Part 1: Performance reporting
- Output Group 3.1 | Labour market assistance
- Output Group 3.2 | Support for people with disabilities
- Output Group 3.3 | Support for carers
- Output Group 3.4 | Support for the aged
Output Group 3.4 | Support for the aged
Contribution to Outcome 3
Support for the aged contributes to Outcome 3 by:
- assisting retirees to make the best use of savings and investments to maintain their standard of living
- helping to support the aged with limited means through the provision of income support
- providing information and fostering opportunities for mature-age people to participate in their community.
Strategies
- promote participation, independence and self-reliance among older Australians through policy development, education and advisory services
- contribute to an adequate, sustainable and appropriately targeted social safety net through the means test and policy directions that focus on older Australians
- enter into international social security agreements to enable Australians to gain access to overseas pensions and domestic benefits that would be otherwise unavailable
- influence the policy debate about population ageing issues and retirement income issues
- provide recognition for the contribution made by older Australians to building the community.
Outputs under Output Group 3.4
Ex gratia payments to Holocaust survivors
Restitution payments made to Holocaust victims regardless of the payment's country of origin have been made exempt from the social security income test from 13 May 2003 under a measure announced in the 2003–04 Budget. Previously only payments made by the German and Austrian governments were exempt. All income support recipients who receive restitution payments in relation to Nazi persecution now receive consistent treatment under the social security income test. The ex gratia payments were made until legislation was passed.
National Information Centre on Retirement Investments (NICRI)
NICRI is an independent body funded by the Australian Government to provide the public with free and independent information on planning and saving for retirement, on the nature of investment options and on effective use of financial resources in retirement.
Support for the aged
Age Pension
Age Pension is a payment for people of Age Pension age who cannot support themselves fully in retirement. Age Pension age is currently 65 years of age for men and 62.5 for women. The qualifying age for women is being progressively raised to 65 and will reach that age by 2014.
Widow B Pension
Widow B Pension is paid only to widowed, divorced and separated women aged 50 years and over on 1 July 1987, and women aged 45 and over on 1 July 1987 who received Sole Parent Pension (or one of its forerunners) on or after that date. The payment is being phased out in recognition of women's increasing labour force participation, with no new grants from 20 March 1997.
Wife Pension (Age)
Wife Pension (Age) is a safety net payment for female partners of recipients of Age Pension where those partners are not eligible in their own right for the Age Pension. The payment is being phased out, with no new grants since 1 July 1995.
FaCS also makes Age, Wife (Age) and Widow B pension payments to people under various international social security agreements.
Pension Bonus Scheme
The Pension Bonus Scheme is intended to encourage older Australians to continue working beyond Age Pension age rather than retiring from the workforce and claiming Age Pension. It provides a one-off tax-free lump sum to eligible people. It is payable when a person registered in the scheme finally claims and receives Age Pension.
Telephone Allowance to Commonwealth Seniors Health Card holders
Telephone Allowance is available to Commonwealth Seniors Health Card holders to assist with the cost of maintaining a telephone service.
FaCS seniors publications
FaCS promotes independence and self-reliance through the promotion of a range of publications which, in addition to the information and services provided through the Financial Information Service (FIS) and NICRI, provide information to retirees and pre-retirees on planning, saving and preparing for retirement, on investment options and on the effective use of savings for self-support. The department works with industry bodies, other agencies and community groups in producing these publications. The publications are available through Centrelink offices and on the FaCS web site.
Performance summary
Key achievements included:
- major contribution to the development of the Australian government paper A More Flexible and Adaptable Retirement Income System. The paper sets out responsibilities of the individual and government in financing retirement incomes, and highlights the importance of financial planning and preparation for retirement, and in particular the measures to:
- increase choice and competition in the income streams market through a potential new product called a market-linked income stream
- change the assets test exemption for complying income streams and introduce increased flexibility for people making the transition to retirement.
- influencing and contributing to the ongoing policy debate on population ageing through conference papers and input to the Australian Government discussion paper Australia’s Demographic Challenges
- major contribution to the development of Australian Government legislation to prohibit age discrimination
- research designed to test FaCS seniors publications, which has found reaction to the publications extremely positive in all respects.
