Here's a radical reform that could keep super and pay every retiree the full pension

Squeals would be heard, but there would be relatively few squealers and they might be unlikely to gain much sympathy.

hundred dollar bills in black and white

Kevin Davis, University of Melbourne

The government’s retirement income review is being told our current tax and benefit treatment of retirement incomes is a mess.

Much of financial planning industry is devoted to structuring affairs to maximise access to the age pension.

The means test and other requirements that control access to it are a bureaucratic nightmare and expensive to administer. There are ongoing fights about the taper rate at which access shrinks with income. Debates rage about whether taxpayer support goes where it should.

Then-treasurer Peter Costello’s 2006 removal of tax on super fund earnings in the retirement phase has proved to be misguided.


Read more: Why pensioners are cruising their way around budget changes


The scale of the benefits to wealthy households has become so inequitable it has necessitated a range of complicated administrative measures to impose limits.

Under our dividend imputation system, government corporate tax revenue is cannibalised as super funds in the tax-free retirement phase get “refunds” of the tax they haven’t paid on the dividends delivered to them.

A budget neutral proposal…
I am proposing a radical reform involving

  • introduction of a universal (non-means-tested) full age pension
  • restoring tax on the income of super funds in the retirement (pension) phase
  • other tax changes, including removing the seniors and pensioners tax offset, and a different tax scale for those in receipt of the pension.


The changes I propose could mean the only likely losers will be those with retirement super balances currently generating tax-free income in the region of A$100,000 per year or more.

Squeals would be heard, but there would be relatively few squealers and they might be unlikely to gain much sympathy.

The change could be budget-neutral.


Read more: 5 questions about superannuation the government's new inquiry will need to ask


Under the proposal retirement would trigger:

  • the automatic award of the full age pension
  • the conversion of the retiree’s super fund(s) into retirement mode where earnings within the fund(s) would be counted as personal income for tax purposes.


The tax scale for age pension recipients would also need to be adjusted, and the seniors and pensioners tax offset removed, in order to avoid windfall gains or losses and make the change budget neutral.

…that could make retirement simpler
At one stroke, all of the complexities involved in applying for and checking eligibility for the age pension would vanish.

Incentives to maintain large balances in super after retirement for tax-preferred estate planning would no longer be as attractive.

Introducing a universal non-means-tested full pension would increase budget outlays by about $30 billion, but this would be offset by increased tax revenues under the changes proposed which would leave most retirees no worse off in after-tax terms.

This is calculated using ball-park figures of around 4 million people of pension eligibility age with 1.8 million currently getting the full pension, 1.4 million a part pension, and 0.8 million on no pension.

Most retirees would be no worse off
Existing full pensioners would be unaffected.

The average part-pensioner could be left in the same after-tax income position by the tax scale changes which see the government recouping in extra tax revenue what it lost in extra pension outlays.

Self-funded retirees would receive a windfall gain of the full pension amount, but part of that would be offset by taxation of super income.

With proper adjustment of the tax rates the changes could mean that only those with very high income from super ($100,000 or more) would be adversely affected.

Unforseen consequences
In reality, nothing is that simple. Incentives for choice of retirement age would need consideration, as would the implications of tax scales for households as well as individuals.

Tax arbitrage involving imputation credits could destroy some of the expected budget revenues – suggesting a need to at least consider removing the rebates for unused tax credits.


Read more: It's hard to find out who Labor's dividend imputation policy will hit, but it is possible, and it isn't the poor


That shouldn’t be a deal-breaker for most retirees because they would be no worse off, but it could meet opposition from investors with other ways of lowering their tax rate, as we saw in the last election.

But my proposal, albeit radical, appears to be feasible and has the potential to abolish much of the bureaucracy and costs associated with administering the age pension and much of the tax complexity and regulations governing superannuation.

Rather than fiddling at the edges, we ought to be considering wholesale reform.


