Age Pension: will indexation of asset thresholds be frozen?

YourLifeChoices clarifies the status of asset threshold indexation.

Senior using centrelink and human services online is confused over asset threshold changes

In its 2015/16 Budget, the Government announced it would not proceed with the freezing of indexation to the income and deeming thresholds, and would maintain benchmarking of the Age Pension indexation against the Pensioner and Beneficiary Living Cost Index (PBLCI). It  then benchmarked against Male Total Average Weekly Earnings (MTAWE) – all of which left many wondering what this meant for the asset thresholds that will change significantly from 1 January 2017.

YourLifeChoices has sought clarification from the Department of Social Services (DSS) and is pleased to report that the news isn't all bad.

Provided by DSS spokesperson
The changes announced in the 2014/15 Federal Budget – to freeze the asset test free areas for pensions for three years from 1 July 2017 – have been reversed as part of the rebalancing of the assets test that was announced in the 2015/16 Federal Budget. 

Rebalancing the assets test will improve the fairness and affordability of the pension system. More than 90 per cent of pensioners will either be better off, or have no change to their Age Pension under the measure. There will be no change to the existing assets test exemption for the family home.

Starting from 1 January 2017, the changes will:

  • provide an increase in the amount of assets a pensioner can hold before their pension is affected under the assets test. This will assist pensioners with moderate assets holdings
  • provide an additional increase in the assets test free areas for non-homeowners to ensure fairer treatment for those who have chosen not to, or are not in a position to, purchase their own home and therefore do not benefit from the principal home exemption, and
  • better target the Age Pension by reducing support to pensioners with higher levels of assets who have greater capacity to support themselves.

The new amount of assets (excluding the family home) pensioners can hold without any impact on their Age Pension under the assets test (i.e. the assets test free area) will be:

  • $250,000 for a single homeowner
  • $375,000 for a homeowner couple
  • $450,000 for a single non-home owner, and
  • $575,000 for a non-home owner couple.

The assets test free areas will be adjusted using the Consumer Price Index on 1 July of each year, starting from 1 July 2017.  

To find out who will be affected by the asset threshold changes, read Asset threshold changes explained.

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    COMMENTS

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    geordie
    8th Aug 2016
    9:59am
    Still clear as mud.
    HarrysOpinion
    8th Aug 2016
    10:54am
    What's not clear to you geordie? If you have the ability to post a comment then you have the ability to understand the Age Pension rules as explained by DSS.
    niemakawa
    8th Aug 2016
    10:25am
    Over a period of time ALL Assets will become the property of the Government of the day. The Government will use these assets to pay everyone a meagre pension, just to survive. This is what future generations can expect. Private ownership will be a thing of the past, of course, to make the system "fair" for everyone. So my advice spend spend spend now before it is taken from you by stealth. Australia will be the dumping ground for all and sundry and it will erupt in to civil unrest be sure of that.
    HarrysOpinion
    8th Aug 2016
    10:56am
    So are you suggesting that the government is becoming Communist?
    niemakawa
    8th Aug 2016
    11:10am
    No even worse than that as is the whole of the Western World. DICTATORSHIP. What is happening in Western Europe is the tip of the iceberg and has the support of The Australian Government. Turnbull was at the UN meeting in Paris last October to endorse its push for the centalised control of people.
    HarrysOpinion
    8th Aug 2016
    1:39pm
    So that would make Orwell a prophet, wouldn't it?
    Old Geezer
    8th Aug 2016
    1:56pm
    Is that why they put fluoride in the water?
    niemakawa
    8th Aug 2016
    3:16pm
    Orwell was correct. Have a look around and the evidence is there staring everyone in the face.
    Old Geezer
    8th Aug 2016
    3:17pm
    I can't see anything to suggest Orwell was right.
    Retired Knowall
    8th Aug 2016
    4:32pm
    Orwell was spot on with Animal Farm.
    Anonymous
    8th Aug 2016
    4:50pm
    Yes, Orwell was a prophet. and niemakawa is right. The government is moving closer and closer to communism every day. Taking from those who work and save to give to those who don't.

