Age Pension assets and income tests must be reconsidered, economist urges

Economist Sean Corbett tells how the Age Pension system must change.

Rethink dual Age Pension tests

Most older Australians will receive at least a part Age Pension at some stage during their retirement. Economist Sean Corbett identifies the key areas of the pension that he believes should be changed after the Government’s retirement income review.

•••

A single means test
Eligibility for the Age Pension, and payment rates, should be based on a single means test, rather than on both income and assets tests, as is currently the case.

I believe that a simplification of the multiple means tests into a single assets test is the most appropriate way to assess people’s true ‘means’ for the purpose of calculating Age Pension entitlements.

Any source of income can be converted into an asset value. Conversely, any asset value can be converted to an income value. All that is required is to use an appropriate earning rate.

In fact, the deeming system that is currently in use essentially does this. It takes the asset value and applies an assumed earning rate to it to calculate the income that the asset is deemed to provide. Essentially, only the asset value is relevant, while the actual income earned is not relevant.

The deeming system was introduced to overcome the problem of people intentionally investing in low or nil returning investments (assuming that it was the income test that determined their entitlements) in order to qualify for higher Age Pension entitlements, while unreasonably preserving their assets by investing in low-risk/low-return investments.

Having a separate income test also discourages investment in higher returning but more volatile asset classes.

The Government should be encouraging older people to consider investing in higher returning but more volatile assets – instead of discouraging them – because such investments are most likely to maximise the income of retirees and decrease reliance on the Age Pension. Of course, there are risks involved in such a strategy, but there are also ways in which these risks can be minimised. One such approach involves putting ‘excess’ returns in a reserve when times are good, then drawing down on those reserves in leaner times.

However, the income test discourages people from adopting this approach by reducing their Age Pension entitlements when returns are higher. This means that excess returns earned in good times cannot be saved for leaner times because they need to be used immediately to replace lost Age Pension entitlements.

The deeming system overcomes the problem that is inherent in the normal income test by replacing the assessment of actual income by ‘deemed’ income, so that a constant amount is assessed rather than higher or lower amounts of income whenever returns are higher or lower.

However, as previously pointed out, under the deeming system the asset value is the only really relevant amount, so why not simply use a single assets test?

If a single assets test were applied, it would be easier to build a case to include the family home, perhaps over a certain threshold value, in the test. The benefit of doing this would be that the distinction between homeowners and non-homeowners within the current means tests would potentially be able to be eliminated, further simplifying the operation of the Age Pension system.

Homeowners v non-homeowners

The assets test thresholds for homeowners versus non-homeowners are perhaps no longer appropriate to allow for the fact that non-homeowners have to pay rent in the current low interest rate environment.

The thresholds are shown below.

Homeowner

Non-homeowner

Single

$263,250

$473,750

Couple, combined

$394,500

$605,000

Even if you assumed that the difference in the thresholds of $210,500 earned three per cent per annum (which would be almost impossible to earn from a secure investment at the current time), then that would give a return of $6315 per annum or $121.44 per week.

People in our capital cities, where the vast majority of Australians live, would find it difficult to rent something reasonable for that amount.

Change the taper rate for the assets test back to the pre-2017 rate

The taper rate for the assets test changed in 2017, but I believe this change should be reversed.

Until 2017, fortnightly Age Pension entitlements were reduced by $1.50 per $1000 of assets above the threshold. From 2017, the rate of reduction was doubled to $3.

While adjustments were made to the asset thresholds to try to compensate for the change, the effect was that people would get back a much lower amount as extra income in retirement than the additional amount of super they had saved.

For example, a person would have received 84 per cent of his or her extra super savings back as extra income in retirement before the change, but only 60 per cent back after the change.

A further effect of this change is that those who save more super will receive a lower amount of total income (Age Pension plus income from super) in the earlier years of retirement in contrast to the situation if they had not bothered to save more super. That’s because of the high rate at which the Age Pension reduces under the new taper rate for the assets test.