Work is required to:
- develop further policy responses to the effects of population ageing and long-term demographic change, including through work with other departments
- ensure that the social security means test is responsive to the effects of population ageing and the needs of working senior Australians
- better promote the Pension Bonus Scheme and options that facilitate choices available to older Australians who are willing and able to continue working
- further promote seniors programs that will help people better prepare for retirement, including NICRI, FIS and FaCS seniors publications to ensure information reaches the target audience.
Financial and staffing resources summary
| Group 3.4: Support for the aged | (A) Budgeta 2003–04 $'000 |
(B) Actual 2003–04 $'000 |
Variation (column B minus column A) $'000 |
Budgetb 2004–05 $'000 |
|---|---|---|---|---|
| Administered Expenses (including third party outputs) | ||||
| Ex gratia Exempt Scholarships that Waive or Pay Tuition Fees | 160 | 0 | –160 | 340 |
| Ex gratia payment to Holocaust Survivors | 76 | 24 | –52 | 0 |
| National Information Centre on Retirement Investments | 462 | 462 | 0 | 469 |
| Group 3.4: Support for the aged | (A) Budgeta 2003–04 $'000 |
(B) Actual 2003–04 $'000 |
Variation (column B minus column A) $'000 |
Budgetb 2004–05 $'000 |
|---|---|---|---|---|
| Special Appropriations | ||||
| Age Pension (Social Security (Administration) Act 1999) | 19 026 770 | 19 540 401 | 513 631 | 20 140 472 |
| Aged Persons Savings Bonus (ANTS (Bonuses for Older Australians) Act 1999)c | 0 | 13 | 13 | 0 |
| Self-funded Retirees' Supplementary Bonus (ANTS (Bonuses for Older Australians) Act 1999) | 200 | 169 | –31 | 0 |
| Telephone Allowance for Commonwealth Seniors Health Card Holders (Social Security (Administration) Act 1999) | 13 000 | 12 251 | –749 | 13 300 |
| Widow B Pension (Social Security (Administration) Act 1999) | 27 958 | 26 275 | –1 683 | 14 496 |
| Wife Pension (Age) (Social Security (Administration) Act 1999) | 193 707 | 194 176 | 469 | 174 588 |
| Total Administered Expenses | 19 262 333 | 19 773 771 | 511 438 | 20 343 665 |
| Group 3.4: Support for the aged | (A) Budgeta 2003–04 $'000 |
(B) Actual 2003–04 $'000 |
Variation (column B minus column A) $'000 |
Budgetb 2004–05 $'000 |
|---|---|---|---|---|
| Price of Departmental Outputs | ||||
| Policy Advice | 6 534 | 6 535 | 1 | 9 197 |
| Purchasing, Funding & Relationship Management | 1 855 | 1 855 | 0 | 2 611 |
| Research and Evaluation | 3 195 | 3 196 | 1 | 4 498 |
| Service Delivery (Centrelink) | 222 482 | 233 935 | 11 453 | 237 973 |
| Service Delivery (other) | 1 255 | 1 254 | –1 | 1 157 |
| Revenue from Government (Appropriation) for Departmental Output Groups | 235 321 | 246 776 | 11 455 | 255 436 |
| FaCS Componentd | 12 839 | 12 841 | 2 | 17 463 |
| Centrelink Component | 222 482 | 233 935 | 11 453 | 237 973 |
| TOTAL FOR GROUP 3.4 | 19 497 654 | 20 020 547 | 522 893 | 20 599 101 |
| Staffing Years (Number) | 2003–04 | 2004–05 | ||
|---|---|---|---|---|
| FaCS (including the Social Security Appeals Tribunal) | 97 | 87 |
- Final estimates have been used for special appropriations while additional estimates have been used for annual appropriations.
- Budget prior to additional estimates.
- The aged persons' savings bonus and the self-funded retirees' supplementary bonus provided compensation to older Australians for A New Tax System in July 2000. Some residual claims result from the lodgement of taxation returns for the 2000–01 financial year.
