Pensions and benefits to rise but gap widens

Social Development Minister Paula Bennett. Photo / Supplied

Pensions and benefits are going up from April 1 - but the Government has quietly let the married pension fall to the floor of 66 per cent of the average wage that it promised to uphold at the last election.

Social Development Minister Paula Bennett says welfare benefits, foster care allowances, student allowances and the maximum living costs allowed for student loans will all go up by 1.96 per cent, in line with the rise in the consumers price index (CPI) in the year to December.

NZ Superannuation payments will rise slightly faster, by 2.31 per cent, because of the National Party's election promise to maintain the married rate at a floor of 66 per cent of the net average wage.

But the net average wage actually rose by 4.16 per cent, so all beneficiaries and superannuitants slipped slightly further behind those still in the workforce.

The restrained increase will still raise the total cost of pensions and benefits by $240 million over the coming year.

Grey Power secretary Bill Atkinson said the increase was "what one would have expected under the circumstances".

"But for those of our members, and there are quite a few of them, who are living only on superannuation, I ask you the question: would you like to live on super alone?" he said.

The married pension will increase by $11.04 a week from April 1 to $489.42. The rate for single superannuitants living alone will go up $7.17 to $318.12.

Beneficiary Advocacy Federation spokeswoman Kay Brereton said the increase for many beneficiaries would be even less than 1.96 per cent because there would be no increase in family tax credits, while any add-ons such as accommodation supplement would be clawed back because of the increase in the basic benefit.

For example, the unemployment benefit for a couple with two children will rise by $6.22 a week to $323.52. But their family tax credits will be fixed at $146.27, and if they are paying the average rent of $350 a week in Otahuhu their accommodation supplement will drop by $1 to $174 a week.

Families in state houses will also lose a quarter of their benefit increase at their next rent review because Housing NZ rents are based on 25 per cent of their income.

Salvation Army social services director Major Campbell Roberts said the increases were still higher than the 1.3 per cent rise last year in the Salvation Army's "low-income household CPI", which is based on budgeters' estimates of typical spending by a family earning $500 a week.

Last year was the first time for four years that the low-income CPI rose less than the overall CPI, reflecting a reversal of the high food and housing costs of the previous three years.

"But we always have to see these things against the fact that beneficiaries are struggling anyway," Major Roberts said.

He said the number of new families approaching the Salvation Army for food parcels dropped by 3 per cent in the last three months of last year, the first fall since December 2007.

"This may indicate that ... a fragile economic recovery is under way."

But the drop was mainly in the Salvation Army's Midland and southern divisions while demand remained high in Auckland and Northland.