Peter Dutton’s parliamentary career may be over, but his large taxpayer-funded pension for life means he will leave Canberra as a big financial winner.
The former member for Dickson is among a dwindling number of federal politicians still enrolled in a now-defunct parliamentary pension scheme that pays out big bucks to eligible retired MPs and costs taxpayers around $50 million each year.
Dutton is eligible to collect an annual pension of around $258,000 after almost 24 years in the lower house, according to Crikey calculations.
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That’s more than the $233,660 base salary for a federal MP but less than the $432,280 he received as leader of the opposition.
Dutton can alternatively choose to collect a $2.58 million lump sum on retirement in exchange for halving his annual benefit.
Either way, a lot of taxpayer cash is heading Dutton’s way, with the 54-year-old potentially collecting more than $9 million from his parliamentary pension if he lives into his 90s.
Yet the pension money is unlikely to make or break his post-politics lifestyle. Dutton is already independently wealthy, reportedly making nearly $7 million from property sales going back to 1990, some of them through a company he shared with his father.
His departure from frontline politics also opens him up to lucrative business opportunities and board roles, similar to those now enjoyed by other high-profile former parliamentarians such as Christopher Pyne, Julie Bishop and Bill Shorten.
Dutton’s political exit means only six sitting MPs and senators remain in the generous historical parliamentary pension scheme. They include Prime Minister Anthony Albanese, who was first elected in 1996 and is on track for a parliamentary pension worth more than $300,000 per year when he eventually retires from federal politics. The others are Tanya Plibersek (first elected 1998), Catherine King (first elected 2001), Penny Wong (first elected 2002), Sussan Ley (first elected 2001) and Bob Katter (first elected 1993).
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Former prime minister John Howard axed the scheme in 2004 under political pressure from then Labor leader Mark Latham. The reforms restricted membership to politicians who were elected before the 2004 election and who spent at least eight years in parliament.
Federal politicians elected from the 2004 election onward are enrolled in a regular superannuation scheme. (Howard was eligible for a parliamentary pension of $363,000 thanks to a 33-year parliamentary career including nearly 12 years as prime minister.)
The value of annual pension payouts is determined by a complex formula that takes into account the length of time elected to parliament, time in ministerial positions, and time in other additional formal roles such as committee chairs. To complicate it further, the Remuneration Tribunal, an independent body that sets MPs’ pay, says only 80% of the base salary counts towards the pension calculations.
The annual payments also increase over time in line with the base salary of sitting MPs, meaning you really need a spreadsheet to make sense of it all.
The overall cost of the scheme is easier to understand.
A 2024 Department of Finance report found the total liability of the pre-2004 scheme was $824 million, with a projected outlay of $47.8 million in 2024 rising to a peak of $54.1 million in 2035.
More than 400 retired politicians and their spouses remained members of the scheme in 2023, the report said, with payments to eligible retired MPs and their families projected to continue until at least 2063.