Professor Davis was a member of the government’s 2014 Financial System Inquiry.The Conversation

Kevin Davis, Professor of Finance, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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COMMENTS

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cupoftea
10th Feb 2020
11:11am
This LNP give nothing away unless its good for them and there mates, Endue card mean anything
Anonymous
10th Feb 2020
1:45pm
Company owning the Indue card is in administrations ie gone broke.
Anonymous
10th Feb 2020
2:47pm
Couldn't happen to a nicer bloke - one really must ask again - how is it that companies taking in billions in government funds go broke? Know why? Because when the government, in its infinite wisdom, 'sold' this newly 'privatised' venture - they gave a guarantee that the parasite who 'bought' it would be compensated to the tune of billions in the event of failure.

Now what kind of 'business' person or group sells a business off with that kind of guarantee?

This is just a cosy way of transferring a few lazy bill of YOUR money into the hands of mates - a well-traveled path in Third World Central American Banana Republics (such as San Austrador has become) - but who would have expected it in Australia - the great land of equality and opportunity that once was, based on mateship, integrity and standing together?

(You got it - been asked to stand for election again - not sure if I want to do Veteran claims or politics.. maybe both)...
Rae
10th Feb 2020
6:19pm
We desperately need a Federal ICAC.
Anonymous
11th Feb 2020
12:08am
Absolutely, Rae. Especially as the reality is that when such companies go broke, it is after the owners have already siphoned off the money to obscure accounts! Would like to know if any kickbacks were there for anyone.
Trevndawn
10th Feb 2020
11:27am
Sounds like a good idea which needs further consideration.
Travellersjoy
10th Feb 2020
11:34am
I would like to see some worked examples, but if it can be shown that a female full age pensioner with small super will be better off, or not worse off, I can support such a change.

What we have now is a rort for accountants and those rich enough to employ them.

Except successive governments have legalised rorting of the public purse, I would call it fraud - bu u ut it's not illegal, is it say the fraudsters.

That's what happens when you allow the rich to own the government. Any illusions that older Australians might have had that government is of the people, by the people FOR the people is well and truly refuted by the behaviour of this government, its benefactors and its beneficiaries.
Sports rorts anyone? Water rorts anyone? Bankster rorts anyone? Girls in sport and $150m rorts anyone?

10th Feb 2020
11:38am
There is plenty of historical evidence that making corporations and the rich pay their fair share of taxes improves society as well as the economy.

When will this Government learn that creating poverty does not boost the economy and neither do legal tax avoidance loopholes?

Australia needs real Governance, not the corrupt puppets we currently have in parliament. I want the same politicians Sweden has. They are REAL public servants.

https://mg.co.za/article/2019-05-31-00-no-perks-for-swedish-mps/
Mariner
10th Feb 2020
8:37pm
Wonder whether you ever worked and lived in Sweden, jackie. Look at the taxes and the work ethics of the population, no perennial surfers, shirkers, eternal students. Aussies are not Swedes, I come from that neck of the woods.
Nanday
10th Feb 2020
11:47am
It comes down to trust. As an SMSF holder and totally self-funded retiree, I have witnessed governments changing 'rules' on amounts allowed to be accrued without tax, and even trying to implement sneaky tax, slamming those of us who saved and planned as 'rich' and 'greedy' in order to swing public opinion against us. I would not support this recommended change, due to a lack of trust that after implementing it and down the road a few years, they change down the pension payments and change up the taxation rate.
Hervey Bay Escapee
10th Feb 2020
12:03pm
Seems a very sensible, if radical, approach.
Problems may be getting libs to support because of their rich mates and their own super benefits, and getting labour support due to their union and voter mates in Centrelink who may find themselves out of work!
Too many vested interests may stand in the way of a good solution to a broken system. Meanwhile many pensioners suffer.
Hairy
10th Feb 2020
12:04pm
Pensions should not be a political party football,pensioners were workers, built this country ,put money in politicians pockets and the pension scheme till Grubbs got their filthy thieving hands on it,Universal pension is the way to go ,no political interference from any party,I personally think this idea should be worth a look,we are supposed to enjoy our last years of life but I’m afraid politicians just want us to go away and die,they have proven that by their attitude against us
Horace Cope
10th Feb 2020
12:21pm
"Introducing a universal non-means-tested full pension would increase budget outlays by about $30 billion, but this would be offset by increased tax revenues under the changes proposed which would leave most retirees no worse off in after-tax terms."

