David Chaplin 's Opinion

A personal finance columnist for the NZ Herald

Inside Money: Why pension-pinching is not on the transtasman to-do list

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Photo / Thinkstock
Photo / Thinkstock

As per its pre-budget propaganda, the Australian government has put its aging population on notice: retirement has been postponed.

In his budget released this Tuesday, Treasurer Joe Hockey confirmed access to the government pension will eventually be confined to septuagenarians and above.

Hockey said in a statement the Australian government would gradually increase the "pension age to 70 by 1 July 2035", starting in 2017.

While that might apply relatively little immediate pressure on prospective pensioners, Hockey has promised as well to hack away at pension costs via a more subtle, but quicker-acting measure.

Also kicking off in 2017, Australian government pension increases will be linked to the Consumer Price Index (CPI), rather than the current more generous mix of CPI, Male Total Average Weekly Earnings and the Pensioner and Beneficiary Living Cost Index.

The indexation shift will create substantial savings, almost A$400 million in the 2017/18 fiscal year alone, according to budget papers (although, this figure includes a raft of other benefits as well as the age pension).

Of course, old Australians have brought this on themselves by living longer than expected and remaining healthier in aggregate compared to previous generations.
Hockey has thought of that too by cutting access to and benefits provided by the Commonwealth Seniors Health Care Card (managed by the Orwellian-sounding Department of Human Services).

Removing the 'Seniors Supplement' for the Health Care Card will save the government "$1.1 billion over five years from 2013 14", the budget says.

New Zealand pensioners and pensioners-in-waiting are unlikely to see similar measures included in our own budget this week - if only because there is little scope to do so.

Hockey's latest pension-bashing does, however, accentuate the growing divergence between the two countries' retirement systems.

Perhaps NZ ex-pats residing in Australia will read all about this disparity in the upcoming campaign promised in the just-released 'Australia and New Zealand government response to the joint productivity commissions' report on economic integration.'

"The New Zealand and Australian governments will continue to work together to better inform New Zealand citizens and Special Category Visa holders on their obligations and entitlements in Australia," the trans-Tasman communique says. "The Australian Government, in consultation with its New Zealand counterpart, is developing a communication strategy to implement this recommendation, with an expected completion date of December 2014."

- NZ Herald

David Chaplin

A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. David has edited magazines and websites for the financial advice, investment and superannuation industries. Today, he contributes to various publications in Australia as well as his bi-weekly blog for the NZ Herald under the 'Inside Money' banner.

Read more by David Chaplin

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