Age pensioners are paying a ‘poverty premium’

woman on age pension doing shopping

Those relying on the Age Pension and other Centrelink payments pay more for essential goods and services than self-funded retirees and people on higher incomes, according to a report from charity network Anglicare Australia.

The conclusion is that it’s expensive to be poor.

The report reveals that less well-off people end up paying more per item for household essentials than those earning much more.

The main reason is that households with lower incomes don’t have the money, time or other resources needed to buy in bulk or shop around for a better deal.

As a result, low-income people, such as those solely relying on the Age Pension, pay on average 1.5 times more for the same goods and services as more well-off households – an effect being dubbed the ‘poverty premium’.

The report found that people on lower incomes are spending up to 10 per cent more on petrol, up to 20 per cent more on energy and up to a whopping 93 per cent more on groceries.

“People balancing caring responsibilities … rarely have the time to drive to multiple supermarkets to get the best price or call multiple providers to get the best deal,” the report says.

Lower socio-economic areas are also often geographically removed from city centres, and therefore further from shops and services. The result is that less well-off people living in these areas have to pay more in travel costs compared to people living in more connected areas.

Anglicare Australia executive director Kasy Chambers told SBS News that many people were taking on predatory payday loans and other credit products in order to meet basic necessities. Others are simply going without these essentials, skipping meals, missing medical appointments and avoiding taking out insurance policies.

“Our research shows that it costs more to be poor,” she says.

“People pay more because they can’t afford to buy in bulk or to shop around. They pay penalties if they’re forced to live further away from their work and communities. And the best credit deals are for people with high credit scores and healthy bank balances.

“These extra costs are a poverty premium, punishing people who are already earning less.”

What can be done to help pensioners?

With inflation continuing to push up prices, the impact of this inequality will grow. And the pension rate through indexations is slow to catch up.

Age Pension rises, like many government payments, are linked to the Consumer Price Index (CPI) and indexed in March and September. But pensioner advocates say that is simply too slow to reflect changing economic conditions, especially when CPI calculations are done quarterly.

Paul Versteege, policy coordinator for the Combined Pensioners and Superannuants Association (CPSA), wants to see twice-yearly indexations increased to at least four, one for each quarter, if not monthly.

“The reason the pension doesn’t get indexed quarterly and the increase doesn’t come through more quickly is a simple one. It’s cheaper for the government,” he says.

“Timely pension indexation would fix a lot of pensioners’ cost-of-living problems.”

Do you pay more for essential household items because you don’t have the ability to shop around? Are you going without important services? Let us know in the comments section below.

Also read: Upcoming changes that mean you may qualify for a part Age Pension or health card

Written by Brad Lockyer

Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.

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  1. Yes times r tough. Yes I hate the control and manipulation of Gov and rich. Yes it is definitely rude when we r charged to use any card at places, when the goal is cashless society. BUT what amazes me is the amount of pension any politician receives why should they get more than anyone else when they retire from office?

  2. Another comment I have is the new cashless society costs US.
    Nobody is addressing the fact that if we use a card for most purchases, then the small business is now charging us the bank.
    That’s fine but why is the bank charging us for using the card at all?
    It’s getting harder to get cash out also, so our costs are up a silent 1.5% on pensions .

    • A better question, Toots, is : WHY do idiots use plastic cards AT ALL.??? (Actually, I recall how excited the budding ‘feminists’ were when Bankcard was first introduced. (But, being wanna-be feminists, they were clearly stupid by nature.) Remember the motto: ‘It’s YOUR money, Ralph’?? There’s another motto common among my Balkan ancestors: ‘If you haven’t got it in your hands you haven’t got it!
      I suspect YOU’RE a feminist when you ask: “but why is the bank charging us for using the card at all?” DOH!! Because they can get their sticky fingers on YOU wealth with having to do any WORK for it. After a shit-fight with the Commonwealth Bank over its refusal to my wanting to withdraw a largish sum of CASH I shut the account down and removed almost half a $mil. (’twasn’t easy, even after I offered to make the withdrawal with a shotgun I had to filter a bank-cheque through several smaller banks. (Would recommend the BOQ to anyone concerned about remaining in charge of their money. For NOW.)) Any business which doesn’t want to transact a deal in cash is immediately and permanently dumped. (Including the RACV which has been getting ‘account’ money from me for 40 years!) There are always other ‘vendors’ willing to do a cash trade. FOR NOW. What’s required is for EVERYBODY to take their cash from the bank and REFUSE to make ANY payments (INCLUDING TAXES!) in any way other than cash. (Unfortunately expecting brains AND guts from the great unwashed is a pipe-dream!) And there are other looming threats too: eg hyper-inflation etc etc.
      Time to get out from under; make a point of DIY self-sufficiency. It’s MUCH easier than most people think, and ANYONE can do it, just as all their million generations of ancestors did until just about ONE CENTURY ago. In fact, as a migrant/refugee kid I grew up, post-war, without ever being involved in cash transactions. Even the ‘rich’ people seldom got their wallets out! Bartering is MUCH older than ‘payment’; my parents paid the rent in the early days by working, when required, for the orchardist on whose property the house was located.
      But you’re , er-r-r ‘right on the money’ about the ‘digital currency’ threat swiftly looming; it’s the final link in Total Control by Big Brother. And the ever-shortening time to do something definite about that is NOW. Anyone who wants to discuss/explore options is welcome to drop me a line: dabbblesATgmailDOTCOM
      All the best, everyone. Get organised or else buy lotsa knee-pads before the shelves are empty.

