Last week, YourLifeChoices ran a story on predicted Age Pension increases for the March indexation and it’s fair to say many of our members had some strong opinions about the forecast.
To recap, the Age Pension is indexed twice a year, in March and September, based on whichever is higher of the consumer price index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI), a cost-of-living index calculated by the Australian Bureau of Statistics (ABS) specifically for people on welfare payments.
The ABS announced its cost-of-living indexes last week and as a result, expert analysis predicted an increase of just under 2 per cent for the 20 March indexation.
That represents about $18 per fortnight for singles and $27 per fortnight for couples.
In comparison, in the last indexation on 20 September 2023, the maximum full Age Pension increased by $32.70 per fortnight for a single person and by $24.70 for each member of a couple per fortnight.
YourLifeChoices has previously examined if the CPI is still a good measure of living costs.
We found even the government is ambivalent about the CPI’s accuracy for measuring household costs, saying: “The CPI is often used to measure changes in the cost of living, but it is not an ideal indicator of this.”
Fallen behind
YourLifeChoices member David agreed.
“CPI is no longer a measure of real cost of living – it hasn’t been near right since changes to its calculation in 1998.
“The ABS has admitted at several inquiries into CPI indexed pensions and how they have fallen behind massively, that the CPI was not a measure of the increase in the cost of living, simply a fudge factor to indicate how the economy is travelling.”
Many YourLifeChoices readers weighed in with their current struggles living on the Age Pension, the cost of living and opinions about the expected increase.
Reader Steve Quigley simply said the indexation data was “wrong”.
“We own our house, yet our costs are still climbing – insurance, fuel, power, food etc,” Mr Quigley wrote.
“This government is killing our economy. What good are tax cuts to pensioners then we get a pittance of an increase?”
Extreme weather
Mr Quigley has a point about insurance. According to official data, insurance premiums are rising at a rate not seen for two decades on the back of extreme weather events.
YourLifeChoices member Robert says there might be a simple solution to the issue of indexation not matching reality.
“It is time, in fact, it is now necessary to do away with the Age Pension and replace it with a universal pension,” Robert wrote.
It would seem the increase in the Age Pension isn’t based on the increases that are occurring now. (It), never reflects the reality of the continual rise of the cost of living expenses.
“A universal pension does away with the hardship that most of us now have to endure.”
Reader ‘OzJames70’ also took issue with the expected pension increase.
“Who are these people calculating a 2 per cent increase kidding?” he wrote.
He said his insurance had gone up 50 per cent, grocery items had doubled in price for the same item in three years, increasing fuel and car and home maintenance and health services were “priced beyond reach”.
Readers also took issue with any government relief being quickly negated by price rises.
Increase in costs
Reader Ronloby says the CPI will never be enough for pensioners.
“Rent is up 40 per cent, insurance up 25 per cent, fuel is up and down like a yo-yo and food on the table costs, well, who knows?”
Sue Baily said the energy relief allowance and Rent Assistance went nowhere near covering the increase in costs.
“I have a budget that can’t cope with any increase, as I have no ‘wriggle room’. No wonder it’s called the ‘rental squeeze’.”
Are you suffering from a cost-of-living squeeze? How do you think the Age Pension should be indexed?
Also read: How many assets can you have and still be eligible for the Age Pension