The 2015 budget is fast approaching and just like last year, the pension has been a hot discussion topic. There is one reoccurring theme stemming from discussions about the pension that we see on Starts at 60 and that is that pensioners want more. It is all well and good to want more, and many feel as though we deserve more, but we need to have an honest conversation about what more really is.
Right now, according to ASFA, the Australian Super Funds Association, the income needed for a “modest” lifestyle in retirement for a single person is $23,469pa. The current age pension as deemed “adequate” by the government is $22,365pa, including the pension supplement and the clean energy supplement. It increases twice yearly based on CPI and in accordance with average male fortnightly earnings. As we can see, there is a deficit of $1,104. In 2011, there was 1,293,856 over 65s on the full age pension. A further 865,131 were on the part age pension.
But based on the feedback on articles relating to the pension, seniors seem to need a lot more than $1,104 extra to live a modest lifestyle. Based on the ASFA calculations for cost of living, if a 10 per cent concession was provided to health expenses, transport expenses and energy expenses, there’s already a saving of $1,021.41 per year. So perhaps the government should be looking at providing more concessions to services and necessities that are integral to the every day life of pensioners instead of fumbling to find funds to give across the board increases.
While some people would prefer the convenience of concessions, others argue that they create a culture where the government dictates your spending and takes away the freedom of pensioners. So the alternative is of course, more increases and perhaps a fairer indexation system. Currently, the government is considering changing the indexation system but after initial concerns they would decrease the indexation rates, alternative methods have been proposed only targeting those who are “better off” despite being on the pension. The big question is though, who is “better off” when they’re on the pension?
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The problem is that although concessions or an increase could present a big benefit to seniors, the cost for the government is immense. Based on the 2011 pension figures that would mean that a simple increase to the concessions mentioned, would cost the government over $1 billion in additional costs every year. But perhaps it is time that the government understood that there’s no way out.
Ultimately it comes back to the poor forward planning of previous governments and while the superannuation system was introduced, heavy education around finance was needed but wasn’t provided.
So today tell us, what do you want from the government? How much more would you need to live a happy life? Would you prefer an increase to the pension or decreases to living costs? Tell us what you want in the comments below…