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Pension Review Background Paper.

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Minister for Families, Housing, Community Services and Indigenous Affairs

Media Release

Pension Review Background Paper


The Rudd Government today welcomed the release of the Pension Review Background Paper by the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs, Dr Jeff Harmer.

The Pension Review is part of the Government's wider inquiry into Australia's Future Tax System, chaired by the Secretary of Treasury, Dr Ken Henry.

The Pension Review will investigate levels of income support and allowances, frequency of payments and the structure and payment of concessions or other entitlements for Age Pension, Disability Support Pension and Carer Payment recipients.

The Background Paper details the economic and social context of the pension system and is designed to generate debate and discussion on issues surrounding pension payments.

Many people on the pension are finding it more and more difficult to make ends meet with rising costs for food, fuel, health and housing.

Around 4.6 million Australians receive an income support payment of some kind from the Australian Government in the form of a pension or allowance.

Pensioners come from a diverse range of backgrounds and individual circumstances vary significantly.

z More than two million older Australians, or almost 80 per cent of the population aged over 65, now

receive a full or part Age Pension or related payment. But only a small proportion (around 13 per cent) have no private income to supplement their pension payment. z Most pensioners have low incomes, with more than half earning less than $20 a week of private

income. Five per cent have private incomes of more than $400 a week. z Most pensioners have limited savings or other assets, with just over half of pensioners with

assessable assets (excluding the family home) of less than $30,000 and 30 per cent report having bank balances of less than $1000. Five per cent of pensioners have reportable assets of more than $250,000. z Many income support recipients receive pensions or allowances for an extended period of time.

The average durations of current recipients on income support is 13.1 years for the Age Pension, 10.8 years for Disability Support Pension and 7.6 years for Carer Payment recipients.

The Background Paper highlights that the maximum rate of the pension needs to provide an acceptable standard of living, especially over the long term. It also suggests that before people reach retirement age, we need to ensure that people with the capacity to work are given the right incentives to do so.

The Pension Review Background Paper highlights the single rate of the pension, at 60 per cent of the combined couple rate, is lower than the average for OECD countries at 63 per cent.

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Analysis of household spending needs found some people on the single rate of the pension struggling to meet basic living costs.

The Senate Inquiry into cost of living pressures on older Australians found that people on the single rate of the pension who do not own their own house face the most significant cost of living pressures.

The Government knows that many pensioners and carers are finding it tough to make ends meet. That's why the Budget allocated $5.2 billion for seniors over the next five years, which included a permanent increase in the Utilities Allowance from $107 to $500 and the payment of a $500 bonus.

We want to make sure our pension system suits our current circumstances now and into the future.

Through this Review, the Government will be able to investigate measures to strengthen financial security for seniors, carers and people with disability in the long term.

Information from responses to the Background Paper, written submissions and national consultations will feed into the final Review report, due no later than February 2009.

The Pension Review Reference Group, announced last month, has been established to ensure the Review reflects the views and aspirations of those most likely to be affected.

It includes members from organisations such as the Council on the Ageing, National Seniors, Carers Australia and the Australian Council of Social Services.

The Pension Review Background Paper and information about the public consultations can be found at

The public consultations will be held between 19 August and 23 September in all capital cities, and in Newcastle, Rockhampton and Wangaratta. The closing date for written submissions is 26 September 2008.

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