Age Pension boost or super top ups? Which would help pensioners more?

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Grattan Institute CEO John Daley says there are better ways to provide adequate retirement funding for low-income earners – and super top ups is not one of them.

Mr Daley believes that providing super top ups for low-income earners would be too costly and too hard to target those most in need. He also feels that fees charged by super funds would negate any benefits of an annual super top up.

The Grattan Institute CEO suggests that while a targeted boost to the Age Pension would be far more beneficial in ensuring an adequate retirement for all Australians, there may be an even more effective way to improve the incomes of those most in need.

It’s common knowledge that retirees who don’t own their homes are most at risk of living a poor retirement. Many will even live below the poverty line. Mr Daley believes that a $500 annual boost in rent assistance for eligible older Australians, which would cost the Government around $200 million per year, would be the most efficient way to boost the retirement incomes of low-income earners.

On the other hand, a $500 increase to the Age Pension would cost the Government around $1.3 billion and half of that would be going to pensioners with a net worth of more than $500,000 who own their own homes that are exempt from the Age Pension means tests.

While Mr Daley’s suggestions may not be popular for many Australians, it would be interesting to see what you think of them. Why not let us know in the comments below?

Read more at The Grattan Institute website

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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?

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74 Comments

Total Comments: 74
  1. 0
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    I certainly think an increase in rental allowance is a great thing. I am fortunate enough to own my own modest home, but I don’t know how people who are renting can survive on the pension.

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      I agree in that owning your own home on, of before retirement, makes a huge difference to a standard of living once retired.
      Before the usual contributions flood in blaming people for not owning their on home, or making proper financial preparations for retirement, just pause and remember the old saying “that you must walk a mile in someone else’s shoes before you can understand them and their circumstances”.
      Notwithstanding that I am sure we will hear all about someone who knows someone who spent all their money on booze and gambling.

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      A little over half my age pension goes on rent so a rise in rent assistance would be very welcome. Government housing is either not suitable or not available for me, I prefer to choose where and what type of place to live even if it costs more.

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      Okay, but should the taxpayer pay for your PREFERENCES? If you demand the right of choice, that’s surely not the taxpayer’s responsibility? I chose to spend 4 decades struggling to pay off a mortgage, and I’m being disadvantaged financially now because of it. I could rent for less than it’s costing me to own a home. But the taxpayer isn’t helping pay my rates or insurance or maintenance costs.

      If Government housing is not available, that’s a different issue – but if it is, accept or suffer the financial hardship that results from choosing not to accept.

    • 0
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      Actually, iamnotold, nearly half my weekly income goes on the costs of owning a home, and my weekly income is slashed by the government as punishment for slogging my guts out for 40 years to pay that home off. So some ”home ownership costs assistance” would be very helpful to me too. Sorry if I’m not very sympathetic, but 99% of those who rent could have owned a home if they’d worked and sacrificed as much as I did. It was a bloody hard slog! And now I’m worse off for having done it.

  2. 0
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    This targeted approach for the worst off makes a lot of sense to me.

  3. 0
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    Tinkering around the edges is all that such consultants can do. The whole Pension system, especially with the revised Assets Test from Jan 2017 which targets those who saved for retirement, stinks! Govt would do well to keep all such consultants away.

    Rather than such silly tweaks, it is best to throw out this whole Age Pension system, with ATO to give the full Age Pension to all who have paid taxes (for say 10 / 15 / 20 years, or have paid $x in taxes) , and then tax all actual income above it. That would make it fair for everyone. The current Age Pension system administered by Centrelink is only useful for late migrants / others who slip through the above definition.

    Super was meant to be an add-on benefit to pensions, and should continue to have tax benefits with caps to avoid excessive exploitation, so it is a good tool to encourage savings and better quality retirement. Govt needs to avoid attacking savers, and focus on fairness!

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      The changes to the 2017 assets test are a great step in the right direction, People effected by these changes don’t need to pension. It is just nice to have. Age of entitlement is well and truly over so get used to it. After all the OAP is welfare and should only be given to those who need it.

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      i agree with you, George.

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      I agree with you, Old Geezer.

    • 0
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      Aged Pension is not welfare – it is a bought and paid for right.

    • 0
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      Thanks, Alexii & Trebor. I usually ignore the extreme right-wing Liberal-supporting posts of OG. He probably also has a case of sour grapes by not benefitting from pensions / benefits. He has no understanding of the huge hit of the revised Assets Test from Jan 2017 (up to $14,000 p.a. for a couple in their own home) on savers who tried to do the right thing. Caps for Super benefits need to be tightened and taxes increased on those at higher incomes, but as I stated Pensions (not being welfare) should be paid in full to all who qualify if they paid reasonable amount of taxes in this country.

