Aussies living in poverty prove Age Pension inadequacy

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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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Read the press release

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?

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ABS data: asset-rich older Australian in poverty

Around 1.2 million asset-rich older Australians are living in poverty.

One third of over 60s in poverty

Australia has a poverty rate of 33 per cent for those over 60.

Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 171
  1. 0

    The report seems to have merit for addressing some inequities – the tribunal seems to be a reasonable idea – as does their addressing of the housing issue in different cities with non-home owners.

    But I am not sure what home owners will think about their assets free threshold being lowered to $150K and $100K for couples and singles respectively as a saving measure? They are also suggesting a higher taper rate.

    And their idea about further restricting tax concessions on superannuation to reduce the extent to which super is used for tax planning instead of retirement saving is probably a mute point in light of recent changes

    • 0

      The taper rate they are suggesting is lower that what the govt is putting in place as of Jan 2017

    • 0

      Star Trekker – yes, I thought the taper rate was going to be $3/$1000 – but theirs is $2 – up from $1.50 according to them – possibly they are out-of-date?

    • 0

      No one seems to be able to get any of it right.

      I do think the re contribution of tax concessional superannuation needs addressing.

      It is not on that money concessionly taxed can be suddenly non concessional simply by taking it out and putting it back in.

      There is nothing to stop millions being kept in accumulation accounts at 15% and then being taken out in lump sums and re contributed over and over again.

      I might be missing something though.

    • 0

      That is re contributed into pension accounts as they are being drawn down.

    • 0

      Yep – you are missing something.

      It is a harder now to wash out the tax component if it was all concessional – as the non-concessional amount is limited to $100K per year.

      The most tax you can wash out now is $800K before you are 65 using the 3-year bring forward rule – it was $540K – that made it easier to get close to $1.6m.

      So no – you can’t have millions and wash out all the tax – and still keep it in super.

      You can change the recontribution rules – but if you move it all out to a non-super environment all tax is instantly removed – most people would do just that if they got sick or older.

      The sad fact of life is that the reason people with money have it in the first place – is they just work within the tax and other rules to ensure they protect and grow what they have.

      You just have to come to grips with the fact that it is legal to minimise tax and there are ways to do it -and anyone interested in growing or protecting their assets are going to use whatever legal tax rules are available to do just that.

    • 0

      Oops – need to clarify.

      You can only contribute $100K per year non-concessionally – it used to be $180K.

      You can use the 3-year bring forward rule and contribute $300K non-concessionally in one year – it was $540K.

      If you were retired before 60 you could use your Low Cap Rate of $195K and recontribute that as well at 58 and 59 – depending on your pension payment tax – it might only be worth doing $100K.

      In other words you can now pay out and recontribute around $800K before 65 in order to wash out tax.

    • 0

      Thresholds will be INCREASED as per from reply further down from Centrelink tables.

    • 0

      Reasons because this legislation does not come into effect until July 2017 then it is reasonable to assume that the old rules still apply until 2017. So you can put in $180k or $540K until July 2017. However as this has not yet been passed by the government then most financial advisors are holding off until it is clarified.

    • 0

      Yes you are right OG.

    • 0

      OG – perhaps we will have a change of ‘government’ by then, and the next part of The Tag Team will have their go at us.

    • 0

      Be careful wwhat you wish for.

  2. 0

    Yes I’ve been living in my vehicle for two years but yet still I don’t do anything to help the pensioners be at the politician still get 150 to 250 when they come out of parliament 10 to 12 free flight see you absolutely rip off i’ve been told by the time I get public-housing I’ll probably be dead talk about handouts to the pensioners have worked all the lives I now need a hand now don’t get one at the politicians keep getting their superannuation bigger and bigger why can’t the politicians go to work in they’re all vehicles that would start to save a lot of money cook them on the free flights to get for the rest of the life’s set a lot of money cook them on the big payouts to get for the rest of our life’s now on the Whitey said people after work till the 70 so they can carry on with been off the public with the big superannuation is the get absolutely ripped off when people are that shortly have to go out and take some with used to work there sit down every day to Emile probably that you don’t have to pay for chauffeur driven even though it’s a disgrace they want to live in the real World come and live in mine for one there no there’s not one of them will tackle the offer because it looks in the bastards

    • 0

      Spot on, John. They’ve ‘done their public service’ for which they should be ‘adequately compensated’ for their ‘loss of opportunity’ to make (apparently) millions on the outside…… so their ‘compensation’ is only just.


      The reality that they’ve left countless millions short of a retirement, through their much-vaunted ‘policies’, means nothing….