The range of super savings that is affected extends between about $400,000 and $1 million, depending on the circumstances of the person, and this range captures most people. The overall effect will be to strongly discourage people from saving more super for their retirement.

You really have to wonder why the Government introduced a change that discourages people from providing their own retirement income and instead relying more heavily on the Age Pension.

A final word

It seems to me that we have a situation where some rules, particularly newer rules, punish those who attempt to provide for their own retirement.

This article covers only part of that story. The greatest instance of the way the rules have been changed recently, to the detriment of everyone who seeks to make their retirement a comfortable one, has come about as a result of the tremendous growth in the amount of money in superannuation (though that was entirely predictable) and the inability of the Government to resist increasing taxes on superannuation. It is a tale of greed, lies and treachery.

Do you believe the Age Pension tests are overly complicated? Would a single means test be a step in the right direction?

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COMMENTS

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Chooky
20th Oct 2019
10:23am
Don’t you just love the way these bozos want to go after pensioners homes and yet have no issue with the billions of free money paid in franking credits?
adbob
20th Oct 2019
12:49pm
You'd have to be pretty gullible to fall for Shorten's franking credit proposals. HIgh value SMSF holders are obviously some of the richest people in Australia (aside from the super-rich) and they pay virtually no tax - no tax on their investment earnings - no tax on what they draw down. That's thanks to Keating's super system - which has survived quite a few Labor governements - in fact it was the other mob who took a salami slice of tax from the bigger ones.

Going after them for a bit of tax made perfect sense; attempting to do that by denying them franking credit refunds did not - because they can easily avoid that by simply rolling their invenstments in to super funds (which can use them up) - more of BIll's mates admittedly - but the increased tax-take is lost.

Sadly also hit are small folk with a few Australian shares outside of super. If they have an income below the tax threshhold (just over $30,000) why should they suddenly pay tax on that part of their income when tax has already been paid at the company level. They'll be forced to move their money into an invenstment that doesn't have franking credits - not so easy for less financially literate small folk - so they are the ones who will be hit - typically the same people who were hit by Scomo's (as treasurerer) doubling of the assets test taper rate.

So - brilliant own goal Bill - you've hit your own people (only his real own people are the super-rich folk people like him (and Keating and Hawkie in the past) like to rub shoulders with) - also relieved ScoMo of the earlier opprobrium and heaped it onto the Labor party - who were desperate to show unity - so all went along with it.

Bill's certainly got a few mates - including in the media. He got soft treatment after he lost the unlosable election - all kinds of theorising about what policy settings (including that one) caused it.

Here's the real reason Labor lost in just a few simple words:

BIll Shorten was leader.
VeryCaringBigBear
28th Nov 2019
12:01pm
Labor lost the election due to their unfair franking credit policy that did not affect the wealthy at all but screwed those with just enough assets not to get the pension and who need their extra income to live on. Franking credits are just a withholding tax the same as PAYE that is taken out of workers income each pay period. If you have franking credits you have paid that amount of tax so their is no such thing as free franking credits.
Arvo
28th Nov 2019
1:20pm
Do you believe the Age Pension tests are overly complicated?

-No, it's not !

Would a single means test be a step in the right direction?

-No ! This another shifty attempt to include the residential home in the means test.
MICK
28th Nov 2019
1:53pm
Correct Chooky. I stopped reading after this so called expert mentioned bringing the family home into an assets test.
This government can't wait to get the family home into the assets test so that it has an excuse to knock hundreds of thousands of retirees, or more, off a pension.

I continue to argue that OTHER COUNTRIES PAY THEIR CITIZENS A PENSION but in Australia not only are working Australians routinely savaged by the rich man's government but they are being set up to be destituted in their retirement as well.
Hoohoo
1st Dec 2019
12:50pm
I wish that whatever government will lead for the people, instead of deliberately playing the political division game, just so they can will the next election. Divide and rule.