- FACS includes the Social Security Appeals Tribunal.
Performance information
Administered items
Ex gratia payments to Holocaust survivors
Quality—assurance
Legislation approving the exemption of the Holocaust payments from the social security income test became law in December 2003. Ex gratia payments were made to affected customers from 13 May 2003 until the exemption became law.
Price
$0.02 million
National Information Centre on Retirement Investments (NICRI)
Quality—assurance
FaCS satisfied that NICRI met terms and conditions of government funding, as specified in contract between FaCS and NICRI
During 2003–04, NICRI:
- addressed 66 retirement or Financial Information Service (FIS) seminars (51 FIS, 15 other), for which feedback was very positive
- conducted training sessions for FIS officers and various community workers
- distributed 177 558 information leaflets on types of investment, financial planning and preparation for retirement
- responded to 4876 inquiries from the general public, financial advisers and FIS officers
- maintained a web site at www.nicri.org.au, which was accessed 17 014 times.
Price
$0.5 million
Commentary
FaCS is satisfied that NICRI met the terms and conditions of government funding, as specified in the contract between FaCS and NICRI for 2003–04, by providing quality technical information to the public on retirement investment and planning, and by assisting Centrelink Financial Information Service officers.
Support for the aged
Effectiveness—adequacy
Maximum payments to recipients—as a percentage of Male Total Average Weekly Earnings (MTAWE)
The maximum basic rate and pension supplement for Age Pension, Wife Pension (Age) and Widow B Pension are indexed twice a year in line with increases in the Consumer Price Index (CPI). If, after CPI adjustment, the single maximum basic rate is less than 25 per cent of MTAWE, it is adjusted up to that benchmark, with proportional flow-on to the partnered maximum basic rate.
While indexation in line with CPI increases ensures payment rates reflect increases in prices, the MTAWE benchmark ensures pensioners share in any increases in community living standards as measured by growth in wages. The real value of pension payments has substantially increased over the last decade.
Maximum payments to recipients—index of real value
Figure 14 Maximum payments to recipients of pension—index of real value, June 1994 to June 2004 (Text description)
Increases to the single pension rate: actual increases versus alternative CPI and MTAWE adjustments
Figure 15 Increases to single pension rate: actual increases versus alternative CPI and MTAWE adjustments, September 1997 to June 2004 (Text description)
Effectiveness—independence
Percentage on part rate due to means tests
As at June 2004, 36.1 per cent of people receiving Age Pension, 22.4 per cent of women receiving Wife Pension (Age) and 25.0 per cent of women receiving Widow B Pension were receiving a part-rate pension.
Figure 16 Proportion of Age Pension customers receiving a part-rate pension, June 1994 to June 2004 (Text description)
Average reduction per part-rate pensioner
For those customers receiving a reduced Age Pension, the average reduction due to the means test has increased in the last year:
- $94.80 per fortnight in 2000–01
- $102.35 per fortnight in 2001–02
- $103.32 per fortnight in 2002–03
- $105.78 per fortnight in 2003–04.
Note: The increase in the proportion of customers receiving part-rate Age Pension is due mainly to an increase in assessable income.
Percentage of income units headed by a person aged 65 years and over:
- with government pension as principal source of income
The Age Pension represents a large proportion of most people's retirement income in Australia.
Australian Bureau of Statistics (ABS) figures show that the proportion of income units relying on pensions and benefits as their principal source of income where the person is aged 65 years or more fell from about 75 per cent in 1999–2000 to under 71 per cent in 2000–01:
- 74.1 per cent in 1996–97
- 73.4 per cent in 1997–98
- 74.7 per cent in 1999–2000
- 70.6 per cent in 2000–01.
- with government pension contributing less than 20 per cent of income
- with government pension contributing less than 50 per cent of income
ABS data for 2000–01 show the proportion of income units headed by a person aged 65 years and over where the Age Pension contributed to less than 50 per cent of income as follows:
- Age Pension: 50 per cent of income—29.3 per cent of income units
- Age Pension: 20 per cent of income—17.8 per cent of income units
- Age Pension: 1 per cent of income—11.6 per cent of income units.