      What a relief to be able to retire at 45 to ‘enjoy some time with family’….. and then go on to some other nice little sinecure, and be regarded as ‘an elder statesman’.

      I’ve lived in my vehicle…. I’ve been through all of it and at times earned as much annually as these twerps – and I’ve had to do it hard for most of it. Nobody gave me a free ride sitting on my asset and working out nice little rejoinders to the ‘opposition’.

  3. 0

    The Age Pension has always been inadequate. I have memories of my grandfather renting a room in a boarding house and making home brew beer to supplement to supplement his pension. A humble man that worked hard all his life with no super, nor savings. He gave away his savings to one of his 6 children in need.

  4. 0

    We have to learn from history. When John Howard was PM he made many of Pauline Hanson’s One Nation Party policies his own. The One Nation Party policies for pensioners are very much for pensioners. Sitting MPs will do anything to keep their well paid seats and the success of ON at the last election will have sent a chill breeze around their nether regions. Pensioners are a big voting bloc and a letter to your MP and one to Turnbull telling them you will be thinking of voting for ON because of their pensioner policies will, I think, bring them to heel.

  5. 0

    Dignity and enough to live on in later years – This is just one of the many challenges governments are so far failing to overcome. We will not succeed until we face up to the major changes that are needed.

    Eventually governments will realise money has to be replaced to reduce greed and corruption. We need desperately to find better ways of protecting vulnerable people in our world.

    • 0

      The Banksters have changed the purpose of money to be “A tool for ALL” to become a commodity and only “Serve THEIR GREED” by enslaving the population in general.

      Resolve this issue and return money to take It’s “Rightful place in Societies & Communities” and all problems will be resolved easily.

      Let’s start enforcing the Australian Constitution and FORCE the Govt to Issue money for the benefit of the people of Australia rather than the Banksters.

      Only one problem: “It’ll take ALL of US” to resolve these issues!!!

      Look at Iceland – ALL loans were “Paid Out” and property tile handed to those who had a loan – this for the ENTIRE population!!!
      On top of that, they did the right thing and JAILED the (BANK)/(GANG)STERS!!

      Are there lessons in such actions?????

    • 0

      What’s the problem? They have plenty of ‘dignity’ for themselves in retirement….

  6. 0

    I can’t help but note that finally we do not get a photo of an unusually good-looking grey-haired couple, gazing lovingly into each other’s eyes. Finally a somewhat realistic photo of a woman who has seen her fair share of life’s reversals I’d say. Its a lovely photo for a change.

  7. 0

    maybe Im wrong, but I thought the threshold was about $294K for couples ? And in Jan2017 its going to increase ?

  8. 0

    Please read the full report before getting your hopes up! That $100,000 for singles and $150,000 for the couples Asset Test figures (before a tapering rate starts) would be really crippling for most pensioners. The increase in taper rate of $2 per thousand extra assets seems outdated, makes me wonder when this report was really compiled.

  9. 0

    So true! Countries overseas pay more and this includes New Zealand.

    • 0

      And there are many more with absolutely no state funded pensions at all. That makes Australian pensioners well off in comparison. So what? What other countries do or don’t do is irrelevant when you are relying on the Government for ‘safety-net’ payments.

    • 0

      .. but…. but.. but… what about their POLICIES to enable all to retire in comfort with super etc?

      Did I miss something?

      but…. but… but….. what about the social security contribution that has never been removed from taxation, but was way-laid into

      ‘consolidated revenue’,

      and thus became the plaything of politicians of any stamp, rather than the guaranteed retirement fund for all?

      I’d say that funding was transferred to the Caymans along with the rest of the ‘Future Fund’…

      Just saying…… (snuckles under armpit at revealing the truth that will hurt the bastards)….. (snuckle)….

  10. 0

    Well, now it’s official; I’m living below the poverty line and so is my partner. Of course we would like to see the pension raised but how is it to be paid for. The same reasons have been put forward which regular readers of this forum will recognise as what most bloggers have been advocating. It’s not rocket surgery but, again, there has been no method of how to achieve the outcome put forward.

    Sure, changing negative gearing, capital gains tax and mucking about with super all sound good but there will be reactions to these which may cause unforeseen problems. Will housing prices rise? There has been much said to support either side of that argument with no satisfactory conclusion. We have already seen in this forum the reaction to any changes to super with the most common theory being that a set of rules, acceptable to superannuants, be devised and set in concrete. By all means change the tax laws which favour multinationals but how can that be done without disadvantaging our national and local businesses. What if multinationals choose to leave Australia and become an online seller, how many jobs which contribute a tax income will be lost. There is a balance that must be maintained.

