Mercer slams means test, strongly urges universal age pension

‘With a universal age pension, Australians will have an incentive to save for retirement,’ says Knox.

means test

Actuaries giant Mercer has slammed the means test and called for a universal age pension in its submission to Treasury for the retirement income review, reports Investment Magazine.

The actuary wants the means test completely scrapped. It also says the superannuation guarantee should remain steady at 9.5 per cent.

Mercer claims the means tests is the main factor hindering effective interaction between the three pillars of Australia’s retirement system – the Age Pension, compulsory superannuation and voluntary savings.

Mercer partner and retirement specialist David Knox said its original purpose was to ensure that those most in need had access to the age pension, alleviating poverty among senior citizens.

Mr Knox says the original purpose of the means test – identifying those retirees most in need of a full Age Pension to alleviate pension poverty – had been lost. He believes a universal age pension would benefit more retirees and households and will have a positive trickle-down effect on the economy and the superannuation industry. And, with the right tax structures in place, it may not have a substantial effect on the federal budget.

“Significantly, if the universal age pension was an important source of retirement income for all Australians together with superannuation, the superannuation guarantee rate need not rise to 12 per cent, while still providing the same living standard in retirement for average income earners,” said Mr Knox.

“This would reduce the cost of projected superannuation taxation concessions, increase the level of take-home pay and increase taxation revenue.”

However, if the Age Pension remains means-tested, says Mr Knox, the SG would have to rise to 12 per cent.

Mercer says a universal age pension could be funded by taxing the Age Pension for all those who receive it, achievable by basing the tax rate on the balance of an individual’s tax-exempt pension accounts. It could also be offset by changing the super tax arrangements, or by implementing a tax on any investment income generated in the pension phase.

“With a universal age pension, Australians will have an incentive to save for retirement,” Mr Knox says. 

“This isn’t the case today. While the Age Pension would be taxable, there would be a clear benefit to the individual for every extra dollar contributed into super.

“While the universal age pension may not be a viable option in the current political environment, it is a compelling proposition for a simpler, more effective system with a clear objective that delivers stronger long-term retirement outcomes for older Australians,” he adds.

The Mercer submission stands aside from many submissions to the retirement income review and has been applauded by some in the retirement sector.

“Many submissions, which are meant to assist the review build a fact-base for future reference, have failed to fully assess the retirement system across all its component parts,” says David Bell, of The Conexus Institute thinktank.

“In our submission we, like others, highlight the lack of a system objective and the complexity of the system. A universal pension could significantly reduce complexity, but the system would remain complex. For instance, the taxation and incentive structures across super, housing and other investments differ greatly, and households would remain exposed to many financial risks.

“Best practice would be to establish an objective and then work towards the best system solution,” he says.

“Nonetheless, I’m sure reducing complexity would be on everyone’s wish list.”

What do you think of Mercer’s submission? Would a universal age pension benefit you? Do you like the idea of different tax brackets for those potential universal age pension recipients who have more money in savings and investments? Or is it merely a variation of what is already in place?

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COMMENTS

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hyperbole
14th Feb 2020
10:06am
there will be those happy with this and those who are not. this subject has been done to death.
adbob
14th Feb 2020
11:34am
Not talked about enough for my money - ie my money that other people
are spending. I worked hard, paid tax and saved in order to give myself
a better retirement income than that promised by the governemnt Age Pension.

I was encouraged to do that by governments of both parties and by the whole of
the financial "services/advice" industry.

People who did none of those things are now living high on the hog (but wingeing)
on my taxes while I live on my own money and don't get a single cent in Age Pension.

It needs to be talked about a lot more.

Good to see one of the big mates (of both parties) from Collins Street singing the
right tune for once. Governments listen to them - they don't care about ordinary
people, except briefly when they want their votes - and on this issue there was
nothing to pick between either party.

More (not less) exposure of this issue is urgently needed.
GeorgeM
14th Feb 2020
12:18pm
I agree with adbob, people haven't considered the much simpler option of Universal Age Pension adequately or seriously, and with the Retirement Income Review in progress now, it is absolutely necessary to continue focus on this issue and the obvious solution to our Broken Age Pension system. People need to be well informed to challenge or accept the results of that Review, which I think is expected by June 2020.
I also agree "Good to see one of the big mates (of both parties) from Collins Street singing the right tune for once. ".
Sen.Cit.90
14th Feb 2020
5:58pm
We once had a Pension system similar to the UK and paid for by a percentage of our wages. A Federal Government stole all our input saving (believed to be in the billions of pounds) the excuse was the gov't would be unable to pay the debt, obviously, they had used the pension money for other purposes! Then they put us on the present screwed up system and we're made to feel like criminals by some because we're on the age pension. I don't accuse a particular Fed Gov because I've always thought it was Bob Hawke others blame others!
Mariner
14th Feb 2020
9:08pm
Sen.Cit.90 - probably right there, asset testing and deeming came in under Hawke/Keating administration, but then if not them it would have some other Govt afterwards. With all the money promised for foreign aid and other UN programmes we foolishly sign on to funds were getting short.
But never forget that Mr Kevin Rudd PM brought in the 67 pension age qualification and for that he should be condemned. 45 years or so should be enough for most people but if those people would like to continue there should be no road blocks either.
Triss
15th Feb 2020
7:38am
I agree with you, adbob, it’s unfair and undemocratic, especially as you still pay taxes [GST. etc] so are even now paying for other folks pensions and getting nothing yourself.
Suze
16th Feb 2020
6:44pm
Spot on adbob.
ray @ Bondi
16th Feb 2020
10:09pm
right on adbob
Farside
19th Feb 2020
11:38pm
adbob, has been so since at least the 15th century when John Morton, Lord Chancellor, raised taxation funds for King Henry VII by holding that someone living modestly must be saving money and, therefore, could afford taxes, whereas someone living extravagantly obviously was rich and, therefore, could afford taxes as well.
Travellersjoy
14th Feb 2020
10:32am
Why am I always suspicious of these attempts to change the Age Pension and super systems?