Please, I call on all politicians to make bipartisan rulings on really important issues like this. Then, when whoever takes office, they WON'T CHANGE THE RULES AND STUFF EVERYONE AROUND.

Stop this bloody-minded divisiveness. Rule for everyone - that's what our taxes are paying you for.
Hoohoo
5th Dec 2019
1:18pm
adbob, last time I looked the tax threshold was $18K-$19K. Where do you get your "... an income below the tax threshhold (just over $30,000)" figure from?
thommo
20th Oct 2019
10:55am
I will never ever forgive or forget that Morrison and Abbott and Hockey et al changed the assets test as from 1.1.17, to the detriment of at least a million part age pensioners, not to mention those nearing retirement...
This act was a an act of bastardry, but typical of this LNP government, and eventually they will lose office because of it (even if for no other reason), but it is clear that they are on borrowed time.
NGE
20th Oct 2019
11:16am
I agree 100% Thommo. That change on 1.1.17 affected my pension immensely and made my single pension a struggle to live on.
Spud
20th Oct 2019
11:19am
Whilst I agree with your sentiments I truly believe that unless there is a radical change in the majority of seniors voting choices we will be stuck with neoliberalism for a lot longer
adbob
20th Oct 2019
1:03pm
Unfortunately kicking the LNP out of office (something they richly deserve) will not change it back - Labor went to the last election with no proposals to do that - in fact they wanted to hit the same people even harder with their franking credit proposals.

And don't forget that the pseudo-progressive Greens also supported it - that's how it got through the senate. Labor opposed it for theatrical reasons but had no intention of reversing it if they (well Bill really - not quite the same thing) came to power.

What happened to "grey power" - we are all political orphans.
Mad as Hell
20th Oct 2019
2:19pm
The 2017 changes to the Pensioner Assets Test was theft of pensioners assets by the LNP and Greens. The ALP argued against the the changes to the Pensioner Assets Test but suspect these were only crocodile tears. Yes a Grey Power Party with the balance of power has merit.
hyperbole
20th Oct 2019
4:55pm
Most retired people want a peaceful life. Not one that involves getting into politics. Hence "grey power" never gets off the ground.
GeorgeM
20th Oct 2019
8:14pm
Completely agree, thommo and MaH, people (Retirees) need to force change by NOT keeping quiet. All need to write to this Retirement Incomes Review and apply maximum pressure - and stop waiting around for someone else or a political party (there is none) to bat for the Retirees.
libsareliars
21st Oct 2019
12:29pm
Totally agree with you thommo.
Yeah, right!
28th Nov 2019
12:19pm
But Thommo, they had to "balance the budget". Didn't they?

We all had to pitch in to help didn't' we?

"All" accept politicians. Naturally!

Let me see now:

1. Our superannuation contributions were frozen at 9.25/9.5% by Joe "get a good job" Hockey. But "we need to balance the budget," he cried.

2. This has been extended to 2023! True but "WE need to balance the budget," they continued to cry.

3. You're right. NOT ALL. Politicians super contribution (that is your and my taxes) runs at 18% of salary, doesn't it? Yes, but "WE NEED to balance the budget".

4. Oh, and Joe "poor people don't drive far" Hockey once he reached 50 and had left parliament was entitled to claim HALF his salary as a pension payment every year. At fifty years of age? Even when he was drawing a salary as an Ambassador? But you've got to be fair - "WE NEED TO BALANCE THE BUDGET" he continued to say. Not to mention his wife being his landlord in her negatively geared investment property in CANBERRA and receiving his $275 a day allowance, and similar amounts from 2 other politicians, including Brendan Nelson, who rented the garage. Don't get me going on his cattle property in Queensland...

So politicians actions have clearly translated "WE NEED TO BALANCE THE BUDGET" into "YOU, yes YOU need to balance MY budget".

Well at least if you are made homeless balancing their budget, you'll have a nice road to sleep on in NSW thanks to Gladys and Scoto? Arh no, Scumo - that's it Gladys and Scumo.