    I have stated here on a number of occasions why I believe that the value of the family home must be quarantined from the asset test. The value of a home is wholly decided on the address of the home, not the size, and it’s unfair to force pensioners to either sell their home or lose the pension. There are homes in western Sydney that were originally public housing dwellings that were relatively cheap that are now selling for over $1M because of land value yet the same home in another area would be classed as being in the first home buyer’s range. Why should pensioners who, in a lot of cases, have lived most of their married life and raised a family in their home be forced out to an area where they don’t wish to go?

    I find it interesting that a lot of these theories come from think tanks and foundations where none of the people involved will ever be in a position to become dependent on government largesse. Another point is how is the poverty line assessed. Is it the medium of average wages, is it on the cost of living in a capital city or is it a figure plucked from some think tank’s idea of what they would need to live.

    • 0

      According to Wikipedia, Australia does not have an official poverty line, either absolute or relative. Apparently there are two methods currently in use; The Smith family researchers adds up all the pay packets in Australia and divided them by the number of wage earners. That average is then halved to find the poverty line which gives the mean. The Centre for Independent Studies ranks all the pay packets in descending order, finds the wage in the very middle of that range and then halves that to find the poverty line which gives the median and a very different result.

      Like a lot of information online, Wikipedia has its limitations and whilst the above may be correct, there is no information to say whether the figures quoted are acceptable to all of the different bodies associated with pensioners, including the government.

    • 0

      Great post Old Man. It is a pity that so many suffer so much from envy that they can’t see the wood for the trees.

      The large individual payment to the politicians costs little bottom line prepared to just a little paid to welfare recipients. As our numbers increase it becomes harder to give us what we need, let alone what many want. Taking all we spend on the pollies & distributing it to welfare folk would be so little per individual, it would barely be noticed.

      So who should pay for higher pensions?
      Should it come from those who have saved, or are saving for their own retirement?
      Should it come from our kids, who are having enough trouble making their way themselves?
      Multi nationals, who are all too ready to abandon Oz, & go somewhere more profitable, taking their jobs, & import replacement products with them?

      Not enough in all of it to satisfy the whingers.

      Bureaucrats, yes, there are hundreds of thousands of them, about half involved in nothing useful. Big savings to be had there, just cut them in half, & the public would never notice a difference.

      NGOs, a cast of millions, mostly more nuisance than they are worth. Shut them all, & find which ones were actually doing something useful & REINSTATE ONLY THEM, WITH A SUNSET DATE.

      Higher education, perhaps the most bloated sector of all. Yep half that at least, how many more arts graduates do MacDonald’s need to flip burgers?

      Even with all the above & a few more economies, we will never have enough to give the useless or the envious, & why should we? I find living on the pension a breeze. The fact that I don’t smoke, drink or like restaurant dining probably helps.

      I did of course devote the last 15 years of my working life to making sure I owned my home car & a few toys, all in good condition. Hell, I’m even managing to replace the things that have worn out over the last 10 years.

      To be honest I don’t have much sympathy for those who pissed it up against a wall when younger. We reap what we have sewn, Which is as it should be.

    • 0

      The hose is the most inequitable part of the OAP and the sooner it is included the better. Why should people with expensive houses get the full OAP and those who have less in assets get nothing?

    • 0

      Old Geezer, a house doesn’t put food on the table. If it is included as an asset, a lot of pensioners will get their pension cancelled and I can’t see how that can be allowed to happen. Why should people who have set aside a part of their income during their working life to buy a home be penalised? Why should some homeowners be allowed to keep a pension whilst others cannot?

    • 0

      Old Man – your own home is always an interesting conundrum.

      If someone has no house and $2m – they get no pension.

      If someone has no money and a $2m home – they get the full pension.

      Go figure.

    • 0

      Exactly Reasons it is the more inequitable part of the OAP. It would be easy to pay back the pension from the proceeds of your house when you die.

    • 0

      Thanks Reasons, a very interesting point for which I have no answer.

    • 0

      Paid for, Sir? Why – from the same funding that offers to those who make the rules the opportunity to retire in majesty……

      No more need be said…. a ‘Futures Fund’ is for ALL – not just for the select few – and is not transferable to some tax haven to deprive OUR taxation system of its just revenue…

      Why should Public Money be transferred to a fund for the exclusive use of those who transfer it?

      Just asking (again)….

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