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Punting politics out of the pension

On your behalf, National Seniors Australia is demanding the Age Pension be set independently of the government and politicians of the day.

We’ve said so in our Federal Budget submission and in our proposal (jointly with the Benevolent Society) to the Retirement Income Review as part of our Fix Pension Poverty advocacy campaign.

The pension should be set by an Independent Pension Tribunal, which would take responsibility for calculating a fair and adequate pension rate.

It would work out the pension rate and any supplements based on need and circumstance. Its decisions would be accepted without debate in the same way monetary policy is set by the Reserve Bank.

The tribunal would hand down its determination every November to provide enough time to be accounted for in the May Budget.

Why a Tribunal?

Pensions have become politically toxic.

In attempting to balance the Federal Budget, governments of different persuasions see the cost of the pension as a line item to be trimmed.

Pensioner punishment becomes the outcome of these deliberations and they are caught in the middle, putting up with policy changes that whittle away their income.

Unfair deeming rates and changes to the taper rate are just two examples where government has seemingly punished pensioners for saving!

More than half a million people rely on the pension as their sole source of income.

A single older person reliant on the pension survives on an annual income of around $24,000; a couple around $36,000.

We know many people in this situation are struggling.

It reflects poorly on government when older Australians live in poverty.

Compared to other OECD countries, Australia has relatively high rates of poverty among seniors. Yet, at the same time Australia spends relatively lower amounts on pension entitlements (as a proportion of GDP).

The politics must be taken out of the pension process.

An Independent Pension Tribunal is the first step to a fairer retirement income system.

How would the Pension Tribunal work?

The Pension Tribunal could convene twice yearly to independently determine the base rate of the Age Pension and relevant pension supplements, to be adopted by the Federal Government.

The Tribunal could operate in a similar way to the Panel within Fair Work Australia that sets the minimum wage, or the Remuneration Tribunal that sets the pay of key commonwealth officers, including MPs and Senators.

The amount set by the Tribunal would be a ‘determination’ based on an assessment of what is adequate for achieving an acceptable standard of living, rather than a mechanical ‘ratchet’.

It would take into account both the material day-to-day needs of people receiving the Age Pension, and the broader fiscal climate.

It should consider, for example:

  • standard of living measures;    
  • the macro-economic context;
  • the relationship of the pension to the minimum wage;
  • relationship to superannuation, mature age employment and assets test; and
  • relevant international comparators and methodologies.

What would be the structure and make-up of the Pension Tribunal?

The three tribunal members would reflect a depth of professional knowledge, experience and demonstrated excellence in the fields of economics, ageing and social services. 

One would be appointed as Chair for five years; one member appointed for four years and one for three years. All would be part-time appointments.

Members would be independent statutory appointments made by Cabinet.

They (the Tribunal members) should be selected in an open and transparent recruitment process, and exclude Members of Parliament, former Members of Parliament or any person affiliated with any political party.

The Tribunal would actively seek the input of consumers.

The Pension Tribunal should have a small staff with one member of the staff appointed by the Cabinet as Executive Director. It would be funded by a budget appropriation and be positioned within the Minister for Social Services’ portfolio.

What is the government's role?

The Australian Government retains responsibility for determining and reviewing the eligibility criteria for receipt of a full or part Age Pension.

The Tribunal would determine the maximum basic rate of the Age Pension and relevant pension supplements.

The Parliament would be required to adopt the determination.

However, the government would be able to advise the Tribunal of any new or relevant factors it requires the Tribunal to take into account in making its next determination.

Government would be required to draft and pass the appropriate legislative instrument upon which the Tribunal would be established and operate.

Help fix pension poverty

Join our Fix Pension Poverty campaign to support our push for an Independent Pension Tribunal.

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