15th Nov 2018
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Higher average wage to push up pension
Author: Olga Galacho
Money coming the way of pensioners

In a little spot of good news for Age Pensioners, the average Australian wage rose in the September quarter to bring the year’s total to 2.3 per cent.

The relevance for pensioners is that their payments play catch-up to any upwards fluctuation in the male average wage.

In a year where inflation, to which Age Pensions are indexed, is less than the increase to the average male wage, payments will be lifted proportionately to close the gap.

This is turning out to be such a year. The Australian Bureau of Statistics (ABS) report for the September quarter put yearly inflation as measured by the Consumer Price Index (CPI) at 1.9 per cent. That rate is struck on fluctuations in the price of a basket of goods and services.

There is another rate that Age Pensions are pegged to and that is the Pensioner and Beneficiary Living Cost index (PBLCI). That index rose by 2.2 per cent for the year in the September quarter.

Whichever of the CPI or PBLCI rose the highest, that is the rate by which pension payments are indexed twice a year – in May and September.

A third measure – Male Total Average Weekly Earnings (MTAWE) – is brought into play to make sure that pension recipients’ incomes keep up with acceptable standards of living.

The difference between this year’s increase in the PBLCI and the average Australian wage is small at just 0.1 percentage points. But the gap between the PBLCI and the average weekly earnings for a ‘male’ is likely to be greater because men as a collective earn more than women, as the latter are often in part-time work.

YourLifeChoices has asked the ABS to single out of yesterday’s statistics the increase in male earnings for the year to September in order that we can have a better idea of the real size of the increase pensioners can expect next time payments are indexed. However, we were told that this information isn't due to be released for another three months.

This is how a parliamentary document explains how and why Age Pensions are adjusted:

“Currently, pensions (including the Age Pension, Service Pension, Disability Support Pension and Carer Payment) are indexed twice each year by the greater of the movement in the CPI or the PBLCI.

“They are then ‘benchmarked’ against a percentage of MTAWE. The combined couple rate is benchmarked to 41.76 per cent of MTAWE; the single rate of pension is set at 66.33 per cent of the combined couple rate (which is equal to around 27.7 per cent of MTAWE).

“Benchmarked means that after it has been indexed, the combined couple rate is checked to see whether it is equal to or higher than 41.76 per cent of MTAWE. If the rate is lower than this percentage, the rates are increased to the appropriate benchmark level.

“Indexing pension rates to CPI maintains the real value of pensions over time. The PBLCI measures the effect of changes in prices of the out-of-pocket living expenses experienced by age pensioner and other households whose main source of income is a government payment.

“The PBLCI is designed to check whether their disposable incomes have kept pace with price changes.

“The MTAWE benchmark is not intended to maintain the value of the pension relative to costs; it is seen as ensuring pensioners maintain a certain standard of living, relative to the rest of the population.”

Do you believe the slight increases to the Age Pension this year have helped you keep up with rising living costs? How much extra a year would your Age Pension need to be in order that your living expenses were adequately covered?

Age Pension rules and rates are complex. Let us keep you up-to-date. The RetirePlanner™ tool has all the information you need.

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    COMMENTS

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    Lothario
    15th Nov 2018
    12:57pm
    Don’t understand why the additional increase over and above CPI
    Pensioners don’t work so the wage increase is irrelevant
    At this rate, the pension is going to go up to $50k a year in no time
    Triss
    15th Nov 2018
    1:30pm
    Pensioners don’t work for money maybe, Lothario, but do a bit of research and you’ll find that government and taxpayers save a great deal from pensioners’ voluntary work.
    Lothario
    15th Nov 2018
    1:37pm
    My point is the pension increase should have nothing to to with wage increase
    Pensioners do not need to save heaps , contribute to super, or have extra money for luxuries
    Not on the taxpayer anyway
    CPI increase is fair to maintain their basic standard of living but increasing it to match wage increase is over the top
    Self funded retirees do not have that luxury
    It’s riduculous
    OnlyDaughter
    15th Nov 2018
    2:56pm
    I do hope you are right. A $50k pa pension would suit me just fine.
    Sundays
    15th Nov 2018
    4:33pm
    Lothario, one word. Politics. When this method was introduced it was said to better reflect the spending patterns of pensioners. However, the allowances eg Newstart are only increased by the CPI. Recently, after much lobbying some Military pensions have the same indexation as the Pension, whereas they used to only rise by CPI, so now it would be hard to change one without the other I think. In any case, the OAP is barely a living wage.
    Lothario
    15th Nov 2018
    4:36pm
    The OAP SHOULD ONLY EVER BE for bare bones living
    It's not meant for luxury living at all