By the way if you get a parking infringement for sleeping there, Scumo will ring his 'mate' Mick Puller, sorry, sorry Mick Fuller and get him to look into it for you.
Arvo
28th Nov 2019
1:38pm
The ALP, under Shorten's lack of foresight, ' stuffed up ' big time . They misread the voter's mood. Albo isn't doing a great job either to swing support back to ALP for the next election.
Hoohoo
1st Dec 2019
12:59pm
How about we let our political leaders know this: WE WON'T VOTE FOR YOU UNLESS YOU MAKE BIPARTISAN DECISIONS on really important issues like this. Get a policy that is agreeable to both sides.

Allow people to plan their retirements & only change the rules if they are no longer serving the people - NOT THE F'n POLLS or other political party machinations!
Rusty
20th Oct 2019
11:18am
They can keep there nose out of my home, I live there , I can’t cut it up and get an income from it, any govt that tried it will end in the opposition benches
libsareliars
21st Oct 2019
12:29pm
Spot on.
Mariner
28th Nov 2019
12:15pm
The trouble could be that the Opposition could have a mind of also taking the house from you. Every week some twit comes along and wants to include your place in the asset test and we all have a go at each other. Present home owners want to keep theirs and renters want the home owners punished for thinking ahead. It is pure envy and we keep discussing this every week ad nauseam. Maybe we should all sell our places and spend the proceeds on a few years cruising the high seas and then we all live on the full pension. Would there be enough places to rent though? I am going on a 34-day cruise next Monday, starting my divestment!
Brissiegirl
28th Nov 2019
1:18pm
Another advocate for interfering in people's choice to pay off their family home so they aren't paying rent in retirement. This idea is never going to be feasible. It's socially destructive, political poison and socialism at worst. Strangely, it's this website that tries to push this crackpot idea to the point where it's probably a readership turn-off.
Hoohoo
1st Dec 2019
3:26pm
I think you are very wrong, Mariner, saying that "renters want the home owners punished for thinking ahead. It is pure envy..."

Sure, there are very few people who rent who wouldn't rather own their own place. The only reason I was able to buy my first home was because my parents died & I had a (temporary) full-time job (while starting a fledgeling business with my partner). My inheritance meant I had the deposit to buy the cheapest house in town, without having to pay for mortgage insurance. I also received a first homeowners grant & the stamp duty was subsidised. I consider myself lucky to have been in a position to take advantage of the opportunity, even though the price I paid was losing both my parents (before I turned 40). But I certainly don't look down my nose at those who couldn't take advantage, as some people here appear to be.

Does pure envy = pure superiority & entitlement? Of course we shouldn't be punished for making the sacrifices to own our homes, but let's not pretend we didn't get lucky breaks along the way - lucky breaks that other people who now rent would have jumped at, too.
Hoohoo
5th Dec 2019
1:44pm
Another thing, Mariner, stop dragging up what Labor might or mightn't do. Labor is the Opposition and Scott Morrison is the Prime Minister of the LNP government now.
Morrison needs to start being a proper leader instead of being the king of dividing people. He constantly tries to distract the issue by saying what Labor might or mightn't do or did, both in question time in Parliament or in the media. WE WANT A LEADER TO LEAD for the future - just stop this childish, divisive nonsense!
The other thing Morrison constantly tells us is that his new announcement/policy/press release is what the Australian people want (because he won the election in May). In fact, the majority of people didn't vote for the Liberal Party at all - he got over the line with preferences from the Nationals, Clive Palmer & Pauline Hanson & by convincing people in QLD that 1,000 (possible) jobs at Adani's mine were more valuable than the Great Barrier Reef & businesses & 70,000 people employed there in the tourism industry. Oh, & don't forget they frightened a lot of pensioners about Labor's non-existing Death Duty policy & Labor's franking credits policy, for some poor pensioners who don't even own any shares! Pure propaganda by Josh Frydenberg.
Every time Morrison talks about what the Australian people want, I feel like a foreigner in my own country.
adbob
20th Oct 2019
12:57pm
Unfortunately reversing the doubling of the taper rate is going to cost the government so it won't happen. When ScoMo (as treasurer) did it (with the support of the Greens) he also upped the rate for full age pension recipients - the latter being well represented by lobby groups - ordinary hard-working saveers not so.

