What amount of savings can a pensioner have in the bank?

Learn about having savings, cut-off limits, deeming rules and their effect on the Age Pension.

What amount of savings can a pensioner have in the bank?

How much money can a pensioner have in the bank?
One of the most frequently asked questions for those nearing or in retirement is ‘How much money can you have before it affects your pension?’. This article will look at the rules around the Age Pension income and assets tests, which determine the rate of the Age Pension that you be eligible for, as well as the deeming rates that are applied to any savings you have in the bank.

Passing the assets test is one of the requirements that the Department of Human Services uses to assess your Age Pension eligibility. You must also pass the Age Pension income test, have reached your eligibility age, and satisfy Australian residency rules

The Age Pension assets test is passed by more Australians than the income test. According to the Centre of Excellence in Population Ageing Research (CEPAR), only one-third of Australians receiving part pensions have too many assets to be eligible for the full pension. 

The other two-thirds of part-pensioners are ineligible to receive the full pension because they earn too much income. CEPAR research also reveals that 54 per cent of full pensioners have assessable assets worth below $50,000.

How does the assets test work?
Asset test limits are used to determine whether you qualify for an Age Pension and if so, at which rate it will be paid. Your fortnightly Age Pension payment is reduced by $3 for every $1000 you exceed the asset limit. Once you exceed the limits for a part Age Pension, your Age Pension payment will cease.

Your assets, whether held within or outside of Australia, will normally be assessed at their market value. Any debt owed against the assessed asset will normally be deducted from the calculation.

There are certain assets which are exempt from assessment, such as your main residence if you’re a homeowner, certain pre-paid funeral products and accommodation bonds paid when entering an aged care facility.

You can view what is regarded as an asset by Centrelink, as well as an explanation of what is included in each asset class, and which assets are exempt, at HumanServices.gov.au.

You also need to be wary of reducing your assets in order to qualify for an Age Pension, as Centrelink considers this a deprived asset under gifting rules and will assess it as such. The limits for gifting are $10,000 in any financial year, but limited to $30,000 over five years. Deprived assets are assessed for five years.

Asset limits for full Age Pensions are indexed each year on 1 July and the limits for part Age Pensions are indexed in March, July and September of each year. The current asset test limits are listed below.

Centrelink asset test limits for Allowances and full Age Pensions from 1 July 2018

Situation

Homeowners

Non-homeowners

Single

$258,500

$465,500

Couple (combined)

$387,500

$594,500

Illness separated (couple combined)

$387,500

$594,500

One partner eligible (combined assets)

$387,500

$594,500


Centrelink asset test limits for part Age Pensions – effective from 20 March 2019

Situation

Homeowners

Non-homeowners

Single

$567,250

$774,250

Couple (combined)

$853,000

$1,060,000

Illness separated (couple combined)

$1,005,000

$1,212,000

One partner eligible (combined assets)

$853,000

$1,060,000


How does the income test work?

You can still receive a certain amount of income and receive an Age Pension. This income can be derived from investments, property rental or as a salary from employment, as well as several other means.

Exceeding the fortnightly income limit will see your pension reduced by 50 cents for every $1 over the limit, until you reach the disqualification limit for a part Age Pension, at which point your Age Pension payment will cease.

Limits for the full Age Pension are indexed on 1 July each year and the limits for part Age Pensions are indexed in March, July and September of each year. Details of the current income limits can be found in the table below.

Pension Disqualifying Income Limits from 20 March 2019

Situation

For full pension/allowance (per fortnight)

For part pension(pf) 

Single

up to $172

less than $2024.40

Couple (combined)

up to $304

less than $3096.40

Illness separated (couple combined)

up to $304

less than $4008.80


How is my money in the bank assessed as income?

Centrelink uses a set of rules called deeming to work out the income from your financial assets. It assumes these assets earn a set rate of income, no matter what they really earn.

The current Centrelink deeming rates and thresholds, as of 1 July 2018, are as follows:

Family Situation

Assets Threshold

Rate of Deemed Income

Single

$0 – $51,200

1.75%

Above $51,200

3.25%

Allowee Couple – per person (1)

$0 – $42,500

1.75%

Above $42,500

3.25%

Pensioner Couple – combined (2)

$0 – $85,000

1.75%

Above $85,000

3.25%


The income deemed by Centrelink to be received from financial assets is then added to income that you may receive by any other means as part of the income test.