Average amount of assessed income
At June 2004, 95 per cent of persons receiving Age Pension, 94 per cent of women receiving Wife Pension (Age) and 79 per cent of women receiving Widow B Pension had assessed private income from sources other than their pension. Across all payment types included in Table 63, assessed income made up, on average, 25 per cent of total income (including pension).
In June 2004, 94 per cent of people receiving Age Pension had income from their own savings, with the annual average being $1348. The proportion of Age Pension customers receiving income from superannuation was 14 per cent. The annual average income from superannuation rose from $6153 in June 2003 to $6266 in June 2004.
Percentage of age pensioners with assessed income greater than $500 per annum
Proportion of people receiving Age Pension who had assessed income exceeding $500 per year:
- 66.2 per cent in 2000–01
- 62.9 per cent in 2001–02
- 63.7 per cent in 2002–03
- 67.5 per cent in 2003–04.
Ratio of assessed income to total income
Ratio of assessed income to total income (including pension):
- $25.90 of assessed income to every $100 of total income in 2000–01
- $24.00 of assessed income to every $100 of total income in 2001–02
- $24.10 of assessed income to every $100 of total income in 2002–03
- $25.50 of assessed income to every $100 of total income in 2003–04.
Effectiveness—take-up/coverage
Percentage of estimated aged population who are customers
ABS estimates the Australian population over qualifying age for Age Pension at 2 817 120 persons in June 2004. At this time, around 67 per cent, or 1 876 250 persons, received Age Pension. In addition, around 299 416 people over Age Pension age received a similar means-tested income support payment from the Department of Veterans' Affairs (DVA), bringing total government pension take-up for this group to 77 per cent.
Figure 17 Take-up of Age Pension, June 1994 to June 2004 (Text description)
Quality—access and choice
Access for target or special interest groups
Women have a longer life expectancy and lower qualifying age for Age Pension than men. Subsequently, women comprise the greater proportion of people receiving Age Pension (59.4 per cent in June 2004). Women receiving Age Pension are less likely than men to have accumulated income and assets to provide for retirement and consequently have to spread their wealth over a longer retirement period. As a result, 65.5 per cent of women receiving Age Pension receive the full-rate compared with 61.6 per cent of men.
Almost 45 per cent of Age Pension customers are single and tend to be older than partnered pensioners. More single pensioners receive a full-rate pension than are partnered pensioners (70.2 per cent compared with 58.9 per cent). An increasing proportion of people receiving Age Pension are born overseas. In June 2004, 38.5 per cent of Age Pension customers assisted by Centrelink were born overseas.
Figure 18 Percentage of Age Pension customers born overseas, June 1994 to June 2004 (Text description)
Quantity
Number customers assisted
Number of people assisted by Centrelink at June 2004:
- 1 869 612 people paid Age Pension
- 19 646 women paid Wife Pension (Age)
- 1879 women paid Widow B Pension.
In addition, the Department of Veterans' Affairs paid Age Pension to 6638 people and Wife Pension (Age) to 82 people.
Number of customers paid Rent Assistance
In June 2004, based on the number of people assisted by Centrelink:
- 10.4 per cent (194 427) of Age Pension customers were paid Rent Assistance
- 8.2 per cent (1604) of Wife Pension (Age) customers were paid Rent Assistance
- 8.7 per cent (164) of Widow B Pension customers were paid Rent Assistance.
Number of customers paid under international agreements
Average value of payments
In June 2004, 28 325 Age Pensions were paid under agreements (excluding new Zealand and the United Kingdom), averaging $3875 per year per customer. In addition, 7430 Age Pensions were paid under the agreement with New Zealand at an average of $7834 per year per customer, and 1177 Age Pensions were paid under the agreement with the United Kingdom, averaging $5108 per year per customer.
In June 2004, 437 Wife (Age) Pensions were paid under agreements (excluding New Zealand and the United Kingdom), averaging $4120 per year per customer. In addition, 11 Wife (Age) Pensions were paid under the agreement with New Zealand at an average of $9360 per year per customer, and one was paid under the agreement with the United Kingdom, at a cost of $4394 in 2003–04.
