The real sting in pension cuts

Buried in yesterday’s Mid-Year Economic and Fiscal Outlook (MYEFO) was a cut that should have pensioners concerned as it’s yet another indication that, if anyone is going to be hit to help get the country’s budget back on track, it’s older Australians.

Under the MYEFO, after 1 July 2017, pensioners who travel overseas for a period of longer than six weeks, or those who live overseas, will lose their Pension Supplement. Currently, the supplement reduces from $65.10 to $22.70 for singles and $98.20 to $37.40 for couples once you have been outside Australia for six weeks.

The Government’s reason for this Pension Supplement cut is that the payment is meant to assist with “living pressure for pensioners living in Australia” not overseas. However, by proposing such a cut, the Government has overlooked one vital detail.

The Pension Supplement, which was introduced in 2009 as part of the Labor Government’s wider sustainable pension reforms, is a combination of the GST Pension Supplement, Utilities Allowance, Pharmaceutical Allowance and the Telephone Allowance. And of course, when people travel overseas these costs are reduced, but they don’t cease altogether. People still have to maintain utilities to their home, which means they are still paying many of the standing and supply charges that often make up the bulk of bills.

The cut, if legislated, will affect up to 80,000 pensioners who travel or live overseas. Many of those pensioners are also waiting to see if their Age Pensions will be affected by proportionality requirement changes still in legislation limbo.

What do you think? Is it fair that those who travel overseas for more than six weeks or living overseas lose the reduced rate of Pension Supplement altogether? Or is it taking aim at people who have already seen their income reduced by over $40 per fortnight? 


Related articles:
Making sense of MYEFO
Age Pension increases
Pension Supplement explained

Written by Debbie McTaggart

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