Financial assets to which the Centrelink deeming rate is applied include:

• cash
• term deposits
• accounts at financial institutions, such as banks and credit unions
• friendly society bonds
• managed investments
• loans, debentures and managed investments
• account-based income streams commenced after 1 January 2015
• superannuation and rollover funds assets if over Age Pension age, and held if you are of Age Pension age
• gifts (if invested in income-bearing products)
• securities and listed shares
• unlisted public company shares
• gold, silver or platinum.

Why are Centrelink deeming rates used?
By using Centrelink deeming rates rather than actual returns, the process of assessment is streamlined, with Centrelink able to request less paperwork from customers and ascertain payment rates more quickly. Even if the actual return on investments is greater than the deemed amount, the additional income is not assessed. 

Case study
Paul and Jane are in receipt of the Age Pension and have a combined total of $90,000 in financial assets. This is split between $30,000 in Paul’s savings account, Jane’s term deposit of $20,000 and a jointly held managed investment of $40,000 – all of which pay a different rate of interest.

The total value of financial assets

$90,000

Apply the lower couples threshold of $83,400 and multiply by 1.75%

$1459.50

Apply the higher couples threshold to the remainder ($90,000 ­– $83,400 = $6600) and multiply by 3.25%

$214.50

Determine the total deemed income by adding $1459.50 + $214.50

$1674


This income is added to any other income, such as that from wages, that Paul and Jane earn, and the total is used to determine their Age Pension payment. For every $1 of income that Paul and Jane earn above the relevant threshold, their Age Pension payment will be reduced by 50 cents.

How are Centrelink deeming rates set?
Centrelink deeming rates are set by the Minister for Social Services and are monitored regularly to ensure that they reflect the returns on a wide range of investments available in the market. This means that they can be raised or lowered depending on the average markets returns and to reflect the interest rates (or cash rate) set by the Reserve Bank of Australia (RBA). 

However, although the returns and interest rates are regularly monitored, the reality is that Centrelink deeming rates are not commonly amended. And although they can be amended at any time, to minimise disruption, any changes usually coincide with the indexation of Age Pension payment rates or income and asset thresholds. 

The thresholds are also indexed annually, on 1 July, in line with the consumer price index (CPI).

Does everyone benefit from Centrelink deeming rates?
Many older Australians who rely largely on the Age Pension to fund the majority of their retirement income believe that deeming rates are unfair. This is due to the fact that the actual returns on savings accounts and term deposits are often lower than the Centrelink deeming rates. This means that they are deemed to be earning more income from their savings than they actually are and as a result, their Age Pension payment is reduced.

One way to combat this issue would be to reduce, at the very least, the Centrelink deeming rate that is applied to the lower asset threshold, as it is often those with the least in savings who are most affected. However, it seems unlikely that this will happen any time soon.

If I don't receive an Age Pension, do Centrelink deeming rates matter?
Even if you do not receive an Age Pension, Centrelink deeming rates may still be applied to your financial investments to ascertain your income and therefore your eligibility for a Commonwealth Seniors Health Card (CSHC). 

Self-funded retirees (those whose income falls below the current thresholds, which are indexed on 20 September each year), will receive a CSHC that will provide concessions on prescription medicines, health services, utilities, rates and many other everyday expenses.

Can I be excluded from Centrelink deeming rates?
Under certain circumstances, the Minister for Social Services can grant an exemption to deeming rates and will decide when the exemption will commence. These circumstances are:

• when a financial investment has failed
• certain superannuation investments where funds are fully preserved or inaccessible
• accounts that only contain funds paid to participants for a funded package of support through the National Disability Insurance Scheme
.

Once an exemption from the Centrelink deeming rates has been granted, the actual return on your investments is used to determine your Age Pension eligibility and payment. Deeming exemptions do not apply to the assessable asset value of any financial investment.