Because the affluent and outright rich never give wanting more of whatever pie is on offer - especially if it is funded by taxx payers.

I am not an accountant or an actuary so I don't have the capacities to adequately examine every variation these people keep putting up. And no-one in their right mind would blindly trust that anyone in banking, finance etc actually had the interests of age pensioners at the heart of their proposals.

Month after month they trot out ways to force age pensioners out of their homes and communities, increase the cost to pensioners of the age care services battened on the poor and disabled, increase access to pensions for those with millions in superannuation and living in mansions, ensuring the affluent get Health care cards by any devious means available, etc. None of them have the slightest idea what life is like on an age pension, and the challenges to live decently, and they never will because they went from kindergarten to university with the rest of their privileged cohort - whose interests they continue to represent.

These are the people for whom there is never enough and they push, shove and wheedle until they get compliant governments who give them more. Even this site gives more attention to affluent retirees and their interests than those of the 'constrained' pensioners. That's where the money is and money always talks louder and longer.

Give me one good reason why I should trust this bloke.
Pass the Ductape
14th Feb 2020
11:44am
Never a truer word spoken!
Macheke
14th Feb 2020
12:54pm
As long as there is a mechanism to offset the age pension for the rich there should be more for those who really need it and less for those who don’t. If I sold my investments and bought a big fancy house I could get the age pension. That means the system is badly designed.
ray @ Bondi
14th Feb 2020
10:45pm
here here, though a lot agree, for the goverment it is buisness as usual YOU DO WHAT WE SAY !!!!!
marls
14th Feb 2020
10:35am
Google who stole the workers compulsory pension fund by Australian morning mail
Workers still are paying their 7.5% which was never removed and now workers also pay for super plus now you want to tax them again
The pension fund was a non means test one
Civilised countries around the world do not means test the aged pension except our greedy age of entitlement politicians not even NZ has a means test
Joy Anne
14th Feb 2020
10:57am
Totally agree Marks. Pensioners should never be means TESTED. If the govt means test pensions then POLITIANS should also be MEANS TESTED. Why 1 rule for Politians and another for pensioners.
Mariner
14th Feb 2020
11:22am
Politicians are different, Joy Ann. They also do not often eat rissoles and bangers and mash. They have no C/L pension but a Parliamentary one. Too many politicians anyway; if Queensland can function without a Senate why can't every State and the Commonwealth?
older&wiser
14th Feb 2020
11:50am
Totally agree marls - I can still remember my shock in 1993 when Keating announced the new super system. Here I was thinking I had a nice though small amount from my previous 26 years, to start me off. But no, had zilch. Nil. Nothing. Had I not been lied to, then perhaps I would have been putting away something for my later years. To cop it off, by mid 1990's, I had to leave working to care for elderly and ill parents for some years, then trouble getting back into the workforce, and when I did get a job, only casual and low paying jobs, so when I had to leave work at 64, I had minimal super.
Whilst in theory I agree with Mercer proposal, tax implications for pension needs to be looked at, and current systems grandfathered. No retrospective penalising.
GeorgeM
14th Feb 2020
12:20pm
Agree, marls. Keating destroyed the system with the Assets and Income Deeming Tests, with the Libs putting the nail in the coffin in 2017 pretending to save their Budget.
Macheke
14th Feb 2020
1:13pm
I would be more than happy to receive an age pension if there was no means test. I don’t think I deserve it though
Arvo
14th Feb 2020
3:02pm
Some people who turned up at an MP's office on appointments would be asked by the MP ...,"Did you bring a paper bag?"... Paper bag?..."Yes, for my lunch"...So on next appointment in his office a brown paper bag was thrown on his desk. "What's this?'"..."Your lunch!...Hope you like ham and cheese sandwiches...couldn't find any red lobsters"...Interview lasted less than five minutes..."Thanks for coming"...
Horace Cope
14th Feb 2020
10:35am
"its original purpose was to ensure that those most in need had access to the age pension, alleviating poverty among senior citizens."

