Is the Age Pension adequate?

Ask this question of any one trying to survive on an Age Pension and the answer will undoubtedly be a resounding ‘no’. Whilst the current government was behind the Age Pension reforms of 2009, have they decided that this was enough and can now rest on its laurels?

Q. The single Age Pension is currently approx $658 per fortnight plus $50 supplement, about $18,200 per year. This is well below the amount that the ASFA-Westpac Retirement Living Index defines as a modest standard of living – $21,132 per annum. How can we reasonably expect older Australians to live below what is effectively a poverty line?

Response provided by a spokesperson for Jenny Macklin, Minister for Families, Housing, Community Services and Indigenous Affairs.

In September 2009, the Australian Government delivered the most significant reforms to the pension system in its 100-year history. These reforms delivered pension increases, a new pension supplement, a pension Work Bonus and a new indexation system. The indexation system uses the new Pension and Beneficiary Living Cost Index which better reflects pensioners’ rising costs of living. This new index helps pensions keep up with the cost of living and will help ensure this vital support for older Australians is sustainable into the future.

Since the Australian Government’s reforms began in September 2009, the pension has increased by $128 per fortnight for singles on the maximum rate and $116 for couples combined on the maximum rate.

A report released last week by the Organisation for Economic Co-operation and Development, Pensions at a Glance 2011, found that Australia’s age pension is more generous, relative to average earnings, than the OECD average of targeted payments, and more generous than similar payments in countries such as the United States, the United Kingdom, France, Germany and Italy.

YOURLifeChoices comment
No matter how many times we raise this question, we come back to the fact that the level of the single Age Pension remains $3000 short of the Westpac ASFA modest income measure. In quoting the OECD Pensions at a Glance 2011, it may be true that Australia may be more generous than other nations still suffering from the global economic downturn. But this is not the case when compared to nations such as Sweden. The same report shows OECD average spending on pensions (as a percentage of GDP) to be 7 percent, Sweden to be 7.2 per cent and Australia less than half at 3.3 per cent.

Also, is it relevant to compare ourselves to other nations? We think not. We should not be a nation which thinks that just because we are better than some others, then we are good enough. To have our older citizens living below the poverty line is a poor reflection of our nation and is hardly in line with traditional Australian values.

Written by Debbie McTaggart