    I have no objection to contributing to funding pensions for the sick, disabled and disadvantaged, but the assets test change gave them NOTHING. It took from people who saved well and planned responsibly to give to people who have a few hundred thousand in the bank and a higher income, in many cases, than those who lost out. The system stinks. It's hard to imagine a more unfair, cruel, and economically detrimental system if they really tried to create it that way.
    Anonymous
    8th Aug 2016
    5:18pm
    Settle down, comrades.
    LiveItUp
    9th Aug 2016
    7:38am
    I agree Rainey the pension system is very unfair. The new assets test will help a bit in making it fairer but it fails to address the most unfair part that is one's house.
    Anonymous
    9th Aug 2016
    9:59am
    Wrong, Bonny. The new assets test makes it VERY MUCH MORE UNFAIR. Sad that the greedy and selfish can't see how unfair and damaging it is.
    Old Geezer
    9th Aug 2016
    11:56am
    I agree the greedy and selfish are the ones who really don't need the pension and it's only unfair to them because they have lost the icing on their cake. The change will not really effect them other than they will have to draw down their assets instead of relying on the taxpayer.

    The government now needs to address the most inequitable part of the pension system. The house.
    Anonymous
    10th Aug 2016
    8:41pm
    Is it fair that someone has a $10 million dollar home and is on an aged pension yet someone who has $10 million in the bank is not.

    BTW I am not living in a 10Million dollar home or has $10 million in the bank.

    My home is very modest.
    ex PS
    11th Aug 2016
    10:54am
    Bonny, I've said it before and I will say it again, I truly hope that this government Asset Tests the family home, this will finish them for good. No retiree in their right mind will vote for them, if they get away with it they will just take more and more from retirees knowing that they will get no resistance from them.
    Old Geezer
    12th Aug 2016
    9:18am
    It would not surprise me that retirees with modest houses would be better off if their house was in the asset test. That would be a positive for the government as many more have modest houses than mansions.

    8th Aug 2016
    10:54am
    ''Rebalancing the assets test will improve the fairness and affordability of the pension system.''

    This claim is TOTALLY FALSE. It does NOT improved fairness to strip people who saved of benefits that were pledged - particularly if their income is very small or if they have special needs.

    The pension will NOT be more affordable as a result of punishing and discouraging saving and planning and rewarding cheats, manipulators, and the less responsible.

    ''More than 90 per cent of pensioners will either be better off, or have no change to their Age Pension under the measure.''

    Which means that 10% of pensioners are bearing almost the entire burden of suffering for failed economic management by politicians. No other sector of society has been so savagely attacked. Many affected are losing 30% of their income, and will be left with as little, in some cases, as HALF the aged pension with $0 benefits, until they spend down to re-qualify for assistance. How STUPID to force people to dispose of their savings quickly in order to restore their income to acceptable levels.
    HarrysOpinion
    8th Aug 2016
    11:15am
    "The assets test free areas will be adjusted using the Consumer Price Index on 1 July of each year, starting from 1 July 2017."

    Do CPI figures include the cost of renting homes?

    Cost of electricity as separate to cost of gas?

    Council Rates?

    Water rates including sewerage rates?

    Home unit Strata rates?

    Private Health Insurance gaps? Medical essential and cosmetic surgery costs?

    Can you think of other cost of goods and services?

    Are all the figures intentionally stacked up in structured groups in order to minimise the CPI average? My empty savings and empty pockets make me feel that we are being deceived and the true CPI is not revealed at all.
    niemakawa
    8th Aug 2016
    11:16am
    The trademark of Governments DECEPTION.
    HarrysOpinion
    8th Aug 2016
    5:19pm
    I love the way ABS combine cost of food with non-alcoholic beverage in order to hide the real CPI of food. Of course the CPI index will show an increase of only 1% when you combine a high cost food item with a low cost non-alcoholic beverage item. Whom are they kidding? CPI increase on food 1%? What a load of bullshit ! The cost of 2 rump steaks in a pack has gone up 42.86% since June 2015. They also show that Communication CPI has decreased by 7% ... bullshit again !!!
    Liars, liars, pants on fire!!!
    Old Geezer
    8th Aug 2016
    7:24pm
    I seem to be spending less each week lately so the CPI must be about right. I don't buy any of those non-alcolohic beverages as I make my own. Whether they are non-alcolohic or not is debatable though. I don't buy rump steak either. Harvested lots of peas yesterday so will have plently of greens. Still harvesting citrus so plently of Vit C.
    Anonymous
    8th Aug 2016
    8:05pm
    There he goes again with his ME ME ME and stuff you. I'm okay, bugger everyone else. And he tries to justify it with boasts about how wonderful he thinks he is getting to an okay position. But there's nothing wonderful about being arrogant and uncaring about the country and the majority of the population.

    News flash, OG. You are NOT the only person in this nation who matters.
    Old Geezer
    8th Aug 2016
    8:44pm
    No I am not the only person who matters but if I have noticed that I am spending less then it wouldn't surprise me that others are as well.
    LiveItUp
    9th Aug 2016
    7:55am
    Gee Rainey you are doing the same to OG as you did to me in that if they disagree with you then they are wrong as there is only one opinion that matters and it's yours. I like OG disagree with much of your opinions too.

