The Age Pension is inadequate

A new report into the adequacy of the Age Pension has found that, with around 500,000 older Australians living below the poverty line, the Age Pension is thoroughly inadequate.

The report, The Adequacy of the Age Pension in Australia: An Assessment of Pensioner Living Standards, conducted by Per Capita, The Benevolent Society and The Longevity Innovation Hub, found that age pensioners – especially older women and renters – are at a very high risk of living in poverty.   

Life for these pensioners is difficult. Many forgo hot water during the summer months to make utilities more affordable; others skip food to pay for medicines and health care; some go without internet and mobile phones thereby losing touch with family, friends and the wider community and, because they can’t afford dental care, mash or blend food to make it easier to chew.

As a result of these findings, The Benevolent Society is calling on the Government to make radical changes so that older Australians can live out their later years in dignity.

“The Age Pension in Australia is clearly inadequate – that is an indisputable fact and the Government has to face up to that fact,” said report co-author and chairman of The Longevity Innovation Hub, Everald Compton.

The group has proposed the forming of an independent tribunal that assesses the adequacy of the Age Pension twice per year, in order to recommend a suitable level of income that covers life’s necessities and allows pensioners to live more comfortably in retirement.

With the base rate of the Age Pension currently at $794.80 per fortnight for a single person and $599.10 per person in a couple, and the poverty line drawn at $851 per fortnight, it is clear, by those numbers, that the Age Pension is inadequate for living even a modest lifestyle.

The report recommends a number of further measures that may alleviate some of the hardship faced by Australian pensioners. Some of these include:

  • adjusting rent assistance rates to help bridge the gap between homeowners and renters, indexed to housing costs instead of CPI
  • providing nationally standardised Medicare-funded dental care for all age pensioners
  • increasing awareness of Government schemes and subsidies related to non-pharmaceutical health expenses
  • coordinating state-based rebates for pensioners to prevent utility costs rising as a proportion of pensioner expenses
  • providing broadband internet supplements or rebates.


It is estimated that these recommendations would cost the Government around $2 billion per year. Although the report recognises that advocating for increased expenditure in the current fiscal climate may be difficult, it suggests that the Government could introduce other measures that could fund these changes. They include a reduction of negative gearing and tax concessions on capital gains, a restriction of superannuation tax concessions, a crackdown on multi-national tax avoidance, a reduction of the assets-free area for homeowners and an increase in taper rates from $1.50 to $2.

Overall, once the cost of the recommendations is taken into account, the total potential savings for the Government – should all these measures be introduced – would be around $8 billion per year.

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Opinion: Stop pension rot

A new report states that over 1.5 million older Australians rely on the Age Pension as their main source of income and more than a third of them are living below the poverty line. This is unsurprising. We have been regularly reporting on this shortfall. It’s well past time that something was done to fix this problem once and for all.

Not all pensioners are created equal. Our own study Retirement in a digital world shows that over 32 per cent of those surveyed live on a full Age Pension and over 40 per cent live on a part Age Pension. And although more than 67 per cent of our respondents said they are positive about life in retirement, a whopping 87 per cent feel that the current Age Pension is not enough from which to live a comfortable life. Almost one third of those surveyed rent or part-own their home.

When we take into account that only 20 per cent of respondents claim that they will have enough money to live out their years, that leaves 80 per cent unsure as to whether their retirement savings will last as long as they do.

As far as pensioner health goes, just under three-quarters of our survey participants take prescribed medicine daily and around two-thirds take daily supplements, making health costs and GP or specialist visits a major expense for many older Australians.

The Age Pension has just received a minor bump in income, however, as many of those surveyed in the Assessment of Pensioner Living Standards report will tell you, a $3.10 increase per fortnight is just not enough. Additionally, an increase in the pension is usually followed by an increase in the cost of living.

Annual increases in rental costs often outweigh any increase in the Age Pension, as do the rising costs of medicines, healthcare, health insurance, food and utilities.

So many pensioners sacrifice what we would consider ‘necessities’ just to survive day to day. An inadequate Age Pension puts older Australians at a huge disadvantage, stripping them of a decent quality of life, and forcing them to live in squalor. This should be catalyst enough for the Government to make the necessary adjustments. The suggestion of an independent tribunal that constantly monitors the expenses required for our ageing population is surely a wise one.

A blanket approach to the Age Pension is not working. So many reports will tell you the amount of money required to live a modest lifestyle, yet these same reports don’t take into account the full cost of living for individuals. It measures in averages and, as we all know, these averages are often skewed by the ultra-wealthy.

The report’s recommendations are sound, sensible and something the Government urgently needs to examine. We live in one of the world’s wealthiest countries, and our pensioners – who have done the hard yards, contributed to society and made our communities what they are today – should not be living in squalor and deprivation. It is simply unacceptable.

What do you think of the recommendations? Do you do it tough each day? What do you ‘skip’ so that you can get by? What would you add to these recommendations?

Related articles:
Pensioners resort to living in cars
Asset-rich but living in poverty
One-third of over 60s in poverty

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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