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COMMENTS

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patti
24th May 2019
10:51am
So, if my only income is the Age Pension, I own my own home, and have borrowed some money on a Reverse Mortgage to pay for essential house repairs (roof renovation, rebuild retaining wall etc) hopefully the $7000 I currently have in my account will not affect my pension. I still have other repairs coming up, including a new hot water system. And am paying interest on the Reverse Mortgage, although no repayment at present.
Roby
24th May 2019
11:19am
Yes you don't have a problem patti.
Bulla
24th May 2019
1:46pm
In my view,all have to look forward to more bad days as the so called "think tank" who though are not goverened by these dictates ( like the elected reps.) but do not mind putting their hands in others pockets for any and verything.The story goes to the past when this land was invaded and occupied by aliens and they dumped their trash(convicts and labourers) from the adjoining countries(Europeans) and over the years of their occupation they showered benifits on these dumped classes until the time new arrivals began who were more skilled,educated and earned more and that is when this thinking of stopping these benefits arose.I know people who have come from their parent country(England) at various time and making huge income but still leaving on credit cards,not having any money to spend as either the moneyis just blown away in enjoying or only God knows what they do with it.The end result is that they never have any money with them,in pocket or bank.They are the people who immediately rush to the disbursing body to claim unemployment allowance or any other available money.So,according to their motto it is a crime to save anything and put it in bank or any asset as everything is on credit card or loans/mortgage.The other elite class is that of elected reps who draw huge salaries,super which is then topped with huge pensions for which they have devised rules which are not same or even similar to those applicable to other citizens.I have tried to lay hands on the salaries,perks,super and pensions of this class but have not got it so far.It appears that these are kept hidden from the public.A bsic question which arise is that are they also have to undergo and income and assets test including age to get any pension?It does not appear to be so otherwise why this information is not revealed on the same platform as for others?
Rae
25th May 2019
8:56am
Yes Bulla they do have asset and income tests.

Their lump sun is deemed to be worth 8X the income stream amount.

Their 50% on average non concessional amount is deemed at 10%.
The other 50% is taxed in pension mode.

This is to avoid giving them any assistance at all.

So most get no aged pension funding nor concessions.

Having also never received the 9% guarantee they are truly self funded as no taxpayer funds were ever handed over as rebates or concessions.
Rae
25th May 2019
9:08am
Actually the lump sum is deemed 16X the income stream. It works out to be about double what the actual lump sum was worth in reality.

Very few understand including the Senators who legislated this nonsense.

I've been researching it for decades and may yet write a book.

For example the amount after tax that a classroom teacher paid into super over a career would have bought 6 Sydney homes if invested in property.

Instead they ended up with a little over $400 000 lump sum in reality deemed as $800 000 to deny them a part pension.

Just saying the scheme was fabulous doesn't make it true unfortunately.
GeorgeM
26th May 2019
11:31pm
Rae, your posts above make no sense at all, if you relate it to Bulla's question about MPs perks. Politicians (talking of Federal MPs) first elected since 2004 get 15.4% Superannuation (funded by taxpayers, and much better than the 9% for others), thanks to Mark Latham forcing Howard into making that change.

Politicians elected prior to 2004 had / have a massively generous defined benefit scheme, with 8-18% of their final salaries (plus other benefits) paid for life. This is described in the link below and explains why many of the Liberal ministers quit before the election assuming they were going to lose the election and thus go to lower salaries in opposition.
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/1011/SuperannuationBenefits
The above link also has a brief para before the Introduction which mentions the scheme for MPs elected since 2004, although there is no detail beyond the contribution aspect.

Note that there are NO tests for Politicians pensions e.g NO Asset, or Income, or Combined Couple tests! They can also get their pensions from Age 55 for life (age being increased to 60, NOT 67 like other people). Why??? They are special privileged people with special benefits decided by their own appointed Remuneration Tribunal! Their future pensions are also protected in the Future Fund being managed by one of them, Peter Costello, not rolled into Consolidated Revenue as they did for other people's 7.5% contributions collected since 1946 and still being collected as part of personal income taxes.

I mentioned the above brief clarifications as you seem to have drifted from Bulla's question relating to Federal MPs I believe, nothing to do with classroom teachers, etc.
Rae
27th May 2019
7:20am
George I was defining how defined benefit income streams work. And yes Politicians on over $200 000 will get a pretty nice income stream. But they won't get the aged pension or concessions as the portion they paid after full tax is deemed badly and the non concessional income stream is taxed when received.

People simply don't know how these compulsory funds were funded or paid out.

They aren't pensions at all. Simply because the media and public call them that .
They can get their Income Stream from their superannuation fund from 55 as can others who signed that contract. Choosing 55 for pay out meant higher contributions over the decades though.

Yes politicians are on a good wicket but defined benefit incomes although very reliable and great to have if you pay into them long enough are not the magic pudding people make them out as.

Politicians have made special benefits for themselves I agree. But a lot of what people believe about retirement incomes is fake news and some research would show you that.
GeorgeM
27th May 2019
8:53pm
Rae, I am afraid you continue to confuse the picture by going off at tangents.