This sentence says it all. The thrust of this article is to give an age pension to all which ignores the original reason for an age pension. A home owning couple become ineligible when their assets (excluding the family home) reach $863,500 and people with assets of that magnitude could hardly be thought of as "living in poverty". By spending some of their cash or converting assets to cash and spending the cash will allow people to become eligible for a part or full age pension.
GeorgeM
14th Feb 2020
12:24pm
I disagree. Govts have no business to interfere in people's financial planning, and punish savers or those trying to earn extra income. The Lib party's objective leading up to Jan 2017 Asset Test changes was to save their Budget (also proved to be a lie later when they handed out big tax cuts), not to benefit anyone or to meet any pension objectives.
ray @ Bondi
14th Feb 2020
10:49pm
it just shows that some people have absolutely no comprehension or empathy, so a person lives in an expensive house all houses are expensive and to force people to sell just because the government deems it is astonishingly cruel. The amount mentioned here is just for a modest dwelling in Sydney, so they are supposed to live in hovel boarding houses if any excisit today.
hyperbole
19th Feb 2020
12:37pm
I agree with that sentence you put up Horace Cope. The pension is not there for wealthy people to access which IS happening when people "arrange" their affairs.

No problem with people who are less well off getting the pension but by golly I do object when I hear and know of people with expensive homes, boats, winnebagoes etc getting it and when they fall off the perch their children are getting very generous estates (courtesy of the taxpayer who have been paying a pension or part pension to their parents)

For goodness sake it is (currently) not a right of passage that every one gets it when you become of age. If you qualify fine, if you dont, look after yourself with your super or whatever assets you have built up. If eventually you find yourself on struggle street apply for the pension which you will be entitled to do if you pass the assets/mean.
Mariner
14th Feb 2020
10:37am
Would a Universal Pension benefit me? was the question in your last paragraph. Probably not now but it would have kept me working 5 years longer before I gave it away. Saw the writing on the wall and I had no wish to slog at work for 45 years just to get zilch out of the system in retirement. I was brought up to believe in work as long as possible with a pension at 65 for men and 62 for women.
Accept that we are equal these days and we all get the same pension age entitlement. But I still believe it should be 65. Get the young ones into work and give the 40+ year sloggers the pension and tax the whole income.
Joy Anne
14th Feb 2020
10:59am
Yes totally agree
mogo51
14th Feb 2020
10:47am
There is no doubt that 5here needs to changes to Pension system and criteria. This is what is in place in UK. Pension rates are lower there but less restrictions.
I dont think that someone who lives in a home worth $1m+ and has Super that gives them $70k+ pa, needs the Aged Pension. But I do know it is a huge struggle surviving on the current pension rate alone - this what needs to be addressed first
Mariner
14th Feb 2020
11:16am
Just come back from Melbourne and here you are mentioning $1m+ homes etc. What I saw down there my old co-workers are just a smidgen off that magic figure and they built their places 45 to 50 years ago. I am sure Sydney would be similar if not worse. Give everyone a pension and tax all income and assets; the people in higher priced homes would be paying more and might have a rethink about downsizing. At the moment nobody wants to do it because it would affect the kids' inheritance. The future looks more and more like a two-sided population - kids from wealthy neighborhoods where one inherits the parents' wealth without inheritance taxes or transfer duties and the other side, kids with parents who never had anything, never will have and no desire to accumulate enough money to buy even a modest place. Something will have to change, house prices are only this high because they seem to be the only tax-exempt asset to pass on.
Rae
14th Feb 2020
1:54pm
You can't change it Mariner. Some always work and accumulate with the kids getting jobs while at school and uni and saving, buying a car, saving a deposit, buying a home always working and living within their means plus saving. Others have no ambition, don't get the school job, spend all they earn and often choose not to work when possible including using family as an excuse to not work. It's human nature and has always been the same.

You can't keep taking from the savers and ambitious to give to the wilfully wasteful. It will only make everyone give up like in communist countries.
hyperbole
19th Feb 2020
12:40pm
money is deducted to pay for your pension in the UK...that is not happening here.
Hobbit
14th Feb 2020
10:53am
Makes sense. Think of the money saved by getting rid of the Centrelink paper shufflers trying to deny pensioners.
GeorgeM
14th Feb 2020
12:26pm
Quite correct. Also, think about the massive Health Benefits for Retirees by NOT dealing with the monstrous Centrelink machine. Will help the Health Budget too!
Macheke
14th Feb 2020
12:57pm
Agree. Good side effect. Can put these people into more productive areas like in aged homes.
sunnyOz
14th Feb 2020
4:11pm
Macheke - shock horror! That would mean actually working, so wouldn't go down well.
I needed to go to CL at one stage to discuss working part time. The guy who 'served' me, knew practically nil about the Pensioner Work Bonus (though I for the life of me cannot understand why they call it a bonus). I had to sit there and explain it to him. He then wanted me to come back at another time to speak to someone who could help me more.