Any change is likely to have to be cost/revenue-neutral so that's hard one to undo - although it is definitely the case that anyone approaching retirement under the present system would be a fool to work on sololely to increase their pension pot to a level between the two sweetspots.

Once you exceed the lower sweetspot look at eraly retirement with a view to going in on a full age peniosn supplemented by what the lowere sweetspot will generate.

If lots of people start to do that the system will inevitably change.

The goverment only benefits now because people who thought that their savings would *supplement* their age pension are now being forced to use it to *replace* their age pension; had they known ahead of time they would clearly not have got into that situation - which of course their financial advisers advised them to do at the time.
Red 13
20th Oct 2019
1:20pm
Glad you decided, at last, to address the point of the article rather than continue your anti Labor rant.
You’re just another Liberal apologist, who has great difficulty facing the truth, this government has to go,and if that means electing a Labor government to do so, then so be it.
The sooner the better, the current government absolutely stinks.
adbob
20th Oct 2019
3:28pm
@Red 13 - no way am I an LNP apologist. I was once a Labor Party member - before that a member of the UK Labour Party. I haven't changed - they have.

Hawke and Keating did to Australia what Margaret Thatcher did to the UK. The opposition sat there with dropped jaws knowing that they coud never have got away with all that themselves.

Watching Keating decimate Hewson (one of the more decent people on that side) was great theatre but hided what was really going on.

Certainly some change was needed - but not that much. Labor has abandoned its traditional constituency in favour of a new one which they think will keep them (as career politicians) in jobs.

Politics isn't like supporting a football team - where you keep supporting the same team even though there's not a single player still there.

People like Keating and Shorten have hijacked the party for their own selfish ends.
Red 13
20th Oct 2019
1:15pm
A recipe for getting poor quickly and staying that way. Home ownership obviously gets in this governments way, as do old folk.
I love how these “experts” always dovetail to going after the family home. Always!!
Stuff him and stuff this greedy government. What a mistake we made electing these gangsters.
They told us Labor were after us, they lied, they are the ones we should fear most
libsareliars
21st Oct 2019
12:32pm
"Stuff him and stuff this greedy government. What a mistake we made electing these gangsters.
They told us Labor were after us, they lied, they are the ones we should fear most"

Absolutely correct Red13
Hoohoo
1st Dec 2019
3:36pm
I think Morrison's victory lap is finally over. We've all seen his nasty side now so he won't get away with much any more.

