Editorial: Pension scheme may be winner

Retirees scraping to get by are apparently at the bottom of the economic ladder. Photo / File

A new study shows retirees who rely on the pension as their sole source of income are scraping by at the bottom of the economic ladder.

No exciting holidays or trips away with the grandchildren. They have to focus on making ends meet.

As the Bay of Plenty Times reported last week, a study found a single pensioner on a no-frills budget has about $113.35 left after paying rent. Of that, $70.73 is spent on food and power. The study did not budget for health costs, alcohol, tobacco, clothing and footwear and it's hard to see how the budget would stretch that far anyway.

We spoke to Bureta resident Bev Davis, who says living on the pension is a fortnightly juggling act.

Her budget is so stretched that she has to seek a loan if an unexpected expense crops up.

It is obvious why more people are working past the age of 65 and many are working well into their 70s.

And that's why United Future MP Peter Dunne's is suggesting an incentive to take state superannuation later in life.

His proposal - a varied rate depending on the age at which the entitlement was taken - could solve a number of problems.

Chief among these would be a superannuation payment that allows some quality of life for those who decide to work longer.

Mr Dunne suggests a pension below the superannuation rate could be made available from age 60 for those who wish to retire before they are 65. They would then receive the reduced rate for the rest of their life. People who decided not to pick up the pension until they were 67, or perhaps 70, would receive a higher rate.

The age of entitlement is being raised in developed countries not just to reduce the burden of an ageing population on fewer taxpayers, but also to reflect increasing longevity.

Mr Dunne's practical proposal deserves consideration.