I had already waited nearly 2 hours, and I had clearly explained to the person who greets customers, exactly what I wanted. Why send me to someone who couldn't help me? Even then, they got it all wrong, and started weeks of phone calls and visits to sort it out. Underpaid me, they refused to provide breakdowns of how they reach their figures, and though I am a fairly strong person, they really pushed me to the limit. Made me absolutely determined to have as little to do with them as possible - and chucked in my part time job. Simply don't trust them, especially with this Robodebt disaster. I don't want to get a notification in 7/10 years time.
Macheke
14th Feb 2020
11:20am
I agree with the concept of a universal age pension to simplify the current system. I would however have a mechanism (via tax system) to effectively negate the age pension for the wealthy. This is to avoid spending money where it’s not needed plus negate criticism that the wealthy get more when there are needy out there. There are a few more things needed. One of the submissions talked about you should have pride in providing for your own retirement if you can. The discussions on the age pension is riddled with comments about maximising the age pension. This should be seen as robbing from those that need it more than you. I know the response is well others do so I am a mug if I don’t. We need to change the culture and mentality. It’s not “the government” it’s the taxpayers. Your friends colleagues etc. that fund it. Secondly SG should not be available as a lump sum on retirement other than a basic amount or in extreme hardship. Whether or not lump sums are being spent or not doesn’t matter. If they are not no change if they are these few are taking advantage of the system. We would the have the SG with the unversal age pension with offsets for the wealthy. The individual would then have freedom to spend other assets accumulated through their desire to save.
Horace Cope
14th Feb 2020
11:27am
Having an each way bet Macheke? There is a mechanism already in place to effectively negate the age pension for the wealthy. It's called the asset and income test.
Mariner
14th Feb 2020
11:27am
Do you think anyone would make extra payments into Super if it cannot be taken out upon retirement in a lump sum? Took the lot out myself at 64 as I was concerned that the Govt might one day make me take it out monthly thus cancelling my age pension altogether. For every action there is a reaction as they say.
GeorgeM
14th Feb 2020
12:32pm
You have missed the point, Macheke, Universal means universal. But, I agree the tax benefits for the Rich should be cut back - by capping any Tax Benefits from Super to say maximum $600K in tax-free status, with the rest taxed at marginal rates. Also, a Minimum Tax for Individuals of 25% on Gross Income to prevent all the rorts by the rich evading tax. Such additional measures have been missed by Mercer, and would make the UAP proposal much more acceptable to all, other than the rich (who cares about them, they do well anyway).
Blinky
14th Feb 2020
11:34am
The easiest way is to raise the asset test to $600.000 and leave the system as it is.
That way, both people with no super and people with a little super would receive a FULL PENSION. People with A LOT of super would get either a part-pension or no pension at all.
And for Christ's sake, leave the primary home alone. We paid x it, we have the right to keep it in our old age!
Macheke
14th Feb 2020
1:16pm
No one said you can’t keep your home. If it’s very valuable why should you get the age pension and the renters suffer? If it’s not valuable no problem.
Triss
14th Feb 2020
3:02pm
Why do the renters suffer because Blinky has his own house, Macheke? It usually takes a lot of years to finally pay off your house and there are a lot of people who made a decision to rent because they didn't want to be tied with an overlarge debt or tied to a place. Thirty or forty years ago houses cost tenth to a quarter of what they do today and rents were low and folk at that time decided either to buy or rent. That was their decision and renters can't put the blame on house holders now for the mistake they made then.
adbob
14th Feb 2020
11:41am
You don't have to re-invent the wheel on this - just look at most of the other countries in the developed world. Australia is out on a limb on this one.

The Paul er y'know Keating super system, taken together with the means-tested Age
Pension, benefits the wealthy and high income "earners" and the welfare-as-a -lifestyle-choice contingents.

Ordinary hard-working people pay and suffer.
Mariner
14th Feb 2020
11:56am
Nail on the head, adbob!
Tanker
14th Feb 2020
12:00pm
To be equitable the tax system would have to be totally revised. All the tax breaks given to the well off to build retirement savings would have to disappear, e g Family Trusts etc.
Those who often claim to be self funded actually enjoyed significant tax breaks during their working life so that the nest egg they built was in fact partially funded by the ordinary tax payer.
Many of them, as government employees, enjoyed the superannuation benefits from that employment that the rest of us were denied. The list goes on.
Those who are shouting the most for a Universal Age Pension sense a windfall benefit for themselves hence have a vested interest.
I await the deluge of opposition to this post.
Captain
14th Feb 2020
1:23pm
Tanker, as a SFR, I do take exception to your "significent tax breaks during their working life". I commenced work as a 16 year old, 300 klm away from home on a 1st apprentice wage (avg of about $3.00 per week left after expenses).

I saved every penny I could as a rainy day would come along one day and I would have something in reserve. Those early saving habits stayed with me during my entire working life, and by the way, the savings were also taxed.

Now I sit back and say it would be nice to actually get back some of the taxes I paid during a 45 year working life by receiving a pension. However, I am not sure that I want the government (of any colour) being able to look at my life.