Who would've thought we'd be praising Jackie Lambie & Pauline Hanson for standing up to them & defeating their crap bills in parliament? About time. They won't be taken for granted by either side now, which is a good thing, as these two politicians (as much as I disagree with them at times), at least are genuine people who want to do good & who haven't sold their souls to big business or union interests.
Karl Marx
20th Oct 2019
2:48pm
This is no better than the complex system we already have. The only & I mean ONLY solution is to bring in a universal pension for everyone over 65 & everyone earning any income from investment, work etc pays tax the same as everyone else. No more tax free earnings above the tax threshold etc. No more asset, deeming or income tests required so billions saved from the current centrelink bill. No robodebt to worry about in 2, 5 or 10 years time, 99.9% rort free. Only the ATO to worry about when you submit your returns like everyone else.
If you still have hardship then centrelink can issue rent assist, power allowance etc
Keep the system simple, K I S S
Anonymous
20th Oct 2019
5:34pm
That is the way it is in most western countries, Karl Marx! Would add greatly to the unemployment rate though getting rid of all these Centrelink types. Saving there for a start! Just the ATO and possibly lower the tax threshold as well a bit to get most people paying tax. Possibly better than increasing the GST
GeorgeM
20th Oct 2019
8:19pm
Absolutely the right way to go, Karl Marx - we have a fully broken, complex, costly and destructive (to pensioners health) Age Pension system, and the best solution now is to push for Universal Age Pension for all with NO tests other than Age (65 yrs) and Residency (say 15 yrs) paid by the ATO with no need for Centrelink to be involved except for hardship cases for those who don't qualify. So many positives as you have also noted, and can only boost the economy.
Triss
28th Nov 2019
11:48am
Yes, Karl, a faster cheaper way to sort all the paraphernalia of paying a bit to this pensioner or taking a bit from that pensioner involving lots of CentreLink staff and hours is a universal pension.
Arvo
28th Nov 2019
1:45pm
The concern about universal pension is that if it were to be introduced it will pay a lesser amount than current full age pension !!! It will disadvantage the poor and benefit the wealthier who are on a lesser amount of part-pension.
Triss
28th Nov 2019
2:04pm
Why will it be less, Arvo?
older&wiser
28th Nov 2019
2:49pm
Karl - agree. But you forgot one thing - that's too simple! Have to keep the bloated public servants in a job, making up and monitoring these stupid rules and regulations.
Mariner
28th Nov 2019
5:08pm
Still awaiting Arvo's answer. Why will it be less? Everyone getting it, taxation will take some away from the wealthier among us and the poorer ones get the whole amount tax free. That is how I understand universal pensions; of course we would have to find jobs for all the redundant Centrelink employees that are no longer needed.
Mariner
28th Nov 2019
6:13pm
I still reckon the GST rate will go up, Anonimous. Look at the other countries' rates. And basic food stuff excluded (thank you Meg Lees). Your other ideas though are rather sound.
Hoohoo
1st Dec 2019
3:43pm
I think Centrelink's staff has already been cut to the bone. Robbodebt & other out-sourcing had already taken a lot of their jobs

And then they were left with a skeleton staff with 3,000,000 unanswered phone calls coming through after Robberdebt sent out threatening letters to innocent people.
Agnes
20th Oct 2019
2:53pm
More than happy with the present government. As long as we don't have a labor government (particularly one led by shifty shorten and his rich mates) Australia is a better place. My vote for the Coalition (in the lower house not the Upper) was far more anti-Labor than pro Coalition ( as my vote is for the least unpalatable). I am, you see, also suspicious of religious zealouts who may let their religious beliefs influence policy, but not enough to overcome the odium of an ALP government and all it's rich, self interested MP's cronies.
thommo
20th Oct 2019
6:12pm
So, Agnes, you're suspicious of religious zealots, yet you voted for charlatan Morrison...No logic in that one....
'
Agnes
21st Oct 2019
8:46am
Logic is obvious in my comment.......suspicious...but not enough to overcome the odium of an ALP government. Morrison may be a charlatan in your view, but clearly not as much of a one as Shorten, Wong, Plibersek, or Albanese in my view.
Arvo
28th Nov 2019
1:49pm
"religious zealots", thommo?

- We've always had them in politics and in the judiciary!!! -
Agnes
20th Oct 2019
2:53pm
More than happy with the present government. As long as we don't have a labor government (particularly one led by shifty shorten and his rich mates) Australia is a better place. My vote for the Coalition (in the lower house not the Upper) was far more anti-Labor than pro Coalition ( as my vote is for the least unpalatable). I am, you see, also suspicious of religious zealouts who may let their religious beliefs influence policy, but not enough to overcome the odium of an ALP government and all it's rich, self interested MP's cronies.
Blinky
20th Oct 2019
10:30pm
Yes. The current tests punish pensioners who eitther want to work or have some money in their super (asset test), meaning this pushes pensioners into poverty.
Suggestions
A. Increase the asset test to help Aussies who have saved on super
B. Increase the income test to the tax-free threshold.
Cat
21st Oct 2019
8:57am
It's not true that all assets can be turned into income. A tiny 2 bed house with no wardrobes or storage that a pensioner needs to live in cannot be turned into an income. You always need somewhere to live so that asset is always prevented from getting an income from unless you own a palace and can rent out part of it.
Fair Go
2nd Nov 2019
5:53pm
I am in a retirement village unit (which I paid for, as I was a home owner). My only income is a pension, and I do not make ends meet. I have a friend who never owned her own home, but has quite a bit of money (due to super and a payout), spends it like water, but receives a part pension and rent assistance. Is this fair? I don't think so, I sacrificed to pay off my own home on only my income, brought up 2 sons, don't have much in savings (and I am going through them at a rate of knots as I cannot survive on the pitiful pension I receive), while she lives it up, doesn't worry about her rate of spending, and receives government handouts! The system is very broken!
Hoohoo
1st Dec 2019
4:18pm
How come your friend gets so much more than you?

