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Thursday's Euro-style pension panic for thousands of Australians military and public service retirees was a rocky start to the new era of "smaller government" in the federal superannuation authority. The newly merged Commonwealth Superannuation Authority, born of the "red tape" agenda, failed this week in a first attempt to perform a basic function – paying the pensions of the hundred of thousands of retirees who rely on public service or military superannuation. Sources close to the agency say the merger has been beset by resignations and cultural clashes between the CSC and the outfit it took over, the old ComSuper which ceased to exist on July 1. Questions are being raised over the delivery of government services on a number of fronts with the Australian Taxation Office under pressure over a failure to deliver online services and problems reported with Centrelink's electronic presence and the much vaunted MyGov portal. Finance Minister Mathias Cormann sent a statement from Europe saying he was concerned to learn of the payment delays but that he was confident that the merger of the two superannuation authorities was a success. The newly merged Commonwealth Superannuation Corporation, which swallowed up ComSuper in a merger on July 1, had thousands of panicked military and public service retirees flooding its telephone and online systems on Wednesday and Thursday when their pensions were not paid. Some told Fairfax that the bungled pay day, the first with the CSC in charge, was the only time they had ever experienced problems getting their pensions on time. One former public sector worker, Eric Van Wijk of Indooroopilly in Queensland, likened the effects of the glitch to a Euro-style crisis. "No pension on Thursday morning," the CSS fund member told Fairfax. "I thought I was in Greece." Fairfax has been told that ComSuper was dogged by resignations in the lead-up to the merger, which was designed to cut red tape, with its finance section hit particularly hard. Morale among the remaining ComSuper public servants is said to be low as they adjust to the culture of the agency which has "taken over" their workplace. "This is the first pension payday since the takeover," one insider said. "Off to a flying start, clearly." Fund members were told late last month that the merged agency managing their pension was part of "the Smaller Government agenda which aims to reduce the total number of government entities by eliminating duplication and overlap and by simplifying inefficient and complex agency structures." Finance Minister Mathias Cormann The CSC said on Friday that "99 per cent" of pensions should have been paid and that it hoped to process the remaining payments overnight. But retirees who had suffered financially because the debacle, which was being blamed on CSC's bankers Westpac, were told to approach their own banks for redress before taking their problems with their own super funds. The agency did not respond to a request for interview or to questions about staffing issues. Labor was sharpening its attack on the government over services last week with Shadow Assistant Treasurer Andrew Leigh saying the ATO's problems were an example of ordinary people suffering as a result of the Coalition's policies towards the public service.