Question

the withdrawal and use of lump sums from superannuation prior to reaching age pension entitlement age is often referred to as double dipping’ What does this mean, and should people be allowed to double dip? Support your answer with relevant research

Answer 1

Double-Dipping is a term used to describe the act of receiving pension benefits while also accepting a salary, oftentimes from the same employer. For example, double-dipping occurs when a member of Congress receives a paycheck while also receiving a pension from a previous government job.

Usage

The phrase double-dipping is often used when referring to a politician who receives a pension from a previous government job while also receiving a salary from a current government job.

Double-Dipping can occur in the retirement system when a government employee continues in the same job( through a process of retiring, then being hired) while receiving pension benefits from that job. This can cause individuals to receive pension pay and regular pay from the same government source.

Proponents of the practice say that supplementing

one's retirement income with a second job does not place a burden on government pension systems. Those opposed to double-dipping say that it overtaxes the state agency paying pensions, potentially damaging the state's overall pension health. In states with poor pension health, officials may raise taxes or seek other solutions to maintain pension payments.

Pension as dual-income.

One of the main arguments against double-dipping is that, since pensions are intended to replace an individual's income after retirement, a second income is unnecessary. Opponents cite cases where an individual takes a second government job, such as a seat in Congress, after already serving in another government position long enough to receive a pension. In some cases, individuals will receive pension income from a state or federal pension system while also receiving a salary from their work in the U.S.Congress. In 2012, around 90 members of Congress received a government pension alongside their congressional salary( $174,000 in 2012). In 2013, over 100 members, nearly 20% received a government pension in addition to their congressional salary. Although congressional jobs are a common source of double-dipping, the issue can come from nearly anywhere in government where there is the potential for double income.

Early Pensions.

Double-dipping can also occur when pensioners are permitted to receive their pensions prior to retirement. Some plans allow pensioners to receive their benefits as early as 55. This option gives individuals the option of retiring early, but it also allows pensioners to continue working until they are ready to retire.

It may be possible to take your benefits early from your pension scheme. How this works will depend on whether your pension is a defined contribution scheme or a defined benefit.