Word: 1603
References: 4
Type: Essay
Critical Appraisal Of A Review Article, Saunders And Wong (2011) Pension Adequacy And Pension Review
Introduction
The Australian pension package has been available for decades and primarily supports senior citizens, disabled persons and carers. In 2008, an opposition leader to the Australian government called Brendan Nelson created awareness that payments made by the Pensions package were inadequate. This prompted the Minister of Families, Housing, Community Services and Indigenous Affairs, Dr. Jenny Macklin to address the issue. Dr. Macklin appointed the ministry’s secretary called Dr. Jeff Harmer to review the pension package in 2008. The report dubbed the Harmer Pension Review was released in February 2009. The review critically assessed three main areas of the Pensions policy namely age pension, carer payment and disability support pension. The Australian Government used the pension review findings to amend its Pensions package.
This essay critically appraises the review Saunders and Wong (2011) article “Pension Adequacy and the Pension Review”. The essay will provide an account of the pension review as well the policy issue that is discussed in the review article. In addition, the essay will describe the concept of adequacy and the methods used to gauge adequate payment to pensioners. The deprivation approach and the main results depicted in Saunders and Wong paper will be discussed too.
Policy Issue
The issue of inadequate payment led to the review of the Australian Governments’ Secure and Sustainable Pensions package. The issue of adequate payment was the centre of the policy agenda. The recipients of the pension’s package and the Australian public felt that the amount of payment provided to the beneficiaries were not adequate because the costs of living had increased. The affected individuals were experiencing difficulties in making ends meet. The existing standards of living had increased which raised the question of adequate monetary support. It had been reported that the standards of living had increased, but the question of the amount of increment to be enforced was contentious. For many decades, the issue of pension payment adequacy had not been discussed in Australia. The Harmer Pension review created the required platform to engage in discussions about payment adequacy.
The second contentious policy issue that was raised by the review was the frequency of payments. The design and delivery of payment to pensioners was also found as an issue that needed to be addressed. In addition to this, questions were raised about the overall amount of support provided by the pension scheme against consistent and continuous payments. An additional policy issue was the mode of payment of allowances that would improve the finances of the three groups receiving pension.
The Pension Review Report investigated the financial security of disabled persons, senior citizens and carers. The various levels of support were analyzed vis a vis the purpose of payment. The review was to consider whether the payment was enough to sustain an individual living in the current community standards.
The main research objective of the Saunders and Wong (2011) Pension Adequacy and the Pension Review paper was to discuss the adequacy of payment that was suggested in the Harmer pension review. The authors examined the definitions of adequacy citing its use in several official reports. Adequacy is generally described as the capacity to sustain oneself within standards of living that are reflected in community standards. A method used to calculate adequacy called the deprivation approach was illustrated. The approach is commonly used in Europe to determine adequacy payments.
Main Results of the Article and Policy Recommendations
The definition of adequacy is reviewed in the Saunders and Wong (2011) paper. There are various definitions of adequacy used in previous reports. Most importantly, the definition should capture the issue of ability to cater for an acceptable standard of living as well as calculated with reference to current community standards. In the Pension review background paper, Harmer (2008) described adequacy as the ability to support a basic acceptable standard of living accounting for prevailing community standards. The review indicated that the amount of payment given to pensioners should be able to cater for their basic needs and adequately support their needs. Various methods are used to calculate adequacy, an elementary one being an increment in pension payment over a period of time. This method assumes that the increment is adequate and does not take current living standards into account. The second method is a method whereby an external benchmark is used to evaluate the increment of payment. The poverty line is a commonly used benchmark that compares incomes between different groups of people. The review adopted various methods or benchmarks to calculate adequacy of pension payments to various categories of individuals. The review also focused on the adequacy of the single and married pension rate.
The Deprivation approach was shown to be directly related to income adequacy calculations. Depri.............
