Kaye Fallick, ‘Fixing pension poverty is the main issue’, YourLifeChoices 22.02.19
‘First, let’s get some facts on the table.
Above is an index of 14 OECD nations with which Australia regularly compares its wealth and economic indicators. But you will rarely see this particular index, because we come last out of the top 14 OECD economies, and second last out of the full list of 35 nations. The table measures the percentage of citizens aged 66 and over who live in relative poverty, defined by an income of less that 50 per cent of the median household disposable income for that nation.
You will note the OECD average is 12.5 per cent. Older Australians living in poverty measure 25.7 per cent. This is the second worst ranking, after Korea at 45.7 per cent. Nations with similar economies to Australia – say Canada, United Kingdom or United States – measure 9 per cent, 13.8 per cent and 20.9 per cent respectively.
So, what has gone wrong?
Put in simple terms, since the early 1990s, with the introduction of compulsory superannuation, at a flat percentage, regardless of your salary, this system has worked to reward those on higher salaries. So, if you earn $40,000 in today’s dollars, your superannuation guarantee contribution (SGC) of 9.5 per cent should add $3800 per year to your retirement savings.
However, if you earn $150,000, your SGC will add $14,250 to your retirement nest egg. And because you have more discretionary income, you may take advantage of salary sacrifice or extra contributions adding further to your future retirement income.
So, what seemed like a good idea at the time has contributed to a widening gap between the retirement haves and have-nots.
This gap has widened in Australia compared with the world’s advanced economies, with the exception of Korea, we have the most older adults living in poverty – more than one quarter of our senior population. And it is no surprise that those in the ‘cash-strapped’ retirement tribe (the 15 or so per cent of Age Pension recipients who rent) are doing it toughest. They manage to ‘exist’ on the pension, but often go without essential nutrition, household heating, or much needed preventative healthcare. …’
Then there’s the on-going behaviour by middle-class Australians (of course, at arm’s length, through their representatives) towards Australia’s first people and their on-going behaviour towards refugees and asylum-seekers – the most calculating and brutal policies of any Western nation towards these people and a model for them – even Trump was impressed by them.