For MPs first elected before 2004, the picture of Defined Benefits (which range from 50-75% of Base Salary, currently around $207,100, based on completing 8-18 years respectively of service) is quite clear. That is for life. It is the minimum and could be more depending on the positions they held. There are NO Asset, Income, or Couple Combined tests, and are paid out from Age 55 (increasing to 60). People such as Philip Ruddock and Bronnie Bishop get around $250K per annum in spite of whatever massive assets they have and are also not affected by their additional incomes through many other current roles (Ruddock is Mayor of Hornsby, and State Liberal party Director, besides other stints). The link I gave earlier spells out the complex rules fairly clearly. These Defined Benefit Pensions are the BEST Magic Puddings anyone could wish for. They should have been Cancelled from 2004 (when new rules started) as their re-elections should have been considered NEW Contracts. Wish some Legal Eagle could have taken this up and challenged the continuation of their benefits on re-elections - being NEW contracts.

For MPs elected since 2004, they have very generous Employer (us taxpayers) Superannuation contributions of 15.4% as noted before, however there is no detail of what they get as outcomes - whether it is a pension, or simply getting these contributions back on reaching preservation age. If anyone can clarify this, that would be helpful.

They don't need Age Pensions like other normal humans if they have served a few terms as the perks are very high, and besides accruing these pensions / super, they also earn heaps extra, so your comment about Age Pensions is irrelevant. They are seriously privileged even with the perks unlike in other professions. The link below shows a summary from 2016 of their perks (Bulla to also note as he asked about Perks):
https://www.news.com.au/national/federal-election/eyewatering-extent-of-pollies-perks-as-doubledipping-scandal-emerges/news-story/9fbdbb5e83cc058beb52979480f410a6
Note again, that their current Base Salary since 1 July 2018 is $207,100, before all these perks.
in2sunset
24th May 2019
12:34pm
I am constantly amazed and stunned at the number of seniors who do not understand the difference between assets and income. I belong to a large local seniors group and a recent talk ended up in a heated discussion because people simply do not understand.
One guy was a few months off going on Aged Pension, and was absolutely adamant, in fact boasting, that he could could have around $258,000 in the bank and still get the full aged pension. For this example - I am only talking about a SINGLE Pensioner. I explained this was not correct, and gave the following simply scenario.
If a single person, owning own home, with minimal home furniture, and little in the bank - but had a motorhome worth around $250,000. Then yes, they would be entitled to the full aged pension of $926 per f/n. The motorhome is a NON assessable asset.
BUT - sell that motorhome for $250,000 - put the money in the bank, and the Pension will drop to $871 p/f. The money is now an Assessable asset, subject to deeming. The motorhome isn't subject to deeming, but the money is.
For a single person, if you have around $156,000 in the bank, you would still get the full pension. But this may vary depending on other circumstances.
Cowboy Jim
24th May 2019
1:02pm
Thanks for that explanation, in2sunset. I too have mates that do not understand the rules. One bloke in particular just has cash in fixed term deposits, an old apartment and assets worth about $1500 total. Bewildered that he is only on a part pension; he does not understand that cash is not just considered an asset like that motorhome you mentioned above. Still thinks because he has less than $400K in the bank he should get the full pension and that being single. I printed the tables out for him, explaining he should do some renovations to his apartment instead of having everything in the bank. No way!
Rosie
24th May 2019
6:56pm
I have always been told that if someone was a homeowner and also had a motorhome , that the motorhome was an assessable asset when it came to the asset test. Has this changed?
Paddington
24th May 2019
11:11pm
Rosie, it is logical that the motorhome is an asset but it is only the value of what you can sell it for not what you paid for it.
Your home you live in is not assessed.
Greg
25th May 2019
12:16am
Rosie - if you live in/own your home then a motorhome is an asset and as Paddo said the disposal value only is counted. in2sunset has their assets confused.