Significent tax breaks _ ha,ha,ha.
hyperbole
19th Feb 2020
12:45pm
Totally agree with you Captain. I worked from 16 years of age until 46. No tax breaks...just a pay as you go employee. However, I was not a waster but a save/investor and now reaping the benefits and not being a burden on the taxpayer in any way shape or form. I am not resentful that I do not get a pension etc; I am bloody glad I do not have to front up to Centrelink and go through all the hassle that people often complain about on here. That is one stress I do not have and never want!
Tanker
14th Feb 2020
12:00pm
To be equitable the tax system would have to be totally revised. All the tax breaks given to the well off to build retirement savings would have to disappear, e g Family Trusts etc.
Those who often claim to be self funded actually enjoyed significant tax breaks during their working life so that the nest egg they built was in fact partially funded by the ordinary tax payer.
Many of them, as government employees, enjoyed the superannuation benefits from that employment that the rest of us were denied. The list goes on.
Those who are shouting the most for a Universal Age Pension sense a windfall benefit for themselves hence have a vested interest.
I await the deluge of opposition to this post.
Sceptic
14th Feb 2020
1:40pm
Thanks Tanker for your insight and knowledge. I presume that you will be posting all of the references for your statements of so-called facts.
ray @ Bondi
14th Feb 2020
12:06pm
The will never happen as successive governments, the L brothers, Libs and Labor have sold the money trees for plastic trinkets, the commonwealths banks profit this term 1 billion, how good would that be for meeting social obligations that are forgotten by all governments, and there is Qantas, Telstra and the list would go on and on, another benefit of this being owned by the government that is fact you and I the constituents is price control, all thrown away for a pice of glittering broken mirror.
ray @ Bondi
14th Feb 2020
12:07pm
ops spelling :)
Ok
14th Feb 2020
12:15pm
In Switzerland, EVERONE is getting an aged pension. Many have also private super and private savings. It means that most people have plenty of disposable income after retirement. There is no concession for people over 65, people need to pay for private health insurance. All income, however, is taxed. It means that the country has to spend almost nothing to support an ageing population as the aged pension is funded by a contribution from employers and employees during their working life. The pension fund is run by the Government and contributions are used to fund infrastructure etc. It means the Government is not forced to borrow from banks and overseas investors. The Swiss pension scheme may be one of the best in the world and does not have any means-testing.
Mariner
14th Feb 2020
12:42pm
You are almost right but the pension system has the wobbles at the moment because of low and negative interest rates in Switzerland. System is propped up by alcohol and tobacco taxes, however, and will continue to do well. Hopefully the females will accept their pension age to be equal at 65, still is 64. I am a Swiss citizen and a get a small part pension once a month from there, counted here by Centrelink.
Elizzy
14th Feb 2020
5:09pm
The Swiss pension is fine if your working life has been very regular for 45 years or so. Otherwise you have to apply for a whole raft of supplements to bring your pension up to a level you can live on. Medical insurance is very expensive. Also it is practically impossible for an ordinary wage earner to own their own home and while rent control and security of tenure is good, rents are still expensive for an ordinary working person.
Mariner
14th Feb 2020
8:54pm
Elizzy - spot on. We also have to look at the population as a whole at the moment. No dole for coming out of school people, you have to have some job first and then lose it to get unemployment benefits.
As you said the pension is fine if you play by the rules. Would not work here because you pay in and only those who live past 65 get something back. It works like Super here - you pay in and the employer also, but should you die before 65 the money will just go to the lucky person who makes it past the line. Mum retired on full pension in that system at 62 and died last year at 96. You might say she got her money's worth but many of my school mates never made it to that 65, so they got nothing. That is old age pension; here Super is wealth creation because it is part of the estate of the person.
hyperbole
19th Feb 2020
12:48pm
tax rate in Switzerland is 40% and no free health system The health care system in Switzerland is universal and is regulated by the Swiss Federal Law on Health Insurance. There are no free state-provided health services, but private health insurance is compulsory for all persons residing in Switzerland (within three months of taking up residence or being born in the country
GeorgeM
14th Feb 2020
12:46pm
Great to see, as adbob said, "one of the big mates (of both parties) from Collins Street singing the right tune for once." Such recommendations to the Review are very welcome.
However, my own proposals went further and would make it fairer, as I re-documented a few days ago (limited summary below):
* UAP by Age 65 for ALL with NO tests, and Residency of say 15 yrs, with payments issued out by ATO after a simple one-time Application (NO more Centrelink costs or harassment)
* Remove Politicians & Bureaucrats Special Defined Benefits Pensions (to avoid double-dipping),
* Cap Tax-free Benefits from Super to a maximum balance of $600K (to avoid the rich getting extra benefits and also cutting down on their wrongly excessively benefiting from Super), and
* Minimum Taxes of 25% on Gross Income for Individuals and 20% for Large Companies (to stop widespread tax avoidance, and also ensure massive levels of funding).
Captain
14th Feb 2020
1:28pm
GeorgeM, would the pension be subject to tax under your scheme (very similar to one I proposed to a bunch of lazy politicans within the last year) or tax all monies earned above the pension?
GeorgeM
15th Feb 2020
1:58pm
I would expect pension + earnings on up to $600K in Super (being an incentive-based saving meant to improve your retirement) to be tax free, with all income above that taxed at marginal rates. Part of the objective of my proposal is to keep the majority of people (not the rich ones) away from any need to file tax returns. Keep their life as simple and free from Govt controls as possible.
George
14th Feb 2020
12:53pm
Currently about 30% of the age-eligible population gets no age pension (they can afford to self finance their retirement) and other 30% gets part pension. What mercer doesn't say is how much would scrapping means testing cost and who would pay for it?
Macheke
14th Feb 2020
1:10pm
In my view the outcomes should be wealthy get nothing extra after tax or whatever taken into account. Those with valuable assets including super or family home get bit less and those in need including renters get bit more. Government funding doesn’t have to change and half the staff In Centrelink are rehired elsewhere like careers in age homes.
Captain
14th Feb 2020
1:32pm
George, the extra cost would be offset by taxing all income above pension (15% would most probably be sufficent) and the savings from no more Clink employees.
George
14th Feb 2020
1:59pm
Captain, why would you give full pension (worth about 450k at age 66) to top 30% of rich sell-funded retirees and then tax their superannuation to fund the extra expenditure associated with universal pension system (which is significant). This proposal makes no sense to me. What our pension system needs is the stability not these radical proposals.
Triss
14th Feb 2020
3:10pm
Because it's a Universal Pension, Captain, that means everybody. That happens in England, the pension is added to income for your tax returns, if you're wealthy it just gets eaten up.
Captain
14th Feb 2020
4:32pm
George, you propose keeping the status quo with all it's red tape and roadblocks for those on a pension. Your opinion and you are entitled to it.

