The 2015 Organisation for Economic Co-operation and Development (OECD) report, Pensions at a Glance, compared the Australian pension (those aged 65 and over) to 33 other countries around the world.
Startling from this report was the confirmation that 34 percent of Australian pensioners were found to be living below the poverty line, significantly worse than the OECD average, where 12.6 percent of pensioners were found to be living in such dire circumstances. Such degree of poverty was only beaten by one other country, South Korea.
More in-depth information around the results of this report can be found in the chart below:
But should we be surprised by such statistics? Unfortunately not, such circumstances aren't limited to those in their twilight years. Supporting such findings, the 2013-2014 Expenditure survey by the Australian Bureau of Statistics found that 731,300 Australian children or 17.4% were living in poverty. Further to this, the Australian Council of Social Service released a new report in October 2016 that revealed that poverty is growing in Australia at an alarming rate. The council estimated that 2.9 million Australians, approximately 13.3%, live below the poverty line.
Currently the Australian federal government spends only 3.5 percent of national gross domestic product on the old aged pension, significantly lower than other OECD countries around the world who spend 7.9 percent on average.
Further compounding this substandard quality of life is the high cost of living, specifically with utilities, food, and transport, of which has a huge detrimental impact on those surviving on the Australian aged pension. Changes to the eligibility of the aged pension on January 1st 2017 will only adversely compound the issue, with many no longer eligible.
With over 2 million people now claiming the aged pension in Australia, the current rate of pay for is approximately $22,000 for a single person, with couples only receiving $34,000. Further compounding this low pension allocation is the decreasing purchasing power of the aged pension due to inflation, the high cost of housing, and the mining boom. In real terms, the purchasing power of the aged pension has decreased since the year 2000.
In 1992 the federal government introduce mandatory superannuation contributions, however those currently in the process of entering retirement haven’t been able to realise the full designed benefit of the superannuation system due to their short term participation.
As a result of government policy, many pensioners have limited opportunity to maintain a decent quality of life on their current pension, and are forced to source other ways to increase pensioner income such as selling their family home.