    If you are so wealthy you don't get welfare then one wonders why you defend those who don't help themselves and make bad choices in life. Most of us have not done it easy but have benn proud that we have paid our way in society.

    More people will be better off under the new assets test. Those that will lose their pension or part of their pension are wealthy people who should not be getting welfare. They have provided well for their retirement and knew long before the cuurent asset test was raised up in the Howard era that they would not be relying on welfare. Some even held thier heads high with pride. Now that they will lose this nice to have but not needed welfare they are whinging. Time to once again hold their heads high with pride and join those over pension age who look after themselves.
    Rodent
    9th Aug 2016
    8:38am
    Bonny

    You cant be serious- when you said this

    More people will be better off under the new assets test. Those that will lose their pension or part of their pension are wealthy people who should not be getting welfare.

    Yes there actually are SOME pensioners that will get a small Increase. The actual numbers are small , but as I have written before, a Single Home Owner with $500k in assets will LOSE 71% of their pension as fro 1 Jan 2017, COMPARED with a Single NON Home owner who GAINS a 9% increase. A Couple Home Owner at the same $500k LOSES 7% of their Pension and a Couple NON Home Owner has NO CHANGE to their pension

    So by your definition a Single Home Owner with $500k in assets must be Wealthy? As I have said before change was necessary, with more to come , but what they have done is unfair and Inequitable
    to some existing Pensioners.

    Its possible you believe that all existing Pensioners with assets above ZERO should not get a pension. You and others seem to hold these views?

    Please don't go on about the Value of the home being excluded from the Assets test, I understand your point, also made by OG, and others. There is a better way and it will eventually happen.
    Anonymous
    9th Aug 2016
    11:35am
    Bonny and OG both clearly have a serious comprehension problem.

    Relatively young retirees with $823,000 in assets (for a couple) ARE NOT WEALTHY. Many have very little in income-generating assets and some are stuck with assets that aren't saleable, and will therefore be in serious financial trouble when denied a part pension.

    It takes approximately $1.5 million in RETURNING ASSETS to generate even close to an income that supports a ''comfortable'' retirement without risk and without requiring sophisticated investment skills or connections to trustworthy professional financial advisers. If a retiree couple is faced with health problems or special needs, they may find $823,000 is GROSSLY insufficient to cover the essentials they need for retirement.

    Secondly, the claims about what they knew are flawed. Many of them planned for an income far higher than they can ever dream of now, based on AVERAGE INVESTMENT RETURNS when they were saving for retirement. Who knew the economy would collapse, let alone that a cruel government would make unfair changes thoughtlessly? (And it has now been admitted that the changes were ill-thought out and present major problems).

    Sorry, Bonny, but you ARE wrong on this point. Many who are adversely affected are NOT as well off as vast numbers who BENEFIT from the change. The change is grossly unfair and not in the national interest.

    As for including homes in the assets test, I support it if done wisely and with appropriate caution. This government cannot be trusted to do anything relating to retirement incomes and pensions wisely.
    Old Geezer
    9th Aug 2016
    11:49am
    Anyone with $500,000 plus a house worth who knows have plenty to draw down on until they reach a level where they qualify for the pension again.

    Also a couple with $823,000 have more than enough to support themselves in retirement. You do not need anywhere near $1.5 million. Even $823,000 will give you approx. $55,000 to live on over 30 years without the pension. Once you have drawn down below $823,000 you start to get a part pension as well.

    If an asset is unsaleable it simply has no value. Centrelink even values assets on their saleability. So if you have those sort of assets why do they have value?

    As a taxpayer I fully support the government with it's changes to the asset test.
    Anonymous
    9th Aug 2016
    11:55am
    Clearly, you don't live in the real world OG, and you have NO CONSIDERATION OR RESPECT for people's differing circumstances and the challenges some face.

    I know people with a house worth $200,000 (or less) that needs extensive maintenance, and with $500,000 tied up in worthless assets. They will be living in poverty. And some of them have disabilities that impose heavy costs for special care and aids.

    Your generalizations and assumptions based on anecdotal evidence are not only cruel and nasty, they are downright dangerous to society.
    Anonymous
    9th Aug 2016
    11:56am
    And it would be a very DUMB taxpayer who supported a measure that rewards people for being irresponsible and will, therefore, drive pension costs UP UP UP UP UP.
    Old Geezer
    9th Aug 2016
    3:15pm
    Assets are items of value so there is no such thing as worthless assets. Therefore you cannot have $500,000 tied up in worthless assets. They should be simply written off.