Triss, of course it is a universal pension! Did I argue against it? If do, please point out where. Adding the pension as income may well disadvantage a number of pensioners whose assets are currently below the threshold because they then pay tax.
floss
14th Feb 2020
12:53pm
It is much too hard for our P.M.to digest left to him nothing will ever happen. Morrison is a complete failure as a P.M. and will never change his smart ass attitude.
The Care Bear.
19th Feb 2020
3:11pm
Ah but you forget, he has God on his side and he believes in miracles.
floss
14th Feb 2020
1:01pm
Just keep in mind people the Hill Song Hero is P.M.at this time and it is his job to change the system not some long gone P.M.
Macheke
14th Feb 2020
1:06pm
Horace Cope. Yes the asset and income tests for wealthy but complex and excludes family home. I could sell my investments and buy a fancy home and draw the age pension in full! Mariner if you want to get the tax concessions for additional voluntary contributions then they are tied in. If you don’t invest outside super and pay the full tax on investment income. By the way I am talking about the SG contributions I am not too fussed whether additional contributions could be taken as lump sum. Comment by another critic sums up the issue. Took his money out of super as scared he would loose age pension. That sort of thing is precisely what needs to be stopped.
Fliss
14th Feb 2020
1:37pm
Don't like his reasoning, specially : - "Mercer says a universal age pension could be funded by taxing the Age Pension for all those who receive it, achievable by basing the tax rate on the balance of an individual’s tax-exempt pension accounts. It could also be offset by changing the super tax arrangements, or by implementing a tax on any investment income generated in the pension phase". Leave the super'n rules alone!
Sceptic
14th Feb 2020
1:43pm
Nothing wrong with the taxing proposals. Are you just frightened that you will pay tax when you do not pay any now? If you look at the current tax tables, a pensioner would not pay tax anyway, without additional income taking them above the threshold.
Triss
14th Feb 2020
3:13pm
Don't agree with you, Fliss. Reading some of the posts here, getting out from under CentreLink's jackboot will give peace of mind and a return to health and happiness.
Fliss
14th Feb 2020
4:30pm
Yes Sceptic, you are right. I used to argue that the Austn Gvt would save a fortune if they just gave all retirees the pension - no part pension issues, etc. which must be soooo time consuming. But then a friend explained to me how the NZ system works. And yes, exactly what you said upsets me. I've worked hard to accumulate in our SMSF for our future, based on the current rules. So yep, it upsets me. ;)
And Triss, I actually agree with you too. The reason I've worked so hard to accumulate funds in our SMSF is to avoid ever having to deal with Centrelink. So I totally agree with you. That was my reason for originally arguing in favour of a pension for all. Constantly dealing with Centrelink I imagine would be awful.
So Ill admit, my argument is for personal reasons.
Designated Driver
14th Feb 2020
1:38pm
"He believes a universal age pension would benefit more retirees and households and will have a positive trickle-down effect on the economy and the superannuation industry."

