As we review the Federal Budget handed down last night (12 May 2009)and digest the impact on seniors in its aftermath, we bring you a snapshot of the key initiatives.

Penions Increase

Firstly, we welcome  the long awaited increases for age pensioners as a good start and interim measure while the economy is strengthened  -  $32.49pw for single age pensioners and $10.14pw for couple (combined) age pensioners.  This is by no means the end as single age pensioners will still fall below the poverty line unless significant changes to rental assitance  come in to play.

Work Bonus

The Work Bonus will not necessarily remove disincentives and frustration of  workforce participation of pensioners. The income test moves from $138 to $250 per fortnight, however the rate increases from 40 to 50 cents in the dollar which will be disappointing for pensioners earning over $125 per week.  Many commentators have expressed that this move shows mixed messages of staying at home versus working for many pensioners.
Pension Age

The increase of the pension age from 65 to 67 by 2023 has essentialy been welcomed with caution , those in the know are very concerned about workplace reforms and age discrimination measures being addressed to support mature age workers.

Pension Supplement

A new streamlined Pension supplement ( amalgamating the existing Goods and Services Tax Supplement, Pharmaceutical Allowance, Utilities Allowance and Telephone Allowance at the higher internet rate), and increased assistance of $2.49 per week for singles and $10.14 per week for couples combined will be included in the new fortnightly Pension Supplement.

Pensioner and Beneficiary Living Cost Index

Another welcome move is the introduction of a new Pensioner and Beneficiary Living Cost Index, designed specifically for households who rely on the pension. The new index will be used to index base pension rates where it is higher than the CPI. While this is an excellent move, we await the announcement of a basket of goods that will be used in the Index. Furthermore we anticipate that as the economy strengthens a Cost of Living in retirement Index is considered to better support self funded retirees.

Self Funded Retirees

Draw down relief for self funded retirees has been extended, much to the relief of many self funded retirees who were very concerned that concessions afforded them in 2008-09 would not be repeated. This means that the minimum draw down amount for account-based pensions will be halved for the 2009-10 income year.

Paid Maternity Leave

On another note we welcome paid maternity leave as an important initiative for Australia’s future – many older women have suffered financially because of interrupted work patterns and loss of super annuation contributions due to caring responsibilities.

We sense that our work is far from over; we will keep you posted as we learn more of the full impact of the budget. 

Please feel free to peruse the Pension Overview Budget papers http://www.finance.gov.au/publications/commonwealth-budget/2009-10/2009-10/content/glossy/pension/html/pensions_overview_01.htm

Tell us what these changes mean for you, contact the policy team on 9286 3860 or policy@cotansw.com.au