    When will people realize this

    Its a safety net - NOT a retirement asset

    Thats what super is for. That's what savings are for
    Sundays
    15th Nov 2018
    4:45pm
    It is bare bones living! Those on the full OAP will agree. Yes, I know you purport to live on less, but you have capital to replace your car, fridge, repairs, health care etc. People on the OAP do not, they have to try and put a few dollars away each to cover unforeseen costs, so their actual day to day living is very frugal.
    OnlyGenuineRainey
    15th Nov 2018
    4:46pm
    Although self-funded, and somewhat resentful of the fact that I am much worse off than most pensioners (in income terms), I don't agree with your comments, Lothario. I think they reflect arrogance and selfishness. Pensioners who have contributed for decades to society - working and paying tax, raising and educating children who pay tax, doing voluntary and community work, etc - have earned a comfortable standard of living in retirement, and certainly should be able to enjoy improved living standards along with the rest of society. CPI is an artificial and inaccurate measure of pensioner living cost increases, but in any case if society in general is able to enjoy improved living standards, that privilege should extend across ALL of society (including SFRs, even though it does not!)

    Most of today's retired did not have super for most of their working life. Those on low wages would have struggled to save. They contributed more to society than their wealthy, high-paid counterparts - by working for low wages so that their employers could profit. They were promised a pension, funded from a tax levy that all of us paid (and continue to pay). That levy was sufficient to fund generous pensions for all retirees if it had not been rorted by greedy rich politicians. Retirees should NOT suffer for the crimes of politicians. The OAP should guarantee ALL retirees reasonable security and comfort in their winter years. That's the expectation of all in any decent, civilized society. It is only the greedy, self-serving wealthy who reject that mantra.
    Ductape
    15th Nov 2018
    5:08pm
    Lothario...."Pensioners do not need to save heaps , contribute to super, or have extra money for luxuries".

    No, perhaps not, but consider this - as you get older, you need more attention in the health department.

    I'm one of those who wasn't able to get a lot of super before I retired and any small advantage afforded me in this respect is being eaten up by having to pay for health specialist procedures. Yes, I could wait in line to take advantage of the public system, but had I done that, I would not be here.

    My super hasn't supplied me with anything other than shortened waiting times for attention to health issues and I think there must be a lot of people in this same situation.
    tisme
    15th Nov 2018
    1:13pm
    im a carer so im not a worker or a pensioner or unemployed
    Colours
    15th Nov 2018
    1:27pm
    How about indexing the deeming rate to the actual bank savings rate while they are at it?
    Lothario
    15th Nov 2018
    1:30pm
    The first $50k is a 1.75% which is less than what you get for term deposits

    Why would you keep any more than that as free cash
    Triss
    15th Nov 2018
    1:37pm
    Colours, that would be democratic, moral, intelligent and just...how many politicians do you know with those assets?
    Aussie
    15th Nov 2018
    1:45pm
    He he he Triss ..... wowowo maybe if I am dreaming or maybe in another country but not here ... they are all seat warmers and sleepers during sessions .... to our expense ...
    Old Geezer
    15th Nov 2018
    6:39pm
    Deeming rate has nothing to do with bank savings but is the rate that most people can achieve plus a lot more.
    Circum
    15th Nov 2018
    9:08pm
    Would be commonsense to do that Colours but it would cost the government money so they would resist your suggestion.
    Adrianus
    17th Nov 2018
    8:02am
    Colours, would you feel the same level of conviction for your idea when interest rates are much higher in the future?
    Fisherman
    15th Nov 2018
    1:29pm
    My pension increase in September resulted in a DROP in Rent Assistance. After paying tax since 1962, I expected a wage dividend when I retired in 2012. Just because the current Australian Government is mean spirited doesn't mean the rest of us have to follow their lead!

    If Italy can pay a Universal Basic Income to ensure there are no people homeless nor living in poverty, surely it would help our consumer-led economy to do something similar.

    Australia is about to participate in another massive mining boom, starting in WA! The royalties from these mining exports are for ALL Australians, not just the political elite and their lackeys.