When talking about income and its use, there is one simple way technological change could be harnessed to benefit all wage earners and retirees.
And, that is to pay everyone weekly.
Why aren't we being paid weekly?
It should be a piece of cake, for the technology that wiped out so many jobs, to implement such a simple adjustment.
Weekly mortgage repayments would reduce your loan term by 'x' more years, compared to fortnightly or monthly payments.
Weekly superannuation payments would increase your fund's value at a faster rate than is currently the case.
Money would be pumped into the economy twice as fast as it is now.
It would make it much easier for payees, particularly the elderly, to budget.
Thirty or so years ago, blue collar workers were paid weekly and in cash.
They were persuaded to trade away that entitlement for a pay rise that was quickly devoured by inflation.
So it's not like they can't do, it's a matter of popularity if they don't do it.
libsareliars
14th Feb 2020
1:38pm
I agree that their needs to be a universal pension and no means testing.
libsareliars
14th Feb 2020
1:39pm
I also think that we should RAISE THE NOSTART ALLOWANCE TOO.
Mariner
14th Feb 2020
8:40pm
Yes and free beer for all. I like you NOSTART allowance, as most of them will fit in there, particularly if you could raise it.
Horace Cope
14th Feb 2020
2:12pm
A high number of comments are attacking the "rich". Can someone, anyone, give me a definition of who are "rich"? Is it the person who bought a fibro home in the western suburbs of Sydney as it was all he could afford but through the passing of time he now lives in a home worth more than $1M.
Captain
14th Feb 2020
4:44pm
Horace Cope, you are correct, what is the definition of "rich". As a SFR, some people do not have as many assets as me and call me rich. Other people have more assets than me and call me poor.

We are in the catagory of having bought our house many years ago, near the outskirts of a city, now it is a middle ring suburb and the value has skyrocketed. We are land asset rich, but not really other asset rich. Don't want to sell up as we are close to family, friends, medical, hospital and other facilities.
GrayComputing
14th Feb 2020
2:52pm
NO ASSET TEST FOR A PENSION EVER AGAIN!
What our founding fathers said in parliament in 1908:
Quote:_____

We wish to honour the sentiments of the legislators who introduced the Age Pension in Parliament in 1908. When it became law, it was commended with the following words: “… it removes the idea of old-age pensions from any suggestion of a charitable allowance. An old man, who has done his duty as a citizen for 25 years (is) as much entitled to a pension as a commander-in-chief or a chief justice.”
End Quote: _____

The pension was a reward for service. It should still be considered in this light. It is not a handout.

Therefore, a pension is not welfare.

But modern politicians have stuffed it up completely

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 hassled by their crazed robo-debt scam and then waste even more time in the 3 million people waiting queues and more 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.

Ask your MP do they 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?
Hairy
14th Feb 2020
3:49pm
Gray Computing . I agree with you
Muttonbird
14th Feb 2020
5:17pm
Sounds a bit like giving with one hand and taking away with the other. And more work for retirees, many of whom would have to submit tax returns even though they don't have to now.
Fliss
14th Feb 2020
8:44pm
Muttonbird, have got to agree with you!
Elizzy
14th Feb 2020
5:20pm
For all those talking about the UK pension you have to have 35 years of National Insurance contributions to get the full pension of £168 per week. The next layer is a workplace pension and then further private savings. And don't get me started on the changes Macron is proposing for France. I'd like to see comments from NZ as to how well their universal pension works in practice.
cupoftea
14th Feb 2020
8:55pm
I live on my own now I went to see a FIS person and in writing it says Superannuation is intend to supplement not replace the age pension so I think on July 1st I better buy a 4 bedroom house just in case
Franky
14th Feb 2020
11:56pm
Totally in favour of a universal age pension for all the reasons mentioned. Most countries in the developed world do have universal age pension and Australia once again is lagging behind.
JoJozep
15th Feb 2020
12:38pm
Wow! a good deal of comment!

When are we (pensioners and retirees), going to come to our senses? What do you think shapes government policy in regard to welfare?

1. Keeping an eye on present and potential voters and their propensity on how they'll vote
2. Appearing to manage the economy and produce a surplus.

All else is inconsequential bullshite to those in power, because few of our experiences apply to them. They will only change their policies if it suits their campaign to stay in government.

It doesn't matter who's in power, politicians are masters at maintaining the status quo. The only weapon we have to change circumstances and enjoy a better life is to imply a threat to their position in power. How? With our vote.

Hands up those who believed the pre-election lies and propaganda and voted for the present ego trippers. Has your position in life improved? Do your children and grandchildren look forward to a brighter future? Are you living in debt and fear of losing your home or being kicked out because you can no longer pay the rent? Has cost of living rose in the past twelve months? has your wage/pension increased enough to compensate? Have you been able to save for the unexpected? Are you living longer but your body hasn't yet adjusted and still keeps wearing out?

If you said yes, to any of the above, what will it take to illuminate your mind?

Just a comment on Centrelink . You should know by now it is or was until recently actually a private company working for the government. It's underlying premise is to reduce payouts to absolute zero if possible. Same deal with most other departments like NDIS. (Remember that budget surplus for upcoming elections). Taking Centrelink as one example, what's the easiest way to reduce payouts? Yep, place every obstacle in the applicant's path. For example, Including completing massive application forms with legalese type questions, so complex even I had trouble understanding not so much the meaning, but the hidden agenda they would apply in determining the application.
Their online guide lines, were of little help. I spent 6 months answering all the application questions and looking up what each question meant and where it was leading to. Armed with this information and documentation, I thought I was ready to meet my "maker".