    These new asset test will save the taxpayer money not drive the pension costs up. People will simply have to use up their capital until they get down to a level at which they qualify for the pension again.

    I have every respect for people's circumstances but the people effected by the asset changes have assets well beyond what they should have to qualify for welfare.
    Rodent
    9th Aug 2016
    4:29pm
    Dear OG

    These are your words
    I have every respect for people's circumstances but the people effected by the asset changes have assets well beyond what they should have to qualify for welfare.

    So I will ask my question one more time, what do YOU consider to be the Assets Figure above which a person should NOT receive ANY Pension, is it ZERO $ or some other figure. I ask this specifically, not to embarrass you but to better understand your perspective and views as a Self Funded Retiree
    Old Geezer
    9th Aug 2016
    6:19pm
    Ultimately anyone who wants the pension should be given it provided that it a debt against their estate after they die. With the price of housing what it is today most pensioners are asset rich which could fund their retirement.

    The big problem with the pension asset test is that it is full of holes in which to hide assets. Anyone with a bit of forward planning can negotiate their way around the rules if they wanted the pension that bad. Yes even I know how to get around the rules to qualify for the pension myself. But I really don't think that is the best strategy for me for the type of retirement I want.

    If you want some figures. We currently live on the income generated by less than $400,000 worth of assets and no pension. So the new 2017 asset levels are still very generous.
    Anonymous
    11th Aug 2016
    2:11pm
    So because you are fortunate, OG, to have high returning assets, the rest of the world should go to hell and suffer? What a vile selfish attitude!
    Anonymous
    11th Aug 2016
    9:51pm
    OG, expert economists, actuaries and financial advisers have collaborated to determine that, given today's average investment returns, an average relatively young retiree couple (under 70) will need to have $1.5 million in assets (EXCLUDING the family home) to earn an income equal to the age pension. So for anyone to suggest that someone with around HALF that amount is ''wealthy'' is to admit ignorance.

    Nobody should be forced to use their savings to live on while those who didn't save get a pension. That's patently unfair by any reasonable standard. It says ''take world cruises, dine out and buy furs and diamonds and the taxpayer will support you. Save to help your grandchildren have a better life and we'll screw you over.'' Really smart! NOT! There's no better way to ensure pension costs skyrocket than to punish people for being frugal. And to suggest that it's better to leave NOTHING for the next generation just so tax avoiders can continue to party is selfish, irresponsible, immoral, and evidences total contempt for all citizens of this country.

    And no, Bonny, I am NOT wealthy. I don't get a pension because I still work - by choice. I hope I can continue for a long time because this vile, stinking government - supported by the greedy and selfish - has made sure only the wealthy can enjoy a comfortable retirement, no matter how hard you worked or how much you contributed to the coffers the greedy pigs continue to raid.
    Old Geezer
    12th Aug 2016
    10:09am
    I don't work at a job and have not worked for over 25 years because to do so would be selfish in that I would be taking the job of someone who needs one. I earn enough to live on without a job and I'm in no way wealthy either. I don't get the pension because I simply don't need it to live the life I do.

    That said I really can't understand why people are so greedy and want so much from the government. To me the pension would be adequate for my needs and for a couple to have assets over $1 million and get the pension is just stupid. The new assets test will help address this stupidity and give welfare to those who need it not those who don't. If you are not drawing down your capital in retirement then you should not be receiving the pension as you have enough capital to provide for your needs. These are the greedy people who want their cake and eat it too.
    Anonymous
    12th Aug 2016
    8:44pm
    What rubbish you carry on with OG! Why should someone who went without in earlier life to save for extra comforts or special needs in retirement be forced to drain their savings and sacrifice all the benefit of their efforts so people who lived the high life and didn't save can have more. It's not 'having your cake and eating it too''. It's being respected for planning and saving and allowed to enjoy the fruits of your own endeavour.

    Goodness, you would steal the labourer's wages and claim it was fair because the drug addict next door needs it more!

    People who EARN and SAVE should be allowed to enjoy the rewards they deserve, otherwise people will stop striving and then the nation will be even more stuffed than it is now. It's STUPID POLICY that got us into the current mess. An intelligent person would reverse the crap policies, stop overindulging the rich, stop rewarding irresponsible behaviour and laziness, and let the workers who strive and work and save enjoy the fruits of their labour. Nothing greedy about wanting the RIGHT to spend the money you saved for eye surgery or dental care or disability aids on the things you saved for - rather than giving it away to someone who didn't bother to save. Or even the right to give your grandkids a leg up. People who splurged on overseas trips and restaurant dinners get pensions. Why shouldn't those who saved responsibly to provide for needs they knew would arise in later life?