If the motorhome WAS your home then it wouldn't be an asset as per the test.
Cowboy Jim
24th May 2019
1:20pm
Ben says to be wary about reducing your assets to qualify for an age pension. That really only applies to people giving their excess assets away not to those using them on themselves for various items, like buying a new vehicle, having an expensive holiday, etc. The money is still there for you to use as you see fit, only a concern when you want to give it away to your kids as so often happens.
Ricky
24th May 2019
1:31pm
I was under the impression that, for a single pension, a RV was not counted as an asset for deeming purposes, but was still an assessable asset for the asset test. I hope I am wrong as I need to reduce my assets and purchasing a RV could be the answer.
Cowboy Jim
24th May 2019
2:36pm
You can sell your house, Ricky, and buy a Winabago motor home for about $600'000 and all of a sudden you are no longer a home owner and you might become legally entitled to get rent assistance when you park it in a recognised fee charging caravan park. A few so called grey nomads are doing that. As a non home owner you can also have more assets - we really do have a skewed system for the age pension.
ardnher
24th May 2019
5:30pm
yes, there are lots of ways to "work" the system...so if you have a $600K home you are penalised but if you have a motor home the same amount you can screw the system...stinks.
Paddington
24th May 2019
8:35pm
ardnher, your home you live in is not assessed for the pension. Other things are but not your home. You can actually have a lot.
Cowboy Jim
27th May 2019
9:59am
@Paddington, your house is assessed for $207'000 for asset purposes as you can have more assets as a non home owner. Check the tables for the difference. Our unit is not worth all that much more.
Bulla
24th May 2019
2:25pm
As many of you may be remembering that government encouraged people to put in large amounts/assets in super fund and the suddenly start putting lid on the contribution either from tax paid or not paid income and finally almost totally curbing it.The objective is becoming more and more clear now when the balance in super is clubbed with the other assets and a limit is placed on assets, in super or outside the supper, and on income for the purpose of eleigibility to pension and on top of the calculating and adding interest at "deemed rates" to income and which has been going on for several years now.The day is not far when they will employ larger police force which will be entrusted with the task of stopping anyone to check the pockets to see how much cash they have and cease the cash beyond daily allownace and also ,may be arrest those who are found having more than certain sum.So, nothing is certain as the crowed forming the so called goverenment has neither ability nor interested in issues relevant to public interest.It is unfortunate that people who are directly responible for this mess have again been able to grab the position largely based on false propoganda and lies.The vents just before that election like several adjournments,ripped of the majority support but still continuing to run the government and even going ahead with current years budget while elections were just round the corner which was directly steered toward manipulating the so called surplus which every body will soon find was sheer manipulation.Though it may later reveal that how people are robbed and deprived of their earnings as they are all habitual of putting hnads in the pocket of people in the name of tax,levies and anything.
Cowboy Jim
24th May 2019
3:01pm
Tried to answer the wine cask issue on this same YLC here but for some technical reason cannot put anything up. Anyway, that is old hat since a woman called Nicola Roxon under Rudd wanted the casks to go to $55 about 8 years ago. Never happened, but just to be on the safe side we bought quite a few of the better brands this morning. Dan Murphys has a good selection, go for it!!
Mizpah
24th May 2019
5:08pm
All who have cash in banks are classified as unsecured creditors. Money is forfeit given the right national crisis ( written in law ) one Friday night before a long weekend. The amount you can withdraw from ATM 's is a software algorithm; can be changed at a moments notice. The total Deposit guarantee from the Federal Govt does not equal the total Deposit levels . Ask the people of Cyprus who lost all monies above 100000 Euro equivalent.
Personal financial prudence is great when everyone plays by the rules.
wisky171
24th May 2019
10:58pm
not only cash in bank but also shares ,superannuation balance and any other liquid assets that you or I might own,that they know about, are able to be put up as collateral to the I.M.F . AND THERE IS B**** ALL we are able to do about it. Good reason that our government should get out of debt and stay out.
wisky171
24th May 2019
10:58pm
not only cash in bank but also shares ,superannuation balance and any other liquid assets that you or I might own,that they know about, are able to be put up as collateral to the I.M.F . AND THERE IS B**** ALL we are able to do about it. Good reason that our government should get out of debt and stay out.
Mizpah
24th May 2019
5:08pm
All who have cash in banks are classified as unsecured creditors. Money is forfeit given the right national crisis ( written in law ) one Friday night before a long weekend. The amount you can withdraw from ATM 's is a software algorithm; can be changed at a moments notice. The total Deposit guarantee from the Federal Govt does not equal the total Deposit levels . Ask the people of Cyprus who lost all monies above 100000 Euro equivalent.
Personal financial prudence is great when everyone plays by the rules.
Paddington
25th May 2019
10:32am
So, just announced, Josh Frydenberg will commission a review of the retirement income system including the interaction of superannuation, government pensions and, potentially, taxation. Who should worry about this?
Cowboy Jim
26th May 2019
5:27pm
I for one do not worry about it, maybe he wants to introduce a universal pension with taxation on all income which would suit most of us quite fine (I do not have franked dividend income).
GrayComputing
25th May 2019
11:32am
NO ASSET TEST FOR A PENSION EVER AGAIN!
A pension is not welfare.

Now is the season for discontent, so do something about it!
It is time to kill off this insane hugely expensive pensioner whacking bureaucracy.

It is time for all of us (yes that means you) to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

NO ASSET TEST FOR A PENSION EVER AGAIN!
A pension is not welfare.

Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules.

Hiring more Centrelink staff will only increase taxpayer’s costs for processing the creeping insane red tape monster system politicians and well paid bureaucrats have created.

Help scrap it now. Become a hero. The UK has no asset test.

Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly.

Why worry that few million$ earners get it too. That is peanuts to them, not enough for a good vintage champagne.

Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

We all (that means you) need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.
Play Fairly
25th May 2019
1:03pm
Excellent post Gray computing!
I totally agree with you.
GeorgeM
26th May 2019
12:21am
Quite right, GrayComputing. People, especially Retirees and pre-retirees, let themselves down again at the latest election, and DID NOT pursue this matter or vote against the Liberals based on this issue. The Libs have now escaped retribution for their nasty Asset test changes of Jan 2017 in 2 elections.

As politicians have NO tests for their pensions, the better option now is for people to pursue a similar approach of NO tests other than Age and Residency, i.e. based on Universal Age Pension. Only the Greens offered to "consider" it, with Liberals and Labor ignoring it. People need to start this campaign again, so that Retirees DO NOT let them forget that we can still make them pay for not listening to us and ignoring retirees. We have a duty to ourselves and future retirees to never give up!
Cowboy Jim
26th May 2019
5:18pm
Great idea mate. Having lived in the UK in the 70s I paid for stamps for the pension. Maybe we should introduce that again here as well. Universal pension is OK but it is also presumed we do work for most of our lives and put in as well. In this place the people who put the least in get the most pay out because of the asset test. Even in my own place in Europe they want to know how many work years you have had, not just residency years. When I claimed my part pension from there they showed me the amount I paid in to the cent and worked out my pension from that.
We do have too many people who have never worked and never intended to so a universal pension is very difficult to implement, too many taker-outers and too few putter-inners, eh?
GeorgeM
26th May 2019
11:48pm
CJ, the moment you get into the logic of who deserves it, the Universal Age Pension idea will get lost, as everyone will have their own ideas about that. Some will say that all people pay the GST, petrol Excise, and other State taxes, hence all have contributed. Also, you are discriminating against people (mainly women) who stayed at home to look after the kids and house management, while their other half went out to do work. The tax system also does not benefit families of that type (with higher costs) who pay the same taxes as single individuals, hence their savings will be lesser than singles.

Thus, to keep it simple, and avoid unfairness (people slipping through the cracks), it is best to pay Universal Age Pension to ALL who qualify based only on Age (say 65 years) and Residence (say 15 years), with NO other tests. The Residence test will reduce the carrot effect for most people coming here near retirement.

There is also NO problem to afford it if we consider - the massive Centrelink cost savings (with payments directly from ATO following a simple application), more taxes from additional income from older people (working longer with no disincentives), less health issues (with less Centrelink dealings), and by implementing a Minimum Tax system to ensure the rich and large companies (especially multinationals) pay their fair share of tax (not Nil or Negligible taxes as at present). The 7.5% income taxes collected for paying pensions (now part of consolidated revenue) could also be gradually separated out into a Future Fund managed independently of Govt interference.
Cowboy Jim
27th May 2019
10:05am
Could definitely agree with you GeorgeM. The problem with the 7.5% being separated out could be tempting future governments to get hold of the pot of cash exactly what happened to the previous fund. Question would be: How to get the fund independently administered when even the Super funds are constantly meddled with?
GeorgeM
27th May 2019
9:01pm
I agree, CJ, that is a key issue - maybe set up by an Act of Parliament to disallow any Govt interference, and maybe under the control of the RBA with it's own Independent Board. Tough one (to beat the greedy politicians), but I think it's possible.
The alternative of leaving it in Consolidated Revenue will always allow them raid it, and chop down the pension benefits whenever they want.
World Prophet
26th May 2019
8:56pm
From a post by another member some time ago:

1942 – 1943 As a Wartime measure, the Federal Government gained sole control over Australian Income Tax. Labor Prime minister (Ben Chifley) introduced three bills to establish the National Welfare Fund, to be financed by a Compulsory Contribution (levy) of one and sixpence in the Pound (20/-) on all personal income.
Opposition Leader (Robert Menzies) stated that the Compulsory Contribution (levy) should be kept completely separate from other government income streams, that it should be shown separately on the Taxation Assessment and paid straight into a “TRUST” account, and not mixed with the General Revenue.
Menzies said “The stigma of charity should be removed from the Age Pension.” and that “It should be an entitlement earned by the person’s personal contribution to the fund.”

