Treasurer Josh Frydenberg says he is working on the terms of reference for the Government’s retirement income review with plans to get it under way before the end of the year.
Detail about the review, announced shortly after the Coalition was returned in May, is scant although the Age Pension and superannuation will be pivotal components.
The Productivity Commission, which recommended the review in January, said it wanted a broad inquiry into the entire retirement income system, including how superannuation is affecting national savings now and into the future and the adequacy of the Age Pension.
Research reveals that almost half of Australia’s population – including age pensioners – are living precariously from payday to payday.
Close to half (42 per cent) of respondents to YourLifeChoices’ Friday Flash Poll: Deeming rates and the Age Pension say they always or often live payday to payday.
Another 34 per cent said they lived payday to payday every now and then, while 24 per cent of the 519 respondents said they were secure and never lived payday to payday.
Further research from comparison site Finder found that two million Australians could survive for a week or less if they suddenly lost their job or could no longer work.
A startling 2.1 million are living day to day, predicting they could only make ends meet for seven days or less should they be laid off or not be able to continue working.
Sophie Walsh, personal finance specialist at Finder, said the figures painted a troubling reality.
She said many Australians were struggling with rising everyday living expenses and paying for bills such as their rent or mortgage, energy and even groceries.
“We know many Aussies are putting a large amount of their pay towards essential living costs, which doesn’t leave a lot of wiggle room for an unexpected financial emergency.”
Older Australians living from pension day to pension day make up part of Finders figures. Age pensioners such as YourLifeChoices terrib are candid about their challenges.
“The basic pension is still not a liveable amount. Last increase I did not receive any more money, in fact, I am now 60 cents worse off. Being in housing they take 25 per cent, but how I am worse off I have no idea. I guess I will have to contact Centrelink and housing to get to the bottom of that, but the time you spend waiting on hold is daunting to say the least. We need a rise in the basic pension backdated.”
Arvo was also despondent about the challenge of living on a pension, saying: “The Government is out of touch with age pensioners – not because they are unable to make improvement but by their oppressive design to keep age pensioners on the edge of poverty.”
SuziJ says: “Our pensions – especially for those of us with no investments – should be raised by at least $100 per fortnight to counter the fact that our bills and expenses are increasing. We’re just not receiving enough to keep up with these bills.”
The retirement income review would be the first into the Age Pension since the early 1990s.
The chief executive of actuarial firm Rice Warner, Michael Rice, said a properly conducted inquiry could take up to 18 months, meaning its findings would be delivered just ahead of the next scheduled increase in the superannuation guarantee.
“You have to look at whether the Age Pension is at the right level. If you do that, then you have to cover all sorts of other ground – there’s really no limit to what might have to be examined,” he said.
Mercer Australia senior partner David Knox said the review would need to look at the current age at which people can access the Age Pension.
YourLifeChoices member OlderandWiser says the whole system is broken, “too complex even for the most knowledgeable Centrelink staff and way too costly and time-consuming and needs to be tossed out and replaced with a universal pension …”
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