    What you support is THEFT and ENVY. X went around the world and is broke. Y put his money in the bank. So rob Y to fund X's comfy retirement. What a disgustingly destructive, unfair and cruel proposition. I know who is GREEDY, and it isn't the hard workers who are being robbed.
    Old Geezer
    12th Aug 2016
    10:36pm
    Life is too short to go without just to save money. I have no problem with retirees crossing things off their bucket list by cruising around he world etc. I do those things myslef so why can't others? After all money useless to you once you depart this mortal world.

    If pensioners have money in the bank and are not spending it then that tells the government they don't need the pension. Why should the taxpayer pay a a pension to those who don't need it? It is not theft because the pension is only so that old people don't live in poverty. People with money who are not spending it are not living in poverty. If they are then they are being stupid to themselves.

    There is nothing stupid with the 2017 asset test. In fact it will save the government money and those effected have more than enough to support themselves until they spend their assets down until they qualify for the pension again. To whinge about this asset change is just being greedy and asking the taxpayer to pay for a pension that is not needed.
    Old Geezer
    8th Aug 2016
    11:11am
    I am not opposed to freezing the asset test levels.

    ''Rebalancing the assets test will improve the fairness and affordability of the pension system.''

    I agree the current pension assets test is currently a lot higher than it should be for welfare. Welfare should only be given to those who need it not those who it is nice to have. With asset levels at the current level then these people have more than enough not to need welfare.

    ''More than 90 per cent of pensioners will either be better off, or have no change to their Age Pension under the measure.''

    The 10% people who will be worse off have more than enough assets to draw down against until they get back to a level where they once again qualify for the pension. These people saved for their retirement so need to use those savings to fund their retirement not just spend the interest. It is just stupid that people save for retirement then don't use it and their heirs have a lottery win.

    It is also stupid to suggest that people will no longer save for their retirement as once people become savers they will always be savers.
    Theo1943
    8th Aug 2016
    11:40am
    Are parliamentary pensions welfare?
    Old Geezer
    8th Aug 2016
    11:44am
    No they are part of the employment package that any one putting up for parliament accepts if elected. They have nothing to do with welfare.
    Mad as Hell
    8th Aug 2016
    1:06pm
    Old Geezer-Wouldn't a fairer method of funding the short fall in welfare revenue been to increase the GST ?
    What has happened to my contributions to the Old Age Pension prior to 1992 ?
    What formal education do you have finance ?
    Old Geezer
    8th Aug 2016
    1:14pm
    No an increase in the GST will hurt the poor a lot more than the wealthy.

    My contributions to old age prior to 1992 went into general revenue which has long been spent.

    I have lots of runs on the board from the school of hard knocks as far as finance is concerned. I have learnt more from this school than I ever did in any formal education. But I will admit to some formal wall paper from unis mainly in the areas of accounting, law and statistics.
    Anonymous
    8th Aug 2016
    4:52pm
    Yes, you learned to be totally selfish and have no respect for others, OG Well done!
    Anonymous
    8th Aug 2016
    5:02pm
    So you admit to privilege, OG. That would explain why you want to see the hard-working who struggled to rise above under-privilege deprived. Elitists just can't stand seeing people rise above the social class they were born to, can they?
    Old Geezer
    8th Aug 2016
    6:29pm
    Since I was born into the lowest class then how can people not rise above the class I was born to? I find that people who are under-priviledged are full of excuses and not prepared to do anything to get themselves a better life. Yes It takes lots of effort with lots of falls along the way but persistence pays off.

    No I don't respect people who are full of excuses why not. I don't accept the word "can't" from anyone. Even my kids were too afraid to use it.

    I don't consider myself elitist or wealthy. Far from it.
    niemakawa
    8th Aug 2016
    6:33pm
    Agree with your last comment Old Geezer.
    Anonymous
    8th Aug 2016
    8:04pm
    You obviously miss the point entirely, OG. It''s NOT about excuses. Some people simply do not get the opportunity to rise above disadvantage. I rose above mine very successfully, but unlike the arrogant chest-beaters who have no empathy, I recognize that I was lucky to have opportunities and the ability to take advantage of them. Can anyone? NO. ABSOLUTELY NOT. Some struggle very hard but just can't break down the barriers that they face. Others get part way and are knocked over by crisis or tragedy. Some struggle against major disability.