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      You would have to be rather lacking in logic to claim that taking money away from people who may be on very low incomes, in poor health, or facing high home maintenance or care costs in later life to give to people who saved less and possibly have far lower needs and higher incomes is in any way ”a step in the right direction”.

      The asset test change did NOTHING for battlers. It gave folk with healthy bank accounts a $30 boost, funded by stealing the retirement of people who saved a little more – potentially because they knew they would need it more.

      The bottom line is that the pension system is broken. It’s a mess. And the change to the assets test was a short-sighted and ill-considered move that made things very much worse. But fools like OG can’t see past ”have money, steal it”. Yes, probably blinded by the green eyes syndrome! Certainly bat-eyed and incapable of reason.

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    Most pensioners don’t have any left on their super, they need an jncrease on the pension and benefits. Like rent assistance

  5. 0
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    Good idea. Agree but regarding owning a home-those who fully own their home outright (no mortgage) probably do not need such assistance, but what about those still with a hefty mortgage/home loan due to circumstances beyond their control (broken relationships/low income etc)?

    • 0
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      Disagree – how do you know if those who have a hefty mortgage left at retirement have squandered their money during their younger years? After years of slogging, many times 3 jobs at a time, not buying new cars, not going on lavish holidays, at age 64 I have just paid off my modest little 2BR house. Yet it gauls me to hear some of my friends, many married with 2 incomes, and similar age, complain about the mortgage they still have to pay as they approach pension time. Why should they be assisted more?

    • 0
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      Ah, yes – the old Law Of the Jungle – automatic presumption of squandering…

      That’s a lot like a bloke who’s divorced at 48, lost his home, then lost his job, then got sick and injured – and who then – because he has nothing, must perforce have spent his life as a bum and on the beach and on drugs, and probably as dope fiend or similar….. he’s got nothing so he must be one of those lifetime bums…. probably drank or gambled it all… instead of generously over-providing for his children’s well-being and future at his own expense….

      You’re looking at him…..

    • 0
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      in2sunset. Why shouldn’t they be assisted?

    • 0
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      Nan Norma – you HAVE to be joking!! Why the hell should they be assisted? I cannot believe what a stupid shallow comment – unless you are one of those who lived the high life and now cry ‘poor me’ because they don’t own their home outright. I’m not saying that people who don’t own their own home outright should not get some assistance – I am sick of hearing the discriminatory comments about who should get what. Its called OLD AGE PENSION. So when you reach ‘old age’ – you get the pension. If the Govt would stop tampering and changing things, without all these exceptions and provisos, and rules that can be manipulated by certain people, then all seniors would be able to manage and survive, not live in poverty.

    • 0
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      I agree, in2sunset. Owning a home in retirement can also be costly. Add the loss of rent assistance and the variation in asset limits, plus rates and insurance and maintenance costs and I know many who would be better off NOT owning their home – especially if their home is aging.

      The problem is generalizing. The change to the assets test ASSUMED anyone with higher than average saving is better able to support themselves, but that’s just crap. Some of those with higher savings went without extensively to save KNOWING they would have a lesser capacity than most to earn adequate income in their old age, or knowing they would face high costs for particular needs. The changed assets test hurts many who will genuinely struggle once their savings are compulsorily depleted, while high income earners continue to party and get part pensions with all the benefits.

      Similarly with rent vs. home ownership. You simply can’t ASSUME that everyone who rents is worse off than everyone who owns, because individual circumstances vary.

      Frankly, I’m sick of the notion that society should hand out indiscriminately to folk who, in many cases, were irresponsible, while folk who struggled for 4 decades to pay off a mortgage are ASSUMED to be always better off. I think it’s time to review the entire pension system. Abolish it start over from the ground up, without the stupid preconceived notions and with proper respect for our aging population and their needs, and recognition that our younger folk CAN afford to support their oldies if they reduce the overseas holidays and restaurant dinners etc that we never even dreamed of having when raising kids and paying off mortgages. Goodness, I heard yesterday the average wedding costs $65,000. That’s a deposit on a modest home, for heaven’s sake! But they party, then they whinge that homes aren’t affordable. Well, we struggled to buy homes too – older style 2 bed/1 bath in need of renovation, not the new luxury mansions that seem to be standard today.

