Before we move down the track of a universal rise to pensions, we need to think through whether this is best use of money. There are many recipients of government payments that do not even get the pension level payments, such as all those on Newstart who get on 85% of the pension level and have many fewer concessions to help them. Even within those receiving pension level payments there are very different levels of need.
About 20% of aged pensioners have no other income, and probably do desperately need more income, particularly if single and renting privately.
The next 40% have less than $50 per week extra income, with maybe some savings.
However, many of the top 30% have lots of extra income including super which was also subject to tax concessions. A couple can have assets of more than $800,000 or income of $1300.00 per week and still claim some pension and concessions. There are more than 3 million people on pension linked payments all of whom would benefit from a general pension rise and so it is likely to be spread thinly.
Directing up to an extra $70 per week to those single pensioners, living alone in private rental without any extra income, would make a real difference to the many older, often female pensioners who had no chance of saving.
My rough estimate is this would cost less than $200 million which would leave space for more spending directed to other particularly needy groups like poorer carers and those on disability pensions with no additional income. Those pushing for a general rise will end up with a lot less than is needed at the bottom end and holes in the budget.
We are spending about the same ($26B) as we spend on aged pensions on super tax concession which give the biggest subsidies to higher income males’ retirement income. As few of these would get a pension, this is not creating future savings.
The report ‘Are Retirement Savings on Track’ (ASFA 2007) stated that 10% of individuals with super hold 60% of its assets. 70% of men and 90% of women currently have balances of less than $100,000, 24.3% of the group surveyed reported having no super at all — such as low paid/casual workers, social security recipients, and those who have cashed out their super already.
We do need a complete review to ensure those who depend almost entirely on public support can survive with dignity. So I would support a special payment to those singles with no extra income to offer relief now. It has been an article of faith to go for payments rises for all but I think we do the really needy a disservice!