    Decent people have empathy and respect.

    But all that is beside the point, which is that there is now no point struggling to rise above disadvantage, because the stinking vile dishonest government and its rich and privileged supporters knock you back down again. People work their guts out and save to reach a position of modest comfort in retirement, and then they are slugged with an unfair income loss that leaves them far worse off than if they'd only saved half as much.
    Old Geezer
    8th Aug 2016
    8:41pm
    Let the excuse be the scape goat.
    Anonymous
    9th Aug 2016
    11:52am
    REASONS - OG - not excuses. But vile intolerants with no capacity for empathy or human decency will never see it that way.
    Old Geezer
    9th Aug 2016
    12:02pm
    I very much doubt that any of the sick, disabled and educationally-deprived would be even in the asset levels effected. They would have spent thier money long ago. Most would be better off thanks to these changes.
    Anonymous
    11th Aug 2016
    2:09pm
    WRONG WRONG WRONG OG. Why don't you TRY to deal in FACTS for a change?

    Firstly, those who spent their money long ago GOT NOTHING from the changes. They ARE NOT BETTER OFF. The benefit went to people with a few hundred thousand in savings.

    Secondly, many sick, disabled and educationally deprived DO have assets at levels that render them victims of cruel and dishonest policy. Many worked incredibly hard and lived very frugally because they feared ongoing poverty or knew they would have high needs in later life. Some got modest compensation payouts INTENDED to pay for the special care they need, but now they are forced to surrender all the benefit to others who possibly have far less valid needs.

    You are WRONG OG. You base everything on minimal anecdotal evidence and wild assumptions, and don't BOTHER to consider FACTS or to research.

    I am not affected because I still work, but unlike you I took the time and effort to investigate the impact of the changes on a vast number of people, and what I learned would shock anyone who seeks to achieve fairness or a sustainable system. I found people typically fell into two classes - the disadvantaged who are going to be left without adequate means and are terrified of the future as a result; and the angry who will just blow a few hundred thousand on luxuries because they are not willing to hand over the benefit of their hard work to people who are less deserving. BOTH classes will impose higher cost on the taxpayer over time than they would have if the government had left the system as it was.

    Meanwhile, high income earners are getting fat handouts they don't need and the fat-cat wealthy are ripping off the nation with superannuation tax concessions that cost more than the aged pension, are NOT needed, and are grossly unfair and obscene.
    Supernan
    8th Aug 2016
    1:39pm
    I am happy to have an Assets threshhold. I just think its too low. $500,000 would be more realistic. We just use our bit of cash to maintain the house, pay rates, insurance, get gravel drive way re- levelled, renew power poles, lop back trees, etc on this asset called a house. And, because we have chronic illnesses, not to be a burden on the health system & add to the massive waiting lists, we pay health insurance. The amount we have reduces each year. The small part pension we get doesnt even cover food, but does help make ends meet. Our local politician just got voted out & get $100,000 lump sum to compensate him !
    Old Geezer
    8th Aug 2016
    1:55pm
    Welfare and pollies pensions are poles apart and you simply can't compare the two. If you got a job only to find that the conditions of that job changed you wouldn't be happy. Pollies have a job and their pension is part of that job.
    HarrysOpinion
    8th Aug 2016
    2:26pm
    And politicians are complaining that they are not paid enough ! Ah well, when you pay peanuts you get monkeys and that's what we have in this government's parliament, a Zoo.
    Anonymous
    8th Aug 2016
    4:54pm
    Well, HS, I vote we start paying peanuts, because they monkeys would do a far better job than the snout-in-the-trough overpaid incompetent morons we have now.
    Anonymous
    8th Aug 2016
    4:57pm
    Agreed Supernan. The assets threshold should, logically, be set according to the current rate of return, so that - as would be common sense (not that there's much of that around these days, and certainly not among politicians!) income can't be INCREASED by spending down your savings.

    To pay 7.8%+ benefits, indexed to inflation, on savings that can only attract between 2 and 5% in the market is sheer STUPIDITY. It is a disincentive to saving that will drive future pension costs up. And meanwhile people with huge $70,000 a year incomes still get a part pension. It's madness!
    Anonymous
    8th Aug 2016
    5:40pm
    HS, if you think politicians are being paid peanuts you are indeed living in a fools' paradise - and that is even WITHOUT considering their allowances for travel, meals, room, correspondence, etc, etc, etc, and then there's superannuation and retirement benefits. Wake up to yourself!
    Old Geezer
    8th Aug 2016
    7:31pm
    Rainey if returns were 10-12% that mythical 7.8% return plus benefits would be looking a bit average to say the least. The average returns from all asset classes since 1970 has been over 8% so 7.8% not looking near as good.
    Anonymous
    8th Aug 2016
    7:58pm
    OG, you constantly rant on about ''average returns'', but many don't get anywhere near ''average''. And even if they do, there are risks attached and often management implications that are beyond some retirees to cope with. Conversely, 7.8%+ is NOT mythical. It's very real, secure, indexed to inflation, and comes with valuable benefits.