    The modern money theory is worth understanding and learning about, so maybe yourlifechoices could do a series of posts to explain it to their hordes of readers?
    thommo
    15th Nov 2018
    1:53pm
    I completely agree with you FISHERMAN.
    Rae
    15th Nov 2018
    2:06pm
    Yes it would return equity to retirement incomes and encourage saving once again.
    OnlyGenuineRainey
    15th Nov 2018
    5:10pm
    There certainly should be a universal aged pension in Australia - but if the ALP has it's way it will be an almost universal pension due to having ground hundreds of thousands of currently self-funded into income poverty.
    Old Geezer
    15th Nov 2018
    6:22pm
    A couple of good articles about Labor's policies.

    Taxpayers with lowest tax rate are hardest hit

    https://cuffelinks.com.au/taxpayers-lowest-income-tax-rate-hardest-hit/

    Franking credits will hit super funds too.

    https://www.afr.com/personal-finance/superannuation-and-smsfs/franking-change-will-hit-ordinary-super-funds-too-20181113-h17u1w?login_token=Mnf-fuMdtvh63RFVkQt3Loif61ca4C6b1i-jzyBwJtIRnDm7dFkd8skRvQL2TGiUDdRn3RwMo-eUeeRtyzo32Q&expiry=1542162764&single_use_token=-A9NeJgRt9EOkqiQ98RUnawazVocvH89WH8xzChIGD9yxctWlblmivegPvzndShRPKIFHWn30OLXa4adBLmqSg
    George
    15th Nov 2018
    11:33pm
    Quite right, Fisherman. Just ignore the trolls on this website playing the Liberal party line as well as making diversions with no further brains or logic involved.

    Yes, OGR, to fix our Broken Pension system, the only clean way is to dump the entire current system which discourages savers and implement an Universal Pension system, especially as they continue to take the 7.5% tax included in personal taxes to pay pensions.

    All need to write to their MPs especially now with elections coming soon, and threaten & not vote for these sitting MPs by putting them last.

    A couple (2 people) get only 41.76 per cent of MTAWE for 1 person! Yes, the rate also MUST be increased to a decent level.

    This is a massively Resource-rich country (possibly richer than the Middle East countries, as we also have so many types of resources), thus it can not only afford Universal Pensions, but also should massively reduce / get rid of taxes other than on foreign companies and individuals. We need to take back ownership of all Australian resources if people in Canberra had any sense, and stop further takeovers of resources, properties and companies here by China, etc. Our sovereignty is at risk and it's getting worse. All MUST act as noted above if you are interested in yourself, your children and your country.
    Jannie
    15th Nov 2018
    4:02pm
    Pigs might fly too.
    Old Geezer
    15th Nov 2018
    4:07pm
    Well enough is never enough for all you whingers. What about a bit of gratitude instead as yo get it all for nothing?
    OnlyGenuineRainey
    15th Nov 2018
    4:51pm
    The kind of gratitude a selfish food thief shows by falsely claiming people who worked and paid taxes for decades - and in many cases continue to do charity and community work - ''get it all for nothing''. You need a lesson in gratitude, OG. You need a lesson in human decency and integrity. You need lessons in REALITY. And you need to lose the green-eyes and jealousy.
    Triss
    15th Nov 2018
    5:48pm
    OG, get off your high horse. If a universal pension was granted next week I reckon you'd be first in the queue to get it. And I assure you I'm not getting on my high horse, I think self funded retirees deserve the right to keep the money they've saved for extras on top of a basic age pension.
    Old Geezer
    15th Nov 2018
    6:08pm
    Unfortunately no I wouldn't be first in the queue to get the universal pension.

    The greed of those on the old age pension is truly amazing and OGR you have just reinforced that notion in a big way. Gratitude is no where to be found at all. I people did half as much as I do for my community there would be heaps more volunteer work done. There ends the lesson in human decency.

