Pension rate set to drop

October 10, 2014

As well as forcing people to wait until the age of 70 before reaching the retirement age, the federal Coalition government also intends to push these septuagenarians into poverty.

The retirement pension for a single person is currently set at 27.7% of Male Total Average Weekly Earnings (MTAWE) and is indexed every six months. The National Commission of Audit set up by Treasurer Joe Hockey in October last year has conveniently provided the government with a recommendation to reduce this rate.

What was proposed, and has already been passed in the House of Representatives, is that the pension rate be lowered by decoupling it from MTAWE and linking it to the Consumer Price Index (CPI) which has traditionally increased at a much slower rate.

The losses are significant for those on fixed incomes and will compound over time. If the CPI rate had been used since 2009, the pension rate would be $30 a week less than it is now. Over ten years, this gap increases to more than $80 a week and it will continue to increase.

National Commission of Audit chairperson Tony Shepherd obviously has a close empathy with the more than 2.4 million Australian age pensioners. After all, he does know what it’s like to live on a fixed income.

Prior to auditing pensioners he was head of the Business Council of Australia and Chairperson of Transfield Services where he got by on a miserable $380,000 a year.

And when he finishes his onerous auditing job he’ll have to put up with the poor pay that comes with being a director of the international arm of Virgin Australia and head of the WestConnex Delivery Authority that awards contracts for a toll road in Sydney that the affected residents don’t want.

The Audit Commission’s recommendation was a set-up from the start. It stems from the belief of this government that the pension is far too generous and that people should be prudent enough to provide for their own retirement.

Yet, on October 1, Help Age International released the Global Age Watch Index to coincide with the UN International Day of Older Persons. What the report showed is that Australia has below-average pension income and relative welfare rates compared with 60 other countries surveyed in the Asia-Pacific region.

Australia also has the highest age poverty rate in the region. The government will do its best to make sure it stays that way.

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