    Sure, SOME retirees will be doing just fine on their investments despite not having over $1 million, but the reality is that a great many would be far better off having less savings, and that means that the system is STUPID and DESTRUCTIVE. It's NOT about you or the privileged people like you. It's about the MAJORITY. Many retirees have suffered educational disadvantage or are ill or disabled. Many simply don't have the ability to achieve high returns, much less to cope with the administrative demands of sophisticated investing.

    The government SHOULD be governing for the welfare of all - NOT gearing its policies to a minority of rich and privileged. But it seems they - like you - only care about the wealthy and privileged and are happy to destroy the nation in the name of pandying to the selfish upper class.
    Old Geezer
    8th Aug 2016
    8:40pm
    Just more excuses Rainey.
    Anonymous
    9th Aug 2016
    11:51am
    MORE FACTS, OG. NOT EXCUSES. Only the arrogant me-focused would be so cruel as to suggest that the sick, disabled and educationally-deprived should suffer because they were disadvantaged and blamed for the problems their disadvantage causes them.
    Old Geezer
    9th Aug 2016
    12:00pm
    If you are sick, disabled and educationally-deprived then you would have next to nothing so would not be effected by these changes. In fact you would be better off thanks to these changes.
    Anonymous
    11th Aug 2016
    2:02pm
    What a stupid, arrogant, ignorant ASSUMPTION, Old Geezer. I know many who were sick, disabled, or educationally deprived who worked incredibly hard despite their disadvantage, lived very frugally, saved well - because they FEARED poverty after experiencing hideous hardship and wanted to try to ensure they never suffered poverty again.

    And those wo have nothing GOT NOTHING from the changes. Obviously you are deaf and blind. The only beneficiaries were those with a few hundred thousand in savings. The really poor didn't get a single cent.

    12th Aug 2016
    6:55am
    Expert actuaries, financial advisors and economists are now expressing concerns that ill-conceived pension assets test changes are grossly unfair and will cause economic damage.

    Experts have determined that the average retired couple needs $1.5 million in assets (excluding the family home) to achieve an income (at current return rates) equal to the aged pension. Clearly, many affected by the revised assets test - and even many who are excluded from benefits by current thresholds, are nowhere near this mark and are therefore draining savings to get by.

    The result of draining savings is concerning economists. Firstly, those affected are likely to cut costs in the areas that impact most severely on government costs and revenue and economic growth. Surveys show one of the first cost reductions is typically health insurance, which places a higher burden on the taxpayer. Next is travel - generally motor vehicle trips which yield high tax revenue to the government. Tourism is a major industry creating high employment, and with cuts to seniors travel the impact will be felt strongly in this industry - resulting in reduced business profits (therefore reduced tax revenue) and reduced jobs. As seniors typically support smaller local businesses, this will be felt in the area where stimulus is most needed.

    The most obvious loss, however, from reducing the standard of living of retirees is GST revenue. Money spent typically circulates through the economy 10 times in a year. This was the basis for some recommendations that GST be set at 10%. The loss of spending power in the retirement community means the loss of 10% of that spending power in the first instance, due to loss of GST revenue, and then massively reduced consumption resulting in reduced profits, job loss, income tax loss, GST loss... in an ongoing cycle.

    A further consideration is the potential for investment returns to rise over time. A 65 to 70 year-old couple forced to reduce savings now may well find - in 5 years time - that their savings WOULD HAVE BEEN adequate to generate a living income without a pension, but eroding them means they need a pension. Given that a 65-year-old couple may have 3 decades to live, and those planning retirement may still be alive in 4-5 decades, there is significant risk that discouraging saving or forcing the erosion of savings will result in reduced wealth among retirees and therefore much higher dependence on pensions in the future.

    And finally, the assumption by some that retirees assisted to maintain living standards will just hoard their money to leave to family ignores the fact that most retirees who seek to leave an inheritance behind for children do so for very constructive purposes - to promote educational opportunities for grandchildren, to help grandchildren buy a home, to enable children to pay out their mortgage and save for retirement. Leaving money to offspring SUBSTANTIALLY REDUCES the future costs of retirement by enabling a wealthier and better educated younger generation to achieve their financial goals and set themselves up for their twilight years.