This paragraph is a concern, it doesn't say that increased tax revenues would fully offset the increase of $30 billion. If not fully offset then there would be an increase in government expenditure which may cause an increase in government income which, as we all know, means an increase in taxation.

Another part of the proposal is to take away the imputation credits which Labor proposed at the last election and has been quoted as one of the factors in the election result. For those age pensioners already receiving a full pension and who also top up with dividends and imputation credit refunds, this will reduce their income.

Again, we see the "bash the rich" come into play but, as usual, we are not given a definition of who the "rich" are. We are certainly not in that category but it seems unfair to those who have worked hard, been fortunate or have become self sufficient by other means. A point not made in this is that retired politicians and billionaires will also be given the age pension so it seems that some of the "rich" people will be winners.
sunnyOz
10th Feb 2020
12:21pm
As usual, will be too late to benefit most current seniors - only helpful for future.
Meccapah
10th Feb 2020
12:37pm
Read Dr Cameron Murray's book "Game of mates" that's an expose' he recommends New Zealand's automatic pension plan for EVERYONE & it works well! There's no jumping through hoops & neither it should be, we've paid our taxes, politicians here get it (before retirement age) so why shouldn't we get it on retirement with no questions asked????
KSS
10th Feb 2020
12:45pm
For at least the last year, people here have been demanding a full non-means tested pension for all, tax retirement income and some even advocating removal of imputation credits.

Now we have this Kevin Davis, Professor of Finance, University of Melbourne making the very same suggestion to the Government enquiry and what happens? People here immediately start picking holes and criticising those same suggestions.
Horace Cope
10th Feb 2020
12:49pm
I'm one of those KSS and I don't apologise for that. If there are faults with a plan then the faults should be pointed out and fixed so the plan can work. I will say that this is another academic who is quick to spend other people's money and I am always very wary of that.
Anonymous
10th Feb 2020
2:53pm
No concept is entirely correct, KSS - unfortunately all need tweaking and when that comes into play, things start to go wrong, requiring another tweak, and so it never ends until we are back where we started.

It's like the historical reality that a radical government is introduced by the people due to stress economic and other from bad government, and that new 'radical' government steadily reverts to character and becomes the old 'entrenched' (read conservative) government that needs to be throw out.

Horace is correct. correct the faults before any start on implementation.
Anonymous
11th Feb 2020
12:13am
KSS, you have a point. However, the Professor's approach is as you say not novel, with myself and several others having proposed UAP many times in YLC itself.
I also agree it is a starting proposal with flaws - mine was closer to perfection, I think, as re-documented separately below, so yes, there are flaws which need to be removed.
Smarn
10th Feb 2020
1:01pm
Great suggestion. I hope this idea is picked up for serious discussion by those legislators.
Anonymous
10th Feb 2020
2:00pm
It's a terrible suggestion. As it says to me why have super at all.

Looks like the idea of cashing in your super and spending it is the way to go.
Anonymous
10th Feb 2020
2:55pm
Such a plan would need to be brought in gradually... **gags** the dreaded Five Year Plan etc...
Anonymous
10th Feb 2020
3:39pm
No sense in having super if there are no tax benefits in having it.
Rae
10th Feb 2020
6:22pm
Savers should not need tax incentives to prepare for retirement. It's common sense not requiring bribes.
Anonymous
10th Feb 2020
11:43pm
Good point, Rae.
Youngagain
4th May 2020
5:03pm
This system would eliminate the current benefits to manipulators who game the system. Naturally, those who have done this will object to changes that render their gaming futile.
Baz
10th Feb 2020
1:28pm
I think radical reform is necessary and the article is worthy of serious discussion. One matter not canvassed is the cost of fringe benefits which all current age pensioners get regardless of how little age pension is received. The wholesale payment of fringe benefits to everyone getting the age pension at retirement age (i.e. the 0.8 million currently not getting at least a part pension and counting) will affect the budget bottom line and thus will affect the cost neutrality of the proposal. Barry
Anonymous
10th Feb 2020
2:57pm
Ummm - yes... as said - all such things need tweaking.