  3. How about sparing a thought to the struggle of we unpaid carers, many of whom get as little as 41 cents an hour to look after someone 24/4, 365 days a year. We save the government billions. Please join over 15,000 people who have signed my petition to the Prime Minister and the Government, calling on them to better recognise and care for carers.

  4. I’m paying more and getting less for groceries two insurance have risen home and content quite dramatically .Council rates have have risen a lot and pier gas and water costs high On a single age pension each pay day is an absolute worry Can’t afford to take the cats to the vet and transport in Broken Hill isn’t the best for getting around and NSW state government has scrapped the travel allowance for remote pensioners It’s as if multinationals and government are creating a nightmare for poor elderly and I’d one needs plumbers or electricians the often cost heaps and o e can only barely afford white goods if they have meagre savings that are in the heap range and dint last long but my heart goes out to the homeless and thise paying high rents What has société become Rich greedy exploiting poor and vulnerable and nothing done to stop this trajectory Life has become a night mare Margaret

  5. What a load of generalized rubbish.
    It sounds like Anglicare had a predetermined answer.
    I’ll give Mr Lockyer the benefit of the doubt presuming he is simply passing on their findings unchecked.
    They have decided that ALL Self-funded retirees are in the one category. Rich.
    During the last few years when interest rates hardly existed, many SFR’s income was bu**er-all, less than an OAP, meaning that they were getting poorer daily, being forced down towards being on the Age Pension, but this is Government policy.
    There is no appreciation of a lifetime having been taught to work hard and save for the future now being considered stupid.

    • Perhaps because ” a lifetime having been taught to work hard and save for the future now being considered stupid.” IS STUPID. Along with other crap the moronic ‘Great Unwashed’ have adopted, willingly or from sheer ignorance; or under threat of repercussions: like handing over part of your income/wealth simply because some faceless government gangster aka ‘The Taxman’ TELLS you to. At least Ned Kelly had the decency to show you his gun. I contribute quite a lot of money to causes of which I, personally, approve. (Remember: ‘It’s MY money, Ralph!’?) And have always been able to get more when necessary. WHY TF would anyone with more than three braincells adopt ANY of the ‘social mores’, particularly when the more people effected the FEWER people are likely to get their money’s-worth.
      Anyone who drops their pants and bends over is NOT entitled to bitch when he cops it where the chook cops the rooster.
      Not only have I refused from the age of three to ‘do as I was told’ without first considering and THEN exercising my choice, as I grew older my guiding policy has always been: If someone insists you MUST do something it’s to be resisted as a matter of principle. eg. Murdering 6 million Indo-Chinese during the ‘Vietnam war’ years, helping to elect politicians (how STUPID is THAT!?) who insist it’s your ‘civic duty’ to drop your pants and bend over when told. etcetcetcetc…. Of course, anybody with no brains (ie ‘STUPID’) and no guts deserves everything they get.

    • you sound like someone who is thrilled that the rich get richer and the poor get poorer and lack any empathy for those who struggle , pay high rent if they can find a place to rent with home ownership out of their reach in foreseeable future with rocketing house prices . Similar in UK until August 2022 but big drop in house values since then . So stop whinging and i have more reason to moan than you as i try to sell my house and to return to W.A !

  6. You are so right Brad. There are more necessities for quality of life that Aged Pensioners are not eligible to get, even on My Aged Care.
    Can’t replace: Refrigerator, stove, air conditioner, soft furnishings ( couch /chairs) and a car.
    Most Pensioners DO NOT have Superannuation. Most of us are pre Super…No Safety Net…
    Aged care packages only cover; mops, brooms, small invalid aides, jugs & toasters…maybe.
    You have to get an OT (Occupational Therapist) to come into your home an do an assessment of your living conditions. This is a Scandal.
    Pensioners do not have adequate heating or cooling, and is NOT ALLOWED for by My Aged Care Packages. If Pensioners were in Care , they would be vivered by A Duty of Care leglislation. Because the majority of Pensioners are encouraged to stay in their homes…Not covered by a Duty of Care…the Federal & State Government’s are saving millions upon millions NOT required to build or maintain Aged care facilities. Subbied out to Private providers, who are c ripping everybody off. pensioners are NOT being looked after…currently No Duty of Care applies…!!!

    • how can pensioners ever catch up to inflation when the govt lies about inflation
      last pension rise inflation was supposed to be %3.2

  7. Brad, WHAT are we going to do , to get the politicians AND the human services general manager to actually care enough to do something to improve this situation?.
    i mean –what high horse are they all sitting on.

  8. Not to be forgotten are the group over 65 who in recent years lost the ability to receive the pension. Not only do they receive less if they are on Jobseeker, they can be required to volunteer up to 100km from home, further reducing the income available for living expenses. Everything is to save the government ceents so they can spend dollars in areas that aren’t properly justified but probably should be.

  9. This is just rubbish. For a start pensioners get handouts from the Government funded by tax payers. Then they get all the discounts that are not available to people who saved for their old age. Examples: Council rates, power bills. My wife does not get all these privileges.

    “pay on average 1.5 times more for the same goods and services as more well-off households”. How could they pay 50% more.. There is nothing to stop them buying items when on special. More likely just laziness.

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