JOHN BARRON:
There was certainly some worrying news for many Australian retirees today as the global financial crisis continues to pummel superannuation funds.
In the last three months, the number of retirees who are successfully applying for the age pension has gone from 2000 a week to 3000 a week. The Government is encouraging retirees who are under financial pressure to contact Centrelink.
The federal Superannuation Minister Senator Nick Sherry says retirees need to know they can get help.
SENATOR SHERRY:
Well, I think unfortunately the environment for superannuation fund returns over the last year hasn't been good.
Many people have seen the value of their account drop and that's because of this world financial crisis - it's hit the share market, not just in Australia but everywhere - and that in turn has reduced the value of their super account.
So, a person who is retired may be eligible for a higher part pension because of the means test, depending on the value of their retirement savings, whether that retirement savings is in superannuation or it may be in some other form.
REPORTER STEVE CHASE:
Do you think people are unduly panicking, that they think they may have to go entirely on the pension or that their superannuation may fade away to nothing?
SENATOR SHERRY:
Well, I understand why people are worried when they see their account go backwards because of this financial crisis. The long-term return, and unfortunately I don't think our system adequately outlines that long-term return, is a positive of five per cent a year.
But, one year in six, or one year in seven will be negative and therefore an account can go backwards.
I don't think our superannuation system explains the long-term return well and therefore some people unfortunately make a judgement based on as we had for five years, which was very high positive rates of returns of 10 or 15 per cent, whereas in the last year there was an average negative of minus 6.4.
REPORTER:
Well, you can imagine people listening to this conversation are worried. In the first instance, what's your advice for them to do if they think that they should put their hand out for more money on the pension, even though they still have some superannuation assets?
SENATOR SHERRY: Well, I think what they need to do is to obtain the value of their superannuation and then if there has been a decline and they believe they may be eligible for either a part or full pension, then they should get some advice from Centrelink on that - to determine whether they are entitled to an increase in the part pension.
And the system has always operated on this basis. We have a means tested age pension, and as the value of your assets declines when you're retired, notwithstanding the current market environment, many people may be entitled to an increase in a part pension payment.
REPORTER:
Does it concern you, and I'm sure you've heard these anecdotes, that some people are wary of going to Centrelink for help?
SENATOR SHERRY:
Well look, I'd urge them to approach Centrelink. I mean the Government age pension is there for a purpose. It's there to provide a safety net to protect people. Superannuation and other income in retirement is, for most, a supplement although som, because of their assets, and their income don't receive any age pension. But the age pension is always there to provide a base safety net for people if they don't have significant levels of private saving in retirement.
REPORTER:
Looking ahead to the remainder of this year, I'm sure the Government has made provision for more of a call, so to speak, on the pension funding?
SENATOR SHERRY:
Well, what will happen in the Budget next year where it's published in May, there will be an updated figure on the cost of the age pension and that will be based on both the number of increasing claimants for a part pension as well as obviously the additional number of people who are retired who have reached pension age anyway.
JOHN BARRON:
The Federal Superannuation Minister Nick Sherry speaking there to ABC NewsRadio's Steve Chase.