Just getting the NSW travel card - far better for me (and the caree) because it means taking the car everywhere on fuel, rather than trains and such and getting transport anyway once arrived at destination anyway. Greater flexibility and convenience.

10th Feb 2020
1:44pm
That simply aint going to happen as all the pollies would be affected.
Anonymous
10th Feb 2020
2:59pm
So true.. said that many times - no positive change will ever come about while ever politicians have their massively beneficial and preferential perks.

Read a book about Wharfies etc in WWII and promises by government personages - Labor and otherwise -to step in and stop strikes etc of supplies to the troops at the sharp end. One Digger, after loading a ship with mates instead, and then on his way to the front, said "Nothing was ever done, since the politicians living off the fattest in the land had nothing to lose". Words to that effect. Stark reality from one in mortal hazard on a few bob a day..
inextratime
10th Feb 2020
1:57pm
Its always easy to target the government about rorting. What I'd like to know is why does it cost 6.4 million dollars a year in wages to just 27 employees to run the CFMEU ?
Anonymous
10th Feb 2020
3:00pm
Please explain?
hyperbole
10th Feb 2020
6:28pm
yes that is a question I would like the CFMEU to answer as well. Those employees get huge salaries.
Anonymous
10th Feb 2020
11:51pm
It's something I, as a former Union delegate (unpaid and at the sharp end of vicious management) oppose. Unions have become a business, as much as politics has become a business - and sometimes a family business.

That is why, in formulating ideas around the Trebor Principle/Scheme etc - I always use inclusive terms such as 'business mates and similar".. including Unions as they now stand.

They, nearly as much as the 'Labor' Party have betrayed their own. It's partly Howard's fault (again) - he forced a situation on Unions where, to remain viable, they needed to be a business... but the rot was in long before then anyway, with the onset of 'affirmative action' - look where that has lead us in the Union movement.

I was booted from a $100k pa job in 1992, for being a Union man and fitted up by management (read my book) - the Union hardly lifted a finger to protect one of their very own - then, when I applied for a direct position with the union - got the response that they were 'encouraging applications from women, those from a non-English speaking background, and Aboriginal and Torres Straits Islanders' - in other words - NOT YOU, White Honkey Australian Man! Cop your job loss on our behalf, but we don't give one damn about you when we have bigger fish to fry, such as feminism, multi-culturalism, and Indigenism.

You can eat cake while we follow Labor down the path of equalising everyone except YOU!

Ask me again why I oppose all of these -isms....
Skiing
10th Feb 2020
2:20pm
So the plan would not affect full pensioners and part pensioners wouldn’t be worse off but there is no mention of increasing the rate of pension which seems to be a complaint heard many times over. And what about pensioners who are renting and the inadequacy of rent assistance, again no mention of an increase to help alleviate current hardship.

10th Feb 2020
2:43pm
Good to see that The Learned Ones are capable of following a simple line of thought... and finally arrive at the concept of a Universal Pension accompanied by income tax (etc) on income over and above.

Now for the endless fiddling of this simple basic concept so as to provide loop-holes for the mates of whatever kind..