    OAP has nothing to do with how much you worked, how much tax you paid or how many pets you have. It is welfare given to those who can show they have no other means of support. It is not have for multimillionaires to do that either. Yes they get it for nothing other than a bit of paperwork.
    OnlyGenuineRainey
    15th Nov 2018
    8:42pm
    I'm not on ANY pension, OG. If I was greedy, I would be. I would reduce my savings quickly and apply for handouts. But I live on what I can generate from my savings, as little as it is, and I ask for nothing from anyone. Nor do I steal food hampers or take free holidays. And I didn't rort the system to live rent free without owning a home. You are the only one here demonstrating greed, jealousy, and disgusting arrogance and meanness.
    Cowboy Jim
    15th Nov 2018
    4:44pm
    Don't think it makes any difference to me - I am on a part pension and during the last increase I experienced a $2 decrease; they must have revalued my assets or something, could be the share price but during the last few weeks the price dropped $5 a share and maybe I am getting the $2 back, eh?
    OnlyGenuineRainey
    15th Nov 2018
    4:53pm
    Makes no difference to me except that it puts me further behind pensioners and part pensioners and makes my savings even more worthless. But Shifty Shorten would have me forced onto a pension anyway. Maybe he'd be doing me a back-handed favour - though damned if I can see how it improves the budget to take a few thousands away from SFRs and force tens of thousands onto the OAP.
    Seenitall
    15th Nov 2018
    5:13pm
    It is on record that Scott Morrison has stated that his future vision for the age pension would be to see it made only available to a very few with most people able to support themselves as self funded retirees. What sort of fairyland is that? Morrison regards the age pension as welfare.
    New Zealand, a country with much less natural resources than Australia, manages to pay a universal non means tested age pension ( almost as much as a full age pension here) to every citizen. I imagine they are able to afford this by much more efficiently taxing the wealthy thus getting back what is paid out as pension back in tax. Also think of the money they'd save not having to support a bureaucracy and administration to police pensioners income and assets like some Soviet era Stasi.
    The aging demographic is easily vilified as being an ever increasing drain on the economy by lazy governments incapable of much needed economic reform.
    Old Geezer
    15th Nov 2018
    6:11pm
    NZ is only about half what we get here and food is at least 30% more expensive. No wonder they can afford it. We could too if we cut the OAP in half.
    Cowboy Jim
    15th Nov 2018
    6:52pm
    OG - agree with you that NZ is more expensive, but mostly for visitors. Most locals know where to shop. Just came back 2 days ago, spent 3 weeks in the south Pacific where the costs are really high unless one lives like the natives do. NZ has a higher GST of at least 15% and it includes everything, food included. Maybe cut the old age pension in half for those people who decided not to work during their lives (plenty of those here in Oz) and pay the workers their deserved OAP.
    Old Geezer
    15th Nov 2018
    7:30pm
    I do shop where the locals in NZ as I don't go to the tourist spots any more as I have done them to death.
    Circum
    15th Nov 2018
    9:27pm
    The New Zealand pension system is far superior than the Australian system where more focus is on budget outcomes rather than the fair treatment of the inhabitants.Morrison is a wannabe accountant just like Shorten.But Morrison can count better than Shorten.
    Circum
    15th Nov 2018
    9:31pm
    A steak and cheese pie from a bakery is highly recommended in NZ.Cost around $5.Is not Don but is good
    Fisherman
    15th Nov 2018
    5:15pm
    You poor sad old man OG, life's a bitch and then you die?
    The Australian Government wants you all on OAP so they can keep track of you and "level the playing field".
    I have just returned from 2 years in the South Pacific with the AusAid volunteer program. It was like a 2 year funded vacation. They live much closer to nature than we do and it was like living in Australia in 1970! Check out the volunteer assignments on DFAT website if you are still breathing and mobile!
    Old Geezer
    15th Nov 2018
    6:09pm
    I live very close to nature most hours on the day and no its warm I enjoy wearing no clothes.
    OnlyGenuineRainey
    16th Nov 2018
    6:51am
    God help the neighbours and your poor suffering wife! I knew you were not human.
    Charlie
    15th Nov 2018
    7:48pm
    Well Mcdonalds just put their prices up.
    Seenitall
    15th Nov 2018
    7:54pm
    O.G. - from what I can find online the standard rate, as of April 2018, for what is called "New Zealand Super" (the non means tested universal age pension), after tax (presumably at the lowest rate), for a single person living alone,is $400.87 per week ($20,845.24 per year). That's not too shabby and is certainly more than half the Australian rate.
    I spent some time in Christchurch a couple of years ago and food is a little dearer than in Oz, but not that much. Any difference would be due to the GST.
    Joy Anne
    15th Nov 2018
    8:57pm
    We do need a decent increase to cope with rising costs. Especially with Liberals rises and Medicare taken away on medical issues we need. I paid my taxes for 50 years and paid into the pension fund until Liberal stole the billions. Most of us paid for our pensions and i also pay $610 f/n for rent. No housing. We need a decent increase to cope with rent rises and food pprices. I don't go out, i don't have luxuries.
    No super.
    GregH
    16th Nov 2018
    2:05am
    Lothario - could you live comfortably on $20,000 a year? Now add in $680 a fortnight for rent and a couple of health problems? That leaves you about $120 a fortnight for power, car expenses, water, gas, insurances, and ohhh what's that other thing ... oh yes, FOOD!
    OnlyGenuineRainey
    16th Nov 2018
    6:49am
    Food, GregH? Surely that's a luxury pensioners should do without? After all, according to OG, it's free unless you want to eat junk food and get obese. He would know. He steals his food from the needy.
    Lothario
    16th Nov 2018
    1:01pm
    Why do you spend $680 a fortnight on rent
    You should move to a suburb or town with cheaper rent

