Federal politicians understandably got a lot of correspondence expressing concern about the low level of the Age Pension. In amongst those that I got, every now and then there would be one which would assert that we have all had to pay extra income tax for the last sixty years for a fund which was supposed to have been used to provide for the pension but never has.
As with many such claims, it is half right. It is also an example from an earlier era of a policy which was either poorly thought through or always a bit of a con.
I was reminded of this while looking through the newly updated guide from the Parliamentary Library on the history of superannuation and retirement income in Australia. It is a brief but fascinating insight into the many changes made to laws affecting Age Pensions and superannuation type payments over the last century.
The part that refers to the occasional correspondent’s claim I note above is from 1945:
The Chifley Government introduced an additional levy on personal income tax which, along with a payroll tax from employers, was credited to the National Welfare Fund. There was, however, no direct link between contributions and benefits and the pension. The National Welfare Fund, whilst set up as a means of establishing a base from which a national superannuation fund could be operated, was in practice merely an accounting device until its abolition in 1985
It is amazing just how many changes have been made in this area, particularly in the last couple of decades. There were a few things I found especially interesting.
Firstly, that the eligibility for the initial Age Pension included character, race and means test.
Secondly, the removal of means and then assets tests for the Age Pension in the Whitlam and early Fraser era, followed by a re-introduction of these in the early years of the Hawke government.
But the thing I found most interesting thing of all was the one thing that hasn’t changed since the very first Commonwealth Age Pension was introduced just over 100 years ago on 10 June 1908 – namely the eligibility age of 65. It hasn’t moved upwards over all that time, even though life expectancy in Australia has increased by over 20 years since that time. (The eligibility age for women was reduced to 60 in 1910 but in recent years was brought back up to 65).
According to this table, life expectancy for those born in 1901-1910 was 55.2 for men and 58.8 for women. It is now 78.5 for men and 83.3 for women.
I guess it would be a brave (i.e. suicidal) government who would propose to lift the eligibility age for the Age Pension, but it probably is something that should be put into the mix amongst the current debate about increasing the pension rate to address the very real difficulties many pensioners have in affording to live on what is undoubtedly a low income – particularly if you don’t own your own home and aren’t in public housing.