    • 0
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      Rainey – oh so nice to find someone else on the same wavelength as me! I recently went to a close friends’ daughters wedding and can only describe it as obscene. So many weddings now are simply trying to go one better than anyone else. They are constantly going overseas, updating cars, and bemoaning the fact they can’t afford to buy a house. Agree – their wedding would have been a deposit on a house. Now they want my friend to be guarantor so they can buy a house, to which I have expressed my utmost horror and disgust. Much to my relief, she has said no, and now faces a very disgruntled and ‘poor me’ daughter. Also totally gauls me about Paid Parental Leave, and all the money wasted on illegal trespassers. I have never been on any Govt welfare, wasn’t around for a First Home Owners Grant, Baby Bonus, etc.
      Here is a classic example of the mentality of many younger people and their expectation of entitlement to constant handouts. My neighbor and I recently agreed to install a new dividing fence, but when it cane time to pay -after they signed to pay – wife reneged. Excuse – almost exact words – ‘My husband now earns over $160,000 a year and that means we are not entitled to any govt benefits, so we can’t pay for the fence.’ I nearly fell off my chair! . I went through the legal channels and finally got my money, but only 4 days before the court case. Paid all in cash.
      I had to struggle, work and save to buy a house – younger ones can do the same.

  6. 0
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    I just love it when experts give advice that involves spending other people’s money. If the comment was only to spend $200M on rental subsidies and we are asked to comment, I’m sure that comments would be different rather than throwing in an impossible figure which could never be considered.

  7. 0
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    Targeted Social Security is the way to go.

    As a Nation we have decided to keep wages very low for these workers deliberately. We have voted in governments that had policies that were designed to create stagnation of minimum wages since at least the 1980s.

    Take an average minimum wage worker lucky to get 40 hours a week, which most don’t.

    That just under $800 a week is around $75 dollars super a week then tax of 15% plus fees, charges, insurance say $50 a week super $2500 a year or $25 000 a decade plus the very low returns and remember those losses in 1987, 2003, 2008 etc.

    That poor hard worker might have around $100 000 if they are really lucky after 40 years.

    It isn’t going to keep them.

    Superannuation only works for high income earners with disposable wealth and that is because of the tax minimisation or forced saving plan.

    So the poor bastards at the bottom of the productivity share deserve rent assistance and decent pensions after 67. It’s the very least society can do for the sacrifice these workers make to ensure the wealthy have a terrific lifestyle.

    • 0
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      Oh, I agree to a point, Rae. But not at the expense of those who – often coming from the same or greater disadvantage – slogged their guts out for decades to save to provide for their own comfortable retirement, then saw investment returns smashed and found themselves needing a modest weekly top-up to meet their rather modest income needs.

      The super and pension system is a disaster. It doesn’t need a minor tweak. It needs a total overhaul – but designed by battlers who have been there and done that and know the real world, not by privileged a-holes whose only focus is protecting the rich from a slightly increased tax burden.

  8. 0
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    Dead easy become a Polly.

  9. 0
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    I believe tinkering around the edges of the Pension system can never be fair and satisfactory for all recipients . For starters there are too many variables from people in their sixties to eighties + , all facing different financial difficulties . From January 1st we will be facing a new problem with many Pensioners having to cope with severe reductions in their Pensions and their savings can not even come near in replacing or matching the income of the person without savings .
    So let our Government for once take responsibility , increase Pensions to everyone , instead of trying to get out of it on the cheap again by paying a little extra here and there ..

    • 0
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      Exactly why calling the legislation The Fair and Sustainable Pension Act actually proves politicians idiots. It’s about as Newspeak as you can get without actually being Orwell.

      If it stuffs up small business we will know exactly who to blame.

      Greek was forced into Austerity and 7000 shops closed their doors just in Athens alone.

    • 0
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      Oh and they print the money. we are not talking borrowing funds to pay Australian retirees pensions as it gets paid in Aussie dollars. The only problem with giving everyone a pension would be if we had rampant inflation and that is very far from happening any time soon.

  10. 0
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    I agree with I am not old. I enquired about Government housing 4 years ago and told I would have to wait at least a min of 10 years. How crazy is that. Yet Refugees and others can get it within 3-6 months. Australians should come first. I pay 2/3rds of my age pension in rent. So an increase in rental assistance is imperative. I don’t want to live in a dump and around where drugs are being taken and sold in front of our noses. I have been in that situation before and was paying the same rent then. We need at least $150 per fortnight in rental increase so we can afford to rent a decent place to live.

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