P.S. Warned yez if this chicanery with the accounts kept up - I'd bring back the girl!
Old Fella
10th Feb 2020
2:48pm
Sounds practical however not sure I understand the full gist of the proposal. It suggests to me that everyone upon retirement age will receive a full pension and any income derived from superannuation or other means is added to that income and taxed as a total income. For many this will be more advantages as the average net total income and pension income will still remain at the lowest taxable tax schedule - perhaps- And for those who have made effort to secure a sustainable retirement through superannuation be rewarded with some above sustenance pension. However I acknowledge with all and any Government proposal the devil always is hidden in the fine print.
Anonymous
10th Feb 2020
3:06pm
The Trebor Scheme (RIP TREBOR - Hail Sven Gali) - after doing calculations - arrived at the concept that to be of benefit, a UAP would need to be totally tax free and insulated - but all other income, perks and 'gifts' in lieu be considered income taxable. Ergo - the UAP was not included in taxable income (as it is now for OAPs who have the balls to work).

**Same old Mondayitis at YLC - says my account/password doesn't work - doesn't recognise the ages old email address, and I create a new account.. so the girl is resurrected as promised....

What Happened To Monday?

https://images-na.ssl-images-amazon.com/images/I/51N7AdrN3fL._SY445_.jpg
Anonymous
10th Feb 2020
3:11pm
Benefits would be increased economic activity for UAPs, and calculations showed that in order to actually lose anything by having super etc taxed as income, you would already need to be securing $90k+ pa... more than a dual OAP anyway.

Anyone with a taxable income less than that $90k + would gain... a bit less the closer you approach that cutoff - which would be indexed.

Another benefit is that government can plan economic activity and budgets KNOWING how much that group will have to contribute to economic activity.. it's in line with what I said about Unemployment Benefits and the current OAP - governments KNOW, when they pass out (not hand out) that fortnightly amount, how much it will participate in the economy and thus budget, and thus it provides a solid 'floor' on which other calculations can be made.
Anonymous
10th Feb 2020
5:45pm
Of course - your average 'retired' politician etc rips in well over $90k a year plus any other easy income - so they will never come at this one... **shock - horror** pay tax on their 'pension' or 'super'?

We need that Revolution and the guillotines... Aux Barricades, Mes Enfants!
Mariner
11th Feb 2020
10:08am
Trebor - you must have got up someone's nose, reason your name and password has been deleted. Do not worry, we just have to be careful what we are saying. Been there!
Old Fella
10th Feb 2020
2:48pm
Sounds practical however not sure I understand the full gist of the proposal. It suggests to me that everyone upon retirement age will receive a full pension and any income derived from superannuation or other means is added to that income and taxed as a total income. For many this will be more advantages as the average net total income and pension income will still remain at the lowest taxable tax schedule - perhaps- And for those who have made effort to secure a sustainable retirement through superannuation be rewarded with some above sustenance pension. However I acknowledge with all and any Government proposal the devil always is hidden in the fine print.
fairplay
10th Feb 2020
6:10pm
OF You are right the devil is in the detail ...We would need to know the rules. Everyones retirement is different ( Not many can PLAN their retirement due to everchanging complex rules. )Once we know the rules we would be able to do some sums. Also if such a scheme was adopted retirees should be given the option to Grandfather what they have or make adjustments based on these new rules. Would need to know how our earnings in a Super fund are split when they advise earnings in a given year.What happens to those Govt. workers that already get a gOvt pension ? are they also eligible to double dip?
SueV
10th Feb 2020
3:27pm
May be a good idea. However, would self funded retirees get taxed on the distributions or dividends obtained by the super funds or just on the 4 or 5 % or whatever that has to be paid out each year? As long as fund balances go up, that would then mean one would have to pay more tax, etc. Not necessarily easy to administer, unless it is done on the yearly minimum payment or whatever is taken out of the accounts.
Fliss
10th Feb 2020
10:40pm
SueV, self funded retirees would be much worse off. As you say - if fund balances go up then one would pay more tax. And you would not be paying tax on simply the minimum payment, nor what ever size payment you take, but rather on the total earnings of the super fund! NOT GOOD for self funded retirees.
SueV
10th Feb 2020
3:27pm
May be a good idea. However, would self funded retirees get taxed on the distributions or dividends obtained by the super funds or just on the 4 or 5 % or whatever that has to be paid out each year? As long as fund balances go up, that would then mean one would have to pay more tax, etc. Not necessarily easy to administer, unless it is done on the yearly minimum payment or whatever is taken out of the accounts.
Anonymous
10th Feb 2020
3:42pm
the conversion of the retiree’s super fund(s) into retirement mode where earnings within the fund(s) would be counted as personal income for tax purposes.