In June 2004, 308 Widow B Pensions were paid under agreements (excluding New Zealand and the United Kingdom), averaging $5426 per year per customer. In addition, four Widow B Pensions were paid under the agreement with New Zealand at an average of $11 395 per year per customer.
Number of Commonwealth Seniors Health Card holders—287 326
Number of Pension Bonus Scheme registrations
In June 2004, among those over Age Pension age who were working, 33 per cent received Age Pension while they worked and another 17 per cent were registered in the Pension Bonus Scheme. On 30 June 2004, 67 975 people had registered in the scheme. In 2003–04 a total of $83 876 551 was paid in bonuses to 7407 people.
Price
$19.5 billion—Age Pension including (Deferred Age) Pension Bonus Scheme
$26.3 million—Widow B Pension
$194.2 million—Wife Pension (Age).
Telephone Allowance to Commonwealth Seniors Health Card holders
Effectiveness—take Up/coverage
Percentage of eligible Commonwealth Seniors Health Card holders receiving Telephone Allowance—88 per cent
Quantity
Number of Commonwealth Seniors Health Card holders receiving Telephone Allowance—252 127
Price
$12.3 million
Departmental outputs
Cost
Ratio of departmental expense to administered expenses
For every dollar spent on administered items under Output Group 3.4, 1.3 cents were spent on departmental outputs.
Policy advice
Quality—customer satisfaction
Ministers and ministers' offices are satisfied with the quality of policy advice and FaCS meets standards for policy advice
Ministers and their offices did not provide feedback on individual output groups but did provide feedback on departmental performance as a whole. Information on ministers' and their offices' assessment can be found in Volume two, Part two, 'Ministerial and parliamentary services'.
Quantity
Number of items to ministers
255 ministerial submissions and other written briefings or advice prepared; 1458 ministerial replies to correspondence completed.
Price
$6.5 million
Purchasing, funding and relationship management
Quality—assurance
Service agreements or contracts that meet legislative, government policy and departmental requirements in place with all service providers—100 per cent
Service providers meet terms and conditions of funding
FaCS ensures that service providers meet terms and conditions of funding.
Quantity
Number of contracts or service agreements under management—4
Number of service providers under management—4
Price
$1.9 million
Research and evaluation
Quality—assurance
Research and evaluation is of a high standard (timely, fulfils terms of reference, complete, methodologically sound) and contributes to policy understanding and development
100 per cent
Quantity
Major pieces of research and evaluation completed—1
Price
$3.2 million
Service delivery
Quality—assurance
Service providers deliver services to the standards agreed with FaCS
Financial Information Service
Centrelink delivers the Financial Information Service (FIS). The service aims to encourage and assist people to maintain or improve their standard of living by planning effectively for their retirement and maximising their retirement income.
There are 141 FIS officers throughout Australia (122 full-time and 19 part-time). Between July 2003 and June 2004, FIS officers conducted 210 208 calls and 77 041 interviews. Over the same period 78 574 people attended FIS seminars. The seminars are increasingly focused on assisting and encouraging pre-retirees to commence planning for retirement.
Quality—customer rights and obligations
Control of incorrect payment and fraud: savings in administered items arising from compliance activities
Review mechanisms common across most payment types for detection and control of incorrect payment and fraud are described in Volume two, Part two, 'Right payments to the right people'. For the purposes of this report, these reviews include compliance reviews, service profiling and general program reviews.
In 2003–04, the Integrated Review System and an interrogation of the Centrelink mainframe data indicated that 424 604 Age Pension, Wife Pension (Age) and Widow B Pension reviews were completed. It is estimated that rate reductions resulted in fortnightly savings of $3 614 036, and upward variations resulted in fortnightly increases of $876 122. It is estimated that debts totalled $39 606 267. Performance outcomes for debt recovery and prosecution activity are reported in Volume two, Part two, 'Right payments to the right people'.
Percentage of reviews and appeals relating to the Age Pension where the original decision is changed
Price
$233.9 million—Centrelink
$1.3 million—other