    While there may be an initial perceived saving by cutting part pensions, to do so in an environment of low returns risks major economic damage and will not, over the long term, achieve cost savings. It's seriously short-sighted policy.

    The final consideration is the reaction of the community to a patently unfair policy that rewards extravagance and irresponsibility and punishes those who save to try to be independent but are hurt by falling investment returns. The logical response by the populace is to manipulate affairs to qualify for a HIGHER pension than would otherwise by claimed. And that IS HAPPENING. You cannot punish people for doing the right thing and expect them to continue to do the right thing.

    On the other hand, means testing incomes DOES potentially create savings, because it doesn't punish past efforts to achieve and it doesn't steal the benefits of past sacrifices.

    Our system currently allows couples earning $70,000 a year to claim part pensions, yet denies them to couples who can't achieve an income of more than $24,000 a year.

    And finally, the idiotic assumption that renters are so much worse off than home owners completely ignores reality. A homeowner retiree might incur a cost of $450 a week just to live in their own home, when you total average rates, insurance maintenance, and pension loss. Yet a renter paying $450 a week rent will not only receive a much more generous pension, but will also get rent assistance. And $450 a week buys very nice accommodation in many areas. I can rent a beautiful, very large 4-bedroom/2 bathroom/2 living room home in Townsville for $300 a week. The government would subsidise that and pay a higher pension, yet a homeowner suffers a cost of $450 a week to live in the house they spent 3 decades working to pay off. How absurdly unfair can you get?

    If the system stopped discriminating against savers and responsible planners, we could reduce the cost of pensions dramatically. But punishing frugal living and responsible planning will ensure the future cost of aged pensions goes through the roof.

    If there is to be an assets test, it SHOULD include the family home (because it's patently unfair to allow people to sink millions into a home and get a pension while couples living in $200,000 shacks or home units can't), but it should be at a level that allows for retirees to enjoy the home they worked so hard to own AND to have enough returning assets to achieve a comfortable income AT CURRENT AVERAGE RETURN RATES.

    Personally, my view is that there should NOT be any means test for aged pensions. We all paid for our pensions by a contribution to a fund designed for the purpose of funding aged pensions. Left alone, it would have been more than adequate to pay all retirees $500 a week. It's NOT the fault of retirees that dishonest governments raided that fund, and we should not bear the burden of loss. It should be distributed fairly and equitably - and the fairest way to distribute it is to abolish some of the obscene tax concessions to the rich and clamp down on tax minimization. Make those who can afford it pay their share. There is plenty of money to pay the nation's debts if it weren't stowed in overseas tax havens. Recent exposures prove that.
    Old Geezer
    12th Aug 2016
    9:27am
    I agree the house should be included in the assets test. I would not be surprised that retirees with modest houses would be better off if the house was included.

    I disagree with a retired couple needing $1.5 million in retirement. We live on the return from just under $400,000 which includes health insurance and all other expenses.
    Rodent
    12th Aug 2016
    11:00am
    Rainey and Old Geezer

    I am having fun reading your views, might even jump in later after I catch up on some Doc reading.
    Anonymous
    12th Aug 2016
    8:29pm
    There goes Old Geezer again with the ''me me me me me''. Never mind the MAJORITY. Stuff the disadvantaged. The law should only take OG into account, and bugger the rest of society. If HE is lucky enough to have a $400,000 asset that delivers twice the average return, then everyone who isn't that fortunate should be ground into poverty. And this from someone who CLAIMS to be charitable!!!
    Old Geezer
    12th Aug 2016
    10:45pm
    I know one thing no matter how much money most people have they always want more. If you doubled the pension it would not be enough for most people. It's like credit cards to most people they are like fire that gets out of control but if you can master credit cards they have some awesome benefits. I certainly love my free plane ride every year.

    Stop whinging Rainey and become the master of your destiny instead. That's what I have done.
    old frt
    12th Dec 2016
    10:50am
    As someone who recently retired (3 years & self funded) &new to these forums it is good to read what realist OG is .Sadly Rainey, you come across as a sad envious jealous person who spends to much of there employers time on these forums.
    Come on Rainey $450.00 a week on home costs - must be a huge mansion, how can someone who rents possible survive paying $450 / week in rent & receives only $430 in OAP + $130.00 a fortnight in rent assistance .
    Who lives in a fool's paradise


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