31,500, with a scheduled 2% annual indexation adjustment, an additional day of employment could cost them $52.50 per year (indexed).
In every other year the indexation adjustment applies to the entire year's benefits. Table 3 below provides the schedule of the pro-rated portion of the indexation adjustment by month of termination.
|Month of Termination||Pro-Rated Increase For the following year|
|Year of Payment||Percentage Increase|