Pensions cut for 330,000 Australian retirees

The New Year has opened with a significant reduction in the pensions of more than 330,000 Australian retirees. The changes to aged pensions, which came into force on January 1, are a sign of the far-reaching assault on the democratic rights of the working class that will be escalated in 2017 by the Liberal-National Coalition government.

Even prior to the cuts, the pension was already below the poverty line, because successive governments had refused to raise it in line with cost of living increases, particularly housing costs. The maximum base payment for a single pensioner is currently just under $400 per week, while the poverty line is $425. That base amount is reduced, however, according to the total value of assets—excluding the family home—that pensioners own above a cut-off threshold. The threshold varies depending on whether they own their home, and whether they live alone or with a partner.

Since its introduction in 1909, the Australian aged pension has always been means-tested. The new cutbacks follow from the government’s changes to the means test, which were announced in 2015. These affect how quickly payments are reduced above the full pension threshold. Previously, they fell by $1.50 per fortnight for every $1,000 of assets a retiree owned above the threshold. Now this amount has doubled to $3.

Those immediately affected by the change have relatively large retirement savings compared to the majority of the 3.5 million current aged pensioners. However, they also include workers who have been able, due to a lifetime of labour with relatively decent wages and conditions, to contribute toward their retirement. For example, the threshold of combined assets above which a couple, who own their family home, will begin to have their pension reduced, is $375,000. As a result of the cuts, a couple whose combined retirement savings are $600,000, will see their pension cut from $15,000 to $2,000 per year, or $1,250 to $167 per month.

Read more: https://www.wsws.org/en/articles/2017/01/13/pens-j13.html