Pay rises have been announced for almost two million retired Australians who rely on the Age Pension, but the increases are unlikely to help them make ends meet, with the Benevolent Society labelling them “inadequate”.
From 20 September, single age pensioners will receive an extra $8.70, taking the fortnightly pension and supplement from $907.60 to $916.30. Couples will each receive an extra $6.60, increasing from $684.10 to $690.70 per fortnight for pension plus supplement.
In March, single pensions rose by $13.20 per fortnight and couple rates went up by $9.90 per fortnight.
The September increases will amount to an extra $4.35 for singles each week and an extra $3.30 for each member of a couple, barely enough for a cup of coffee in most states.
Benevolent Society Advocacy Campaigner Joel Pringle told YourLifeChoices that the increases helped pensioners keep up with increased expenses but did not amount to a “material increase”.
“The pension, in itself, is inadequate for too many people who rely upon it, especially those in private rental, and this indexation does nothing to alleviate that,” he said.
“It doesn’t take much to go wrong for people to be struggling. If they lose their house or never managed to achieve ownership, or if they have unexpected medical costs, or become single, for example.
“That’s the reality for many people who are trying to get by on the Age Pension.”
Mr Pringle said that while he believed the twice-yearly indexation should remain to keep the pension in touch with cost-of-living expenses, the base rate should be decided by an independent and evidence-based process.
“We need to get the politics out of the pension,” he said.
Simon Biggs, professor in social policy and gerontology at the University of Melbourne and member of the Brotherhood of St Laurence’s research and policy centre, said there was evidence through the Brotherhood’s social exclusion monitor that many older Australians fall into the most disadvantaged groups.
“There is clear evidence that large numbers of older Australians are falling into disadvantage and poverty,” he said. “Opportunities for them to lead active and healthy lives are increasingly challenged.”
The exclusion monitor found that 38 per cent of people aged over 65 – twice the rate of exclusion for other age groups – experience social exclusion. The Brotherhood argues that economic growth policies which focus on employment and social services are the best way to help people to fully participate in society.
YourLifeChoices 2018 Retirement Matters Survey found that many older Australians resorted to a number of strategies to make their income go further, including taking fewer or no holidays, not using heating or cooling, not eating out or buying takeaway food, not going to the dentist and going only to doctors who bulk billed.
Mr Pringle singled out rental costs as the single biggest challenge for older Australians and the biggest indicator of financial distress. “That’s why an increase to Commonwealth rent assistance, which is received by 272,000 people on the Age Pension, is so critically important to relieving poverty for people relying on the Age Pension for a decent standard of living,” he said.
YourLifeChoices has been a strong advocate for an increase to the base rate of the Age Pension since the last increase in 2008. Put simply, those who rely on a full Age Pension, particularly renters, live in poverty. These are the Cash-Strapped retirement tribes as benchmarked by our quarterly Retirement Affordability Index™.
It is for this reason that YourLifeChoices supports the Benevolent Society’s ‘Fix Pension Poverty’ campaign.
The Age Pension, Disability Support Pension, Service Pension and Carer Payments are indexed twice a year – in March and September.
Payment rates are linked to the rise in the Consumer Price Index (CPI) or the Pensioner and Beneficiary Living Cost Index (PBLCI), whichever is greater. The CPI measures changes in the prices of a fixed ‘basket’ of goods and services. The PBLCI measures spending changes in households where the main income source is a government payment and is designed to check whether their disposable incomes have kept pace with price changes.
Are you happy with the increases? Will the extra dollars assist your fortnightly budgeting challenges?