At the interview, after waiting one hour before I could start taking to a human, I was confronted with my first challenge. Let's call it bank details! In order to prove I had few assets besides my home, I had to show all bank balances over the past twelve months. Fair enough, I produced a print out of all balances current up to two weeks previously. I don't know about other banks, but mine couldn't display my bank dealings without missing some information called up in the question.

The printout was missing the Bank's actual name at the top of the page! How could I have missed this? The information was rejected! Yes in hindsight, I should not have overlooked this legal requirement. So the application was lodged and after two hours interview, I said I couldn't go home or to my bank without at least an hours delay, by which time Centrelink would have closed and I would need another appointment. Thankfully, they allowed me to access the public computer, which I fortunately was able to access my bank details and print them out in full. This took 20 minutes, so I was saved by the bell! While this was going on, the interviewer noticed another minor discrepancy in my application, even the Financial Planner missed, and he said this was the first time it was raised with them.

More research, and proof of purchase etc., later at my second interview a had assembled a portfolio of documents bigger than my brief to build the new ward block at RGHH (Repat Heidelberg) and the final documentation specification for the new Royal Women's Hospital, Parkville.

Then the bomb shell! She said "I hope they'll accept everything and I will now send all this information to a DHS outlet in Canberra. You should hear from them in about two weeks if you were successful in your part pension".

She realized I was speechless, as I thought I was dealing with the right department in the first place, but no, this was a final obstacle that I had crossed all my tees and provided the right number of full stops. To alleviate my suffering, she added that once approved, the pension would back date to the day of application. (Note another ploy, why not backdate to the date I was eligible nearly five years before).

Guess what, do you think this was the end of my torture? No, the pension card when it finally came said it will expire about two years hence. I don't know what happens then. Their hoping I will probably be pushing up daisies by then anyway.

I could give you other examples where DHS took 1 year to approve home care, only to find that because we had assets at the time, we would pay full fees for each visit. On the first visit, a nurse or nurse aid turned up and did nothing but chat for an hour getting all my wife's details. $30 thank you! On the second occasion, a scruffy male turned up , and said my wife needed physio, and she would need to book an appointment with him. I paid him cash and told him I will think it over! Did the dimwit think I would let him touch my wife if wasn't a qualified Physio? This home care package was a disaster. My wife was then transferred to a nursing home where she could be looked after 24/7. That's another story.

My experience with government departments has changed from the time I worked for all Council, State and Federal Government Departments for nearly 25 years. The present government was urged by the business end to privatize government departments as far as possible. This would reduce costs and be a money spinner for the government by eliminating public servants. In the time I was a public servant and proud of it, whenever i dealt with a client on a person to person basis, I did not let up on following up with that person, even when I had to travel from Melbourne to Sydney or Tasmania to resolve their issues with housing. I also visited other DVA hospitals in Adelaide, Hobart and Sydney. Now being shown the way out is about the only help you get!
ray @ Bondi
15th Feb 2020
1:52pm
very articulate and to the point, it is all about $$$$$$ and how to keep it for the golden trough, personally I have no faith and any Australian government, AKA the L brothers (Lib & Labor)showing any compassion, if so the money trees would not have been sold for sliver of glittering mirror, no matter what they were paid it is just a fraction of what would have been available to dispose to those in need over time.
JoJozep
20th Feb 2020
5:50pm
Missing the point? Where does the money come from?

Since when did the present government consider the super tax paid by employers in our wages, is a tax they can spend willy nilly on things like gun clubs and marginal electorates?

Our earned and saved Super is for our retirement, call it what you like, it is the Old Age Pension, is the money we contributed through and added to, our super TAXES, so the government is not, I repeat not, giving pensioners a handout, thy're just giving the money we earned back over a lifetime of working, that belong's to us. No extra is added by the government, period.

All those newer suckers complaining and being jealous of our entitlements, should look hard at where the money came from. While we struggled to meet our commitments, save for our retirement, pay our taxes plus some super and the employers dragged kicking and screaming to pay our measly 9% super, we became worn out by the age of 60. The younger upstarts of today, drank, smoked and drugged themselves silly all their lives and put away FA for their retirement.

They now realize, the government never hands out money it hasn't already got (not in this country anyway). so the pension is getting harder and harder to get, that's why they're jealous. On the other hand, the government needs their votes, so why wouldn't they farm out pensions as if the fund was inexhaustible? After all, it's not their money. A fine line perhaps, but bring in a law:- you get back what you contributed towards your pension, no more, no less.

If you enjoyed your life and splashed out on gambling, drinks, smokes, (and to some brothels), overseas trips, flashy cars, then so be it, but don't come running for a taxpayer funded payout at retirement as if the pension was a free gift from the government. Stiff paprika.


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