Pension increase welcomed but retirees who rent still in ‘crisis’

The biggest Age Pension increase in seven years – to take effect from 20 September – is welcome news for retirees, but there’s an elephant in the room and that is rent assistance.

Some canny YourLifeChoices members also (cynically?) suggest the increase may be linked to an upcoming federal election. But enough of that!

While the rate rise is music to the ears of the country’s 2.58 million pensioners – and to all those who may now qualify for at least a part pension because of the lift in the eligibility threshold – the maximum rent allowance remains inadequate according to multiple sources.

The payment will increase by $2 to $142.80 per fortnight for a single with no children.

The response from YourLifeChoices members, such as Susan Cook, sum up the situation perfectly: “Does not help much as my rent rose by $30 per week.”

Read more: Age pensioners to get biggest pension boost in seven years

COTA Australia chief executive Ian Yates told YourLifeChoices the increase in rents around Australia had escalated  from “a recurring problem to a crisis”.

“The issue of rent assistance persists. It has been pointed out in inquiry after inquiry, including the federal government’s Retirement Income Review (RIR), and really needs to be addressed.

“We had earlier pushed, based on advice from the Grattan Institute, for a 40 per cent increase to the maximum, but it actually needs to be more than that – which the RIR concluded as well.”

Mr Yates adds that it was not only rent assistance that needs urgent attention but also affordable housing, arguing that a significant increase in public housing stocks would also have a big impact on rental costs.

The latest rental data from SQM Research shows prices have spiralled in the past 12 months, particularly in regional areas.

The national median weekly rent is $508 – a 13.7 per cent increase compared with a year prior, reports.

Read more: Rent assistance increases

SQM managing director Louis Christopher says it is “somewhat perplexing” to see record surges in both regional Australia and the capital cities.

“Given the ongoing international border closures … the national rental market should be at least more balanced,” he says.

The Actuaries Institute highlighted housing issues for renters after a year-long review into the retirement income system.

Andrew Boal, convenor of the institute’s retirement strategy group, says the government has work to do on housing, including greater assistance for renters.

“There is a large gap in outcomes for those who do and those who don’t own their own home at retirement,” he says.

“There should be greater assistance for retirees who rent. The system favours homeowners; for example, the principal residence is wholly exempt from the Age Pension asset test.”

The institute’s report, Securing Adequate Retirement Incomes for an Ageing Australia, also argues that Australia’s retirement system should be fairer, simpler and more efficient, pointing a finger at the Age Pension means testing.

Read more: Age Pension increases

But the good news is that millions of older Australians will see their fortnightly Age Pension payments increase by 1.6 per cent from 20 September. The maximum single Age Pension rate will be $967.50 a fortnight – an increase of $14.80 – and couples will receive an extra $22.40 combined, with maximum fortnightly payments totalling $1458.60.

That takes the annual pension paid to singles to $25,155 and to couples $37,923.

The August edition of YourLifeChoices’ Retirement Affordability Index, compiled in association with The Australia Institute, estimates that a single retiree needs $24,812 for a constrained lifestyle and a couple need $37,790.

But back to your comments:

Daibhin says: “Too little too late. It’s an election bribe but they think we are too old to know …”

And Mickey: “Wow $14 a fortnight, that’s $1 a day extra. That will pay 1/15th of the rent increase each week.”

And Bakker: “A welcome decision albeit not near enough to cover CPI increases.”

What’s your view on the Age Pension increase – and the rent assistance payment? Why not have your say in the comments section below?

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Written by Janelle Ward

Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.

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