HomeCentrelink – Services AustraliaAge PensionAge Pension or Newstart increase?

Age Pension or Newstart increase?

There have been suggestions this week that in March 2019, we may see a significant rise in the Age Pension, but should that be a priority for Australia?

This year there has also been a strong push to increase Newstart payments by $75 a week. Currently, Newstart recipients are living on around $272 a week on average. Many of these recipients are aged 55 and older, but not yet of Age Pension age, and are unable to find work to transition into retirement.

In the YourLifeChoices 2018 Retirement Matters Survey, we discovered that around one in five respondents have been or are receceiving Newstart payments.

Clearly $272 a week is not enough to live on, and many people are in fact subsisting on or below the poverty line – especially renters.

Full age pensioners live on around $417 a week. While this figure is not going to help many live a comfortable retirement, many older Australians who do own their home find it helps them live at least a modest retirement. That’s not to say that there are just as many older Australians living on or below the poverty line, but one cannot deny that $417 a week is a significantly higher payment than $272.

Age Pension rates are indexed to the rise in Consumer Price Index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI), whichever is greater. The CPI measures changes in the prices of a fixed ‘basket’ of goods and services and is used to preserve the real value of pensions. The PBLCI measures the effect of price changes in out-of-pocket living expenses for households that depend on a government payment. That index is designed to check whether recipients’ disposable incomes have kept pace with price increases.

After indexation is applied, the payment rate is then benchmarked against a percentage of the Male Total Average Weekly Earnings (MTAWE). The single rate of pension equals 27.7 per cent of the MTAWE and the couple combined rate is equal to 41.76 per cent. Once initial indexation is applied, if the payment is less than the MTAWE benchmark, it will be lifted to equal the percentage rate.

The benchmarking of pensions to the MTAWE is to ensure pensioners maintain a certain standard of living, relative to the rest of the population.

Newstart payments are simply indexed against CPI.  

The news that this year’s wage increases may next year lift the Age Pension by more than usual indexation will certainly be well received, but should we be looking at helping those who may need it a little more?

YourLifeChoices has long advocated for an increase in the Age Pension base rate, which has not changed since 2009. But the Newstart payment has not increased in real terms in 25 years.

We have one of the highest minimum wages in the world, but we also have one of the lowest minimum welfare payment rates. Newstart is not benchmarked against the minimum wage nor average male earnings. For older Australians who cannot find employment and are too young for the Age Pension, failure to better benchmark their government payments is possibly consigning them to poverty.

So, given the option, do you think the Age Pension should increase, or should those funds be put into Newstart?


We would love to hear your comments on the matter, so why not share them below?

- Our Partners -


- Advertisment -


- Advertisment -

Log In

Forgot password?

Don't have an account? Register

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.