Do you have some big assets (besides your home)? If not, then when you leave the retirement village, will your children benefit (since you have paid for your unit upfront)? If so, then you should be asking your children for some cash flow in lieu of that inheritance coming to them.
BillF2
28th Nov 2019
11:55am
Have to say I agree with Karl Marx that the whole system needs to be changed, and a universal, liveable, pension introduced. The reason pollies won't do it, though, is because the present system gives them better financial control of the masses - that is, keeps them just above the bread line. Why would they have their own parliamentary superannuation system if the Centrelink model was so wonderful? And don't forget, it is they who scheme up and impose the current regulations on us. So much for 'public service'!
Spud
28th Nov 2019
11:57am
A universal aged pension would cost less to the budget imo . If nothing else it should be seriously be costed by treasury
VeryCaringBigBear
28th Nov 2019
12:11pm
Why would anyone want to save for retirement today unless they can save approximately $2 million as otherwise they are better off just having a good time instead and collection the pension when they retire. There is no incentive to save for your retirement.
Mariner
28th Nov 2019
1:00pm
Seems to be a very old item - look at the comments above. The lead-in was dated 28 Nov but all comments seem to be from way back in October. Must wonder whether someone wants to soften us up for the inclusion of our homes.
Seems to become a weekly if not daily topic, a bit like SFRs against part and full pensioners with the haves being envied by the have-nots. SFRs hate the fact that they have to use all their own funds whereas the others are getting something for nothing. Give the SFRs the concession card - being self funded means they paid probably higher contributions to the national wealth cake.
VeryCaringBigBear
28th Nov 2019
1:03pm
Everyone over pension age should be given the pensioner health card and then people wouldn't need to organise their assets so they get a dollar of welfare.

Alternative would be to give anyone who wants the pension and it's a debt upon their estate.

Current welfare system is very unfair.
VeryCaringBigBear
28th Nov 2019
1:03pm
Everyone over pension age should be given the pensioner health card and then people wouldn't need to organise their assets so they get a dollar of welfare.

Alternative would be to give anyone who wants the pension and it's a debt upon their estate.

Current welfare system is very unfair.
Adi
28th Nov 2019
1:36pm
We've (mostly) worked all our lives and paid for a pension. There should be NO means test and the family home NEVER taken into account. It's a home , not just a house.
GrayComputing
28th Nov 2019
2:56pm
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

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.

Even the UK and 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.

Does your MP really like being part of the system that allows this indirect abuse of the elderly?

