Pension rises fail the vulnerable

The Age Pension rates will increase on March 20 by $6.10 per week for a single, full Age Pensioner. They will receive a base pension of $826.20 per fortnight (previously $814).

And if renting, the full rental assistance has been increased to $134.80 per fortnight, yes 90 cents a week. Seriously? What difference can less than a dollar do in our overheated housing market?

To get some context, about 70 per cent of Australian retirees receive a full or part Age pension. The other 30 per cent live on private savings and investments. As of 20 March, the full single Age Pension, with supplements is $907.60 and couples will each receive $684.10, also including supplements. The couples’ maximum rental supplement is $127 per fortnight if they live together.

YourLifeChoices partners with The Australia Institute to measure retiree household expenditure to better understand issues such as Age Pension adequacy across the six retirement tribes:

  • Affluent couples or singles (own home, private income)
  • Constrained couples or singles (own home, full or part Age Pension)
  • Cash-strapped couples or singles (renting, full or part Age Pension)


Our most recent data, due to be released in early April, shows just how tough it is for those who do not own their own homes. Renting singles (cash strapped) typically spend $868.96 a fortnight, while renting couples (cash strapped) spend $1384 a fortnight.



Cash strapped singles

(renters on a full or part pension)


Cash strapped couples

(renters on a full or part pension)







Expenditure Dec qtr. 2017





New Age Pension rates

Per fortnight





‘Savings’ after expenses per fortnight





Full rental supplement if applied per fortnight






The Australian Age Pension system is one of the most finely calibrated, so it is difficult to discern the level of financial stress actually experienced by those on a part Age Pension. For couples who live in their own, mortgage-free, home, with good health the part pension may provide a useful supplement to private income. It is not difficult, however, to do the sums for those on a full Age Pension and see the resultant level of stress.

This has also been recognised by a Benevolent Society study, conducted by the Per Capita think tank and the Longevity Innovation Hub, The Adequacy of the Age Pension in Australia.  The study concludes that the Age Pension fails to provide a decent source of income for the 1.5 million Australians who rely on the pension as their main source of income. It points to the ‘profound levels of deprivation experienced by this group of pensioners, with many going without hot water, health tests, dental care and medication to stay financially solvent.

In YourLifeChoices most recent research – Retirement Income and Financial Literacy Survey 2018 – we asked our 250,000 members who are living on a full or part Age Pension, if they were struggling to live within their income and what they forgo to make ends meet.

The number one cut was holidays – it seems these members don’t enjoy breaks away from home because they simply can’t afford them.

Next came social activities, eating out, heating and cooling, entertainment – many of the things most of us deem to be essential are cut from the list as they are now rarely enjoyed luxuries.

And then there are those who have reluctantly given up health insurance, travel to visit family, eating meat and drinking alcohol. Many have also sold their cars as it is too expensive to cover running costs including insurance.

But there are problems with such saving strategies. Not having a car can often can lead to social isolation. Not having health insurance can lead to missing vital tests or having a choice of doctor or specialist. And fewer holidays and social activity can be very depressing.

What is the answer? A higher base rate for the full Age Pension.

Yes, let’s remember that we remain the fifth meanest nation in the OECD when it comes to the public expenditure on older people, as a percentage of government spending (Pensions at a Glance 2017). We are simply not even in the race when it comes to striking a decent rate for older Australians who do not have enough to live on. In many cases this is because they were caring for other people during their lives. As we approach Budget 2018 (Tuesday, May 8) YourLifeChoices will feature interviews with all the major political parties, asking them how they plan to look after Australia’s retirees.

What do you think? Are you happy with the indexed increase? Or do you agree that the base rate is simply too low for a dignified life in retirement?

Related articles:
New pension thresholds
Struggle street
Retirement Affordability Index

Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

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