    Can’t expect taxpayer to fund your lifestyle choice
    Greg
    16th Nov 2018
    9:48pm
    Lothario - you're a piece of work aren't you. A real pri** with no thought for others. $340 per week rent is low, where would you like GregH move to, Tibooburra.

    "Don’t understand why the additional increase over and above CPI
    Pensioners don’t work so the wage increase is irrelevant"

    Goods and services increase in cost, and obviously you know that, just being a pri** again.

    "Its a safety net - NOT a retirement asset
    Thats what super is for. That's what savings are for"

    Well in say another 10/20 years when most people actually have super when they retire that may work, but for now a lot of people struggle through their lives and don't have much when they retire - again think of others dipshi*.
    GregH
    18th Nov 2018
    1:11am
    "Poverty in Australia 2018" found that there are just over 3 million people (13.2%) living below the poverty line of 50% of median income – including 739,000 children (17.3%). In dollar figures, this poverty line works out to $433 a week for a single adult living alone; or $909 a week for a couple with 2 children.Sep 21, 2018

    That means EVERY person trying to live on the full pension (aged or disability) is living BELOW the POVERTY LINE !! And the Grattan Institute says we are well off - BULLSHIT!
    Lothario
    18th Nov 2018
    1:42am
    The so called poverty line is misleading and that study is bullshit
    Please read up on it before making silly statements
    Fisherman
    16th Nov 2018
    12:30pm
    Dear OGRe, my wife passed in 2005, so I have been footloose and fancy free since then. Seems you and OG would make a fine couple to represent Australia as Mr and Mrs Everidge? (apologies to Barry Humphries)
    Olga Galacho
    16th Nov 2018
    2:24pm
    Hi peeps: I've noticed again that some of you are posting personal criticisms of commentators here. Please keep it nice.
    cheers
    Olga
    Lothario
    16th Nov 2018
    5:46pm
    It’s ok Olga
    I can take it
    alinejordan
    16th Nov 2018
    5:36pm
    it would be so much easier if we could just cull all these OAP, hey Lothario/Hitler??
    Hairy
    18th Nov 2018
    4:16pm
    O G R i agree with you wholeheartedly . Lothario you are what’s wrong with Aussie’s today self centred and blinded to the past suffered by by the people who worked to give you the future you have today,you and a few others in this blog have been spoiled into believing untrue propaganda by the thriving politicians and there media cohorts .disgracefull humans all of them.
    GregH
    19th Nov 2018
    12:55am
    Lothario - I thoroughly studied "that misleading report". Thank you for pointing me back to it. I won't waste my time trying to explain it to you. Oh, and just for the record, given my health problems which are none of your business, I HAVE to live within 20 minutes of a major hospital - makes Tibooburra or even Toowoomba out of the question. I developed these health problems serving my Country and you! $340 a week rent is very cheap for Melbourne and Sydney. I would much prefer to live in the bush but not every one has a choice! Please please consider your sweeping statements before posting them. You can't always know everything about everyone!
    The Black Fox
    19th Nov 2018
    1:37am
    Lothario, methinks that you are a LNP troll. Your response typifies the mean spirited response of the LNP to all who are struggling in life. The Old Age Pension is a right available to those who have worked hard and paid their taxes for many years and who have not been able, for a number of reasons, to become fully self sufficient in old age. It was never meant to be a penalty for being less fortunate.
    Fair Go
    2nd Dec 2018
    1:50pm
    Keep up with an acceptable standard of living - you must be kidding! I am at the stage where I either go without some food, medications or pay one of the larger bills, such as electricity. I would say an increase of at least $50 per week would see me able to live a still fairly modest lifestyle but manage to pay the bills and eat properly.
    Fair Go
    2nd Dec 2018
    1:54pm
    How about we try in this country to keep up to other "wealthier" countries, who have a much higher pension, and where it is not considered merely subsistence living for the poor? I worked too, but due to being on my own for a number of years, raising 2 sons and paying a mortgage, I was not able to save much money at all. It is time people stopped blaming pensioners for their reliance on such a pension.


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