Pension Bleating – Political Beat Up
15 September, 2016
The complaints about adjustments to the Australian Aged Pension entitlements has reached shrill proportions in some quarters. ‘Pensioner implores Prime Minister to reverse ‘savage’ cuts’ in The New Daily (14 September 2014) is typical of the far left response to what amounts to generous pension arrangements. Of course mainstream media will run with similar lines because it grabs attention.
But lets get the facts right. Pensions are being increased, not by much admittedly, but by more than many people’s earned income and by more than what self funded retirees are getting from their investments. It should also be remembered that the Abbott government did not reverse the carbon tax compensation uplift to pensions when the carbon tax was removed.
But the government has decreased the amount of assessable assets that pensioners can have outside their home, before the Aged Pension starts being reduced and eventually cut altogether.
This is reasonable when you look at the numbers, despite the bleating by Labor, the Greens, and various other parties. It is also reasonable when you look at our continuing government deficits and growing debt. It is generous when you consider that the Abbott government did not claw back the additional benefits given to all pensioners to over-compensate for the introduction of the carbon tax, after Abbott repealed that tax.
Below are the new age pension rates per year, as at 20th September 2016.
Remember, to get this you need not have worked a day in your life, or paid a single cent in taxes. All you have to do is to have been a resident for 10 years (and even that has special exceptions). These rates include low income and energy supplements, and of course make no mention of discounts on shire rates, MV registration, free health care, cheap prescriptions and all the other discounts that pensioners enjoy.
- Single Pensioner $22,804.60
- Pensioner couple combined $34,382.40
If they don’t have their own home, pensioners are entitled to state housing where they pay a maximum of 25% of their aged pension as rent and have zero ownership and maintenance costs.
If they rent accommodation they can get a maximum rental subsidy of $3,390.40 p.a. for a single pensioner, and $6,385.60 p.a. for a couple combined.
So non home owning pensioners can be receiving $26,195.00 p.a. (single), $40,768.00 p.a. (couple).
I’m not saying this money will provide a lavish lifestyle, but it isn’t meant to. But if you didn’t manage to put anything extra away in your 65 years, or you were disabled or had a financial tragedy, and you didn’t receive any inheritance from your parents, then it is a pretty good safety net. One which pensioners should be grateful for, not complain about.
The funny thing is, most aged pensioners are grateful and don’t complain. It is those who are looking for political advantage who complain. Of course you will always get those who think the world owes them a living.
I can’t see our generous aged pension being able to be maintained decades into the future, because at the moment we are on the same trajectory as countries like Greece and Italy where the real value of their pensions has been cut dramatically. We are still growing our national debt at an alarming rate, not paying it off.
We are so generous at the moment that the number of ‘Australians’ being paid pensions while living overseas has almost tripled in two decades, costing taxpayers nearly $800 million a year to maintain.
More than 81,000 age pensioners and 6,500 disability support pensioners were living overseas in December, receiving all or part of their Australian pension. Italy, Greece, Spain, Britain, New Zealand and, increasingly, South East Asia are the major recipients.
Aged pensioners were born in 1951 or earlier and have spent a great deal of their working lives living through the greatest economic boom times in history. They are also the ones who saw the value of any home they bought skyrocket. But until the late 1980’s they didn’t have compulsory superannuation, and it only started at 3% of salary growing to the current rate of 9%.
Even if they did put something away for their retirement, this incredibly generous aged pension system still lets you have all, or some of the pension, depending on how much you have in assessable assets which pretty much includes everything but your home, with nominal amounts for contents.
Eligibility for the Age Pension will cut out completely for a single home-owner when they have more than $542,500 worth of assessable assets from 1 January 2017. For a home-owning couple the cut-off will be $816,000. That is still a pretty huge amount for people aged (in the future) 67 yrs or more.
Pensioners with their own homes can have assessable assets up to $250,000 (singles) and $375,000 (couples) without impacting the full-pension entitlements.
The pension gradually tapers off between the lower and upper rates.
It is pretty hard to complain about these pension rates when you remember that the top 10% of income tax payers pay 50% of all income tax. And 48 per cent of Australia’s 12.2 million “income units”, that is working aged individuals who are not totally reliant on welfare income, pay no net tax at all.
We should be asking how long can the government be this generous; not complaining about ‘pension cuts’.
2014 Aged Benefits rates in similar Western Countries
Without doing too much research, I wondered how our benefits compare and came up with this. I think our pensioners should definitely be grateful. All benefits below are for a single pensioner, in $A per year. Remember a single, non-homowner aged pension in Australia will be getting up to $26,195.00 p.a. from 20 September 2016.
- United Kingdom $10,800. (Reduced based on the number of years you worked less than 45.)
- United States $13,832
- Canada $6,760 or $13,000. (Old Age Security program or the Canada Pension Plan – the latter is for those who have contributory work years to qualify.)
- Turkey $624. (That is no mistake)
Even after all this, if you think your home owning pensioner is hard done by, and they don’t want to sell their house to maintain their lifestyle, then maybe they should consider a reverse mortgage rather than demanding more from taxpayers.
So please, no bleating about Australia’s Aged Pension rates!