1946 Prime Minister Chifley agreed and established The National Welfare fund as at 1/1/1946.
A “Trust” Fund with the Parliament as “Trustee.” The Compulsory Contributions (levy) commenced as at 1st January 1946. It was shown separately on the personal Tax Assessments for 1946, 1947, 1948, 1949 and 1950 and the compulsory levy was properly paid straight into the Special “Trust” fund and Welfare claims were paid out of the fund.
The balance in the fund in 1950 was almost 100 million pounds.
1949 Robert Menzies became Prime Minister and he introduced Bills to amend the acts governing the National Welfare Funds.
The Compulsory Contributions (levy) was then grouped with the Taxation Assessment and appeared as one amount on the Taxation assessments and was paid as one amount straight into the Consolidated Revenue Account. The sabotage of the National Welfare Fund had commenced.
The Opposition Labor Party had collaborated in this sabotage by remaining silent instead of opposing Menzies’ action.
1951 – 1985 The compulsory levy of 7.5% now included in the tax continued to be collected and placed in the Consolidated Revenue Account treated as General Revenue and spent, until 1985.
1974 – 1975 Labor Prime Minister (Gough Whitlam) abolished income test for all persons 70 years of age and over and paid pensions to all people over that age.
1975 Liberal Prime Minister (Malcolm Fraser) cancelled the Whitlam legislation.
1977 Liberal Prime Minister (Malcolm Fraser with Treasurer Philip Lynch) transferred the balance in the Welfare Fund Account (approximately $470,000,000) to Consolidated Revenue Account.
1985 Australian Labor Government repealed acts No. 39, 40 and 41 of 1945 (The National Welfare Fund Acts). Thus the funds finally ceased to exist yet the 7.5% levy continued to be collected as a proportion of the Income Tax revenue. It also introduced the (much maligned) Income and Asset Tests, thereby excluding millions of levy and tax paying Australians from receiving Social Services Pensions.
This money these self funded contributions paid as a percentage of the total income tax collections are today worth far more than the amount of means tested pensions paid out.
Actuaries have calculated the non-means tested entitlement due to each retiree, today is in excess of $500 per week.
This surely debunks the politician’s claim that the generation are paying a proportion of their current taxes to cover the payments made to pensioners. The obvious short fall has been swallowed by the Government’s Taxation black hole.
The historical summary above highlights the fact that politicians of opposing political parties each contributed to the agenda to destroy the entitlement as it was intended. Why? They had no mandate to do so, it clearly was not and is not the will of the people.
While Party Politicians on both sides are controlled by a few people who are hidden from public view yet are open to manipulation and outright corruption, there can be no certainty of the payment of pensions.
Only a majority of truly Independent representatives can bring about a change from Government under corporate control, to Government for the People, of the People, by the People.
Just because a cabal of political miscreants become so greedy that they change the way a tax looks in the Ledgers, IN NO WAY REMOVES THE FACT THAT THIS TAX IS STILL COLLECTED TO THIS DAY TO PROVIDE FOR THE SUPPLY AND CONTINUATION OF THE OLD AGE PENSION - A STIPEND TO THE ELDERLY CITIZENS OF THIS COUNTRY WHO HAVE WORKED FOR DECADES OF THEIR LIVES TO BUILD A NATION AND HAVE FROM WORKING DAY ONE OF THEIR LIVES, BEEN PAYING 7% PLUS OF THEIR TAXES DIRECTLY TOWARDS THIS PENSION.
The old age pension is not a privilege: Is not a right. Is not a gift. Is not even welfare.
The Old Age Pension is an asset owned and accrued by each Australian Citizen who has funded this asset from their very own purse.
The governments of the day were employed to amass, secure, invest and manage a fund that in its first 5 years bulged to almost £100,000,000, an amount that today would be worth approximately $240 million.
They did amass, secure, invest and manage - and the figures were colossal and frightening to them and hence they conspired to hide them back into the consolidated Revenue bucket and to this day, that bucket has been brimming with a 7.5% tax collected specifically and only, for the Old Age Pension.
Cowboy Jim
27th May 2019
10:07am
Thanks for putting that up again - as we age we tend to forget this fact and for younger readers it is important to bring it up from time to time.
World Prophet
26th May 2019
8:56pm
From a post by another member some time ago:

1942 – 1943 As a Wartime measure, the Federal Government gained sole control over Australian Income Tax. Labor Prime minister (Ben Chifley) introduced three bills to establish the National Welfare Fund, to be financed by a Compulsory Contribution (levy) of one and sixpence in the Pound (20/-) on all personal income.
Opposition Leader (Robert Menzies) stated that the Compulsory Contribution (levy) should be kept completely separate from other government income streams, that it should be shown separately on the Taxation Assessment and paid straight into a “TRUST” account, and not mixed with the General Revenue.
Menzies said “The stigma of charity should be removed from the Age Pension.” and that “It should be an entitlement earned by the person’s personal contribution to the fund.”

