Retirement Income

Joanita Wibowo

Tony Abbott set to receive hefty "pay rise" after losing the election

Tony Abbott set to receive hefty "pay rise" after losing the election

Former prime minister Tony Abbott may have lost his seat in the latest federal election, but he is set to leave the government with a major pay rise.

After serving his electorate for 25 years, Abbott lost the Sydney seat of Warringah to independent candidate Zali Steggall in Saturday’s election.

However, the former Coalition leader will leave politics with a hefty pension of nearly $300,000 this year – significantly higher than the $207,100 pay he received as a backbencher.

This amount is also going to appreciate in value to follow any increases in the salaries of the sitting MPs, according to researcher William Summers.

As Abbott was elected before 2004, he became a part of the Parliamentary Contributory Superannuation Scheme. This made Abbott eligible to earn a percentage of the wage based on the years served – in his case, 75 per cent.

Abbott’s various official roles during his time in office – such as Prime Minister, Leader of the Opposition and Leader of the House – also added on to his salary.

Combined together, this led to a sum of $295,720 in pension for the 2018/19 period.

“The key reason for why they're so large, is that these pre-2004 pensions are linked to current MPs' salaries, not the salaries that they retired on,” Summers told SBS’ The Feed.

“The only way it could go down is if MP salaries went down and that is very, very unlikely.”

Summers said based on current calculations, the pre-2004 pension scheme afforded to politicians is set to cost taxpayers $43.7 million this year. This number will peak in 2035 at $59.3 million before falling off as the pension holders die out.

Abbott will also benefit from Life Gold Travel Pass, which allows former parliamentarians to gain 10 free return airfares within Australia each year for life. After the benefit got scrapped in 2017, it is now only available to politicians elected before 2012.

Abbott’s next career move is yet to be confirmed, but his backers have urged the Coalition government to give the former MP a public role in his post-parliamentary life.

Liberal MP Craig Kelly said Abbott could be an ambassador to the United States to replace Joe Hockey, who is set to vacate the role next year. “As an ex-prime minister, he should be given a range of options to see how he can best use his skills and talents,” said Kelly.