This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?
Sen.Cit.90
28th Nov 2019
5:13pm
I agree with your comments GC however I wonder what use letters to an ALP MP would be? Watching "Question Time in Parliament" cardboard cut-outs would be as useful as the ALP MP's. This week all questions have come from Albanese but the same question each time worded differently i.e why did Scomo phone the NSW Police Commissioner. Nothing questioned about any other policy.
Incidentally, I'm not a Dyed-in-the-wool Nat/Lib supporter as no doubt I'll be scorned as.
morrowj1122
28th Nov 2019
2:59pm
Divorced at age 52. Newstart until 65 ( tried and could not find paid employment hence volunteering). No home, old second hand car and lived in a garage on occasion. Decided to move overseas whilst I could afford it. Get the basic pension ( no add ons) and am surviving OK and VERY glad I do not have to go through the S..t other pensioners are suffering in Oz. I really despair what our great country has become. The Pension should be universal with no b......t.
mogo51
28th Nov 2019
3:35pm
Yes I do.
MimTas
28th Nov 2019
3:50pm
If you are a single person who owns a home the disadvantage in accruing more superannuation hits well below $400,000 ... actually at $263,250 especially since assets such as a car, furniture, caravan are factored into the asset test. At 67 I work part time and there is nO incentive to build super because of the assets test.
Mariner
28th Nov 2019
5:11pm
At 67 I needed no incentive to build super - was happy not to have a job. Enough young ones with none, give the jobs to them.
thommo
29th Nov 2019
7:05am
Just bring in a universal age pension. That will solve the problem and stop the rot.
GeorgeM
30th Nov 2019
11:38pm
That's right, thommo. Chooky, Arvo & MICK are also right in their responses in the 1st Comment above - these convoluted analyses are quite meaningless as they keep the power with politicians to keep changing rules (and deeming rates) and also are aimed at attacking pensioners hard-earned homes which are NOT income earning (in fact incur a lot of ongoing costs).

Universal Age Pension is the only logical & clean solution with payments delivered via the ATO. As Matt Grudnoff analysed in another article and in the YLC September Retirement Report, Universal Age Pension can result in higher age pensions for all if they stop the massive rort of Superannuation tax benefits used by the rich for avoiding taxes.
Hoohoo
1st Dec 2019
4:44pm
Well said thommo & GeorgeM.
But George your last paragraph opens up a whole new can of worms that demonstrates perhaps the problem at its source - wealthy people can and will access and exploit any opportunity to lower their tax burden, which is biased towards the extremely rich who pay little or no tax at all.
THAT"S the real problem - people believing they are entitled to everything that's not strictly illegal and wealthy people receiving benefits that were intended for the less well off. The question is this - where should the line be drawn & how can you please everyone, especially those on the edge/wrong side of that line?
GeorgeM
1st Dec 2019
8:53pm
You are correct, Hoohoo, the rich will use every loophole possible to avoid paying taxes. The laws need to be re-designed to stop that, but BOTH Liberal and Labor don't want to do that as that will affect themselves and their mates. It would be easy to put firm caps on Superannuation benefits (to name one, say allow max $600K in Super at concessional tax, with all other earnings at Marginal Rates of tax), but even Labor (remember Shorten was the Minister for Superannuation & Financial Services) haven't touched this tax haven. (In fact Liberals put a $1.6Mil cap, but even that cap is too generous, with amounts above that also not at marginal rates.)

Other than that, the Taxation System needs a complete overhaul to stop tax avoidance, or at least implement a Minimum Tax system to force everyone to pay at least a minimum rate of tax on Gross Income after the basic minimum tax-free threshold. The big problem remains - the lack of will by the major parties, hence I often mention that all of us Retirees need to vote OUT the existing major party MP in every seat in every election - to change their self-serving & party-based behaviours and start representing the people.
Hoohoo
5th Dec 2019
1:54pm
I know that very large corporations negotiate with the ATO, because their tax reportings are so large & complex.
Maybe the ATO is the only one in a position to know about tax paid on franking credits by corporations, so the ATO should also be the one to decide whether rich or poor people receive the refund for the tax paid on franking credits.
Blossom
3rd Dec 2019
9:47pm
Really the only thing pensioners save by living together is the supply charge on Electricity, Gas and Govt. utilities such as water etc.. I doubt they add up to the amount that the pension is reduced by.
Blossom
3rd Dec 2019
9:47pm
Really the only thing pensioners save by living together is the supply charge on Electricity, Gas and Govt. utilities such as water etc.. I doubt they add up to the amount that the pension is reduced by.


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