1946 Prime Minister Chifley agreed and established The National Welfare fund as at 1/1/1946.
A “Trust” Fund with the Parliament as “Trustee.” The Compulsory Contributions (levy) commenced as at 1st January 1946. It was shown separately on the personal Tax Assessments for 1946, 1947, 1948, 1949 and 1950 and the compulsory levy was properly paid straight into the Special “Trust” fund and Welfare claims were paid out of the fund.
The balance in the fund in 1950 was almost 100 million pounds.
1949 Robert Menzies became Prime Minister and he introduced Bills to amend the acts governing the National Welfare Funds.
The Compulsory Contributions (levy) was then grouped with the Taxation Assessment and appeared as one amount on the Taxation assessments and was paid as one amount straight into the Consolidated Revenue Account. The sabotage of the National Welfare Fund had commenced.
The Opposition Labor Party had collaborated in this sabotage by remaining silent instead of opposing Menzies’ action.
1951 – 1985 The compulsory levy of 7.5% now included in the tax continued to be collected and placed in the Consolidated Revenue Account treated as General Revenue and spent, until 1985.
1974 – 1975 Labor Prime Minister (Gough Whitlam) abolished income test for all persons 70 years of age and over and paid pensions to all people over that age.
1975 Liberal Prime Minister (Malcolm Fraser) cancelled the Whitlam legislation.
1977 Liberal Prime Minister (Malcolm Fraser with Treasurer Philip Lynch) transferred the balance in the Welfare Fund Account (approximately $470,000,000) to Consolidated Revenue Account.
1985 Australian Labor Government repealed acts No. 39, 40 and 41 of 1945 (The National Welfare Fund Acts). Thus the funds finally ceased to exist yet the 7.5% levy continued to be collected as a proportion of the Income Tax revenue. It also introduced the (much maligned) Income and Asset Tests, thereby excluding millions of levy and tax paying Australians from receiving Social Services Pensions.
This money these self funded contributions paid as a percentage of the total income tax collections are today worth far more than the amount of means tested pensions paid out.
Actuaries have calculated the non-means tested entitlement due to each retiree, today is in excess of $500 per week.
This surely debunks the politician’s claim that the generation are paying a proportion of their current taxes to cover the payments made to pensioners. The obvious short fall has been swallowed by the Government’s Taxation black hole.
The historical summary above highlights the fact that politicians of opposing political parties each contributed to the agenda to destroy the entitlement as it was intended. Why? They had no mandate to do so, it clearly was not and is not the will of the people.
While Party Politicians on both sides are controlled by a few people who are hidden from public view yet are open to manipulation and outright corruption, there can be no certainty of the payment of pensions.
Only a majority of truly Independent representatives can bring about a change from Government under corporate control, to Government for the People, of the People, by the People.
Just because a cabal of political miscreants become so greedy that they change the way a tax looks in the Ledgers, IN NO WAY REMOVES THE FACT THAT THIS TAX IS STILL COLLECTED TO THIS DAY TO PROVIDE FOR THE SUPPLY AND CONTINUATION OF THE OLD AGE PENSION - A STIPEND TO THE ELDERLY CITIZENS OF THIS COUNTRY WHO HAVE WORKED FOR DECADES OF THEIR LIVES TO BUILD A NATION AND HAVE FROM WORKING DAY ONE OF THEIR LIVES, BEEN PAYING 7% PLUS OF THEIR TAXES DIRECTLY TOWARDS THIS PENSION.
The old age pension is not a privilege: Is not a right. Is not a gift. Is not even welfare.
The Old Age Pension is an asset owned and accrued by each Australian Citizen who has funded this asset from their very own purse.
The governments of the day were employed to amass, secure, invest and manage a fund that in its first 5 years bulged to almost £100,000,000, an amount that today would be worth approximately $240 million.
They did amass, secure, invest and manage - and the figures were colossal and frightening to them and hence they conspired to hide them back into the consolidated Revenue bucket and to this day, that bucket has been brimming with a 7.5% tax collected specifically and only, for the Old Age Pension.
ardnher
28th May 2019
6:29pm
the biggest problem owning your own home, being single, and being on the full pension, is the upkeep of the home