Better to take your money out of super and have the franking credits pay all your tax.

10th Feb 2020
3:40pm
the conversion of the retiree’s super fund(s) into retirement mode where earnings within the fund(s) would be counted as personal income for tax purposes.

Why have super at all if it is counted as your personal income? Super would cost you money in fees to have plus all the restrictions.

Makes no sense to me at all.
hyperbole
10th Feb 2020
6:29pm
as a fully self funded person on the wrong side of 70 I personally don't care!
Fliss
10th Feb 2020
10:42pm
Retiring Well, you are correct. They would be doing away the idea of superannuation entirely. You are right - they would be counting all super earnings as personal income & taxing it accordingly. :(
Sceptic
11th Feb 2020
11:34am
The point of Super is to provide extra funds in retirement. Anyone who does not see the point of having it is obviously part of the group that is happy to rely on pension only and then scream poverty and want a higher pension.
Aussie
10th Feb 2020
3:56pm
Yes ....another crack to pensioners and now i am totally convinced that we are the only source of income for this incompetent goverment of seat warmers without any considerations that we are at the bottom of the list of earners .....

How about taxing other sources like overseas land or property owners to a higger rates due to their earnings goes overseas .....

Tax the Bank accounts for foreing people that are not residents or citizens of Australia ...... a % of their earning interest ????? Why NOT THEM WHY US .....and there are many many other ways to get Money ......

Just look what Thailand do as foreing investors and Property ..... "NO FOREING PERSON IS ALLOWED TO OWN LAND IN THAILAND" but in Australia wowowowo is easy and earn a lot on rentals and bank interest and PAY NOTHING OR VERY LITTLE AS TAX ........

WTF is going on in our country .... Look at the social security of any other develop country and is stable with small or no changes to the system ....... PEOPLE LIVE IN PEACE ..... WE DO NOT HAVE PEACE ...... WE CONSTANTLY WORRY ABOUT GOV. CHANGES TO THE SYETEM .... SHIT SHIT ...... Bring the Bill of Rigths to Australia may help to respect our rigths ......

Just think How many in 1 1/2 years have been implemented to our pension system and other welfare programs ... Lost count already

This is my beleive ....sorry if you disagree .....
Anonymous
10th Feb 2020
5:40pm
"WTF is going on in our country "

We're being sold down the river as slaves to the global economy..... families are split up.. children sold (bought) off and weaned onto the idea that all the oldies are no good etc .. wives and husbands going down different roads to different plantations... work 'til you drop or The Mass puts you down as no more use...
Anonymous
10th Feb 2020
5:41pm
MASSA - not Mass (stupid computer - I blame the tools here)..
Bundabergian
10th Feb 2020
4:36pm
Yes. I like it. Let's hope the govt listen.
Brissiegirl
10th Feb 2020
5:21pm
Just pay everyone over 65 a base cip indexed pension regardless. Cut out the financial advisors and the massive squillion-dollar bureaucracy. That way people will know they have to save for their retirement according to whatever extra life comforts they desire. I can truly imagine a de-complicated retirement system where the benefits police no longer threaten and ogre-like chase after people for every $1 they haven't reported to Centrelink. Bring it on.
David
10th Feb 2020
6:15pm
I believe the two biggest issues with pension scheme to be fixed are:
1. Govt encourages us to carry on working then slams pension by 50% of what we earn after a ridiculously low allowance of about $62/week without reducing pension. Thats just a joke
2. People with their own home which is not counted in their assets for pension assessment get same pension as the many people who have to rent at commercial rates.
I am not suggesting they get too much, but rent alowance in a
full pension is about $100/fortnight. What is that suppossed to do for us? It means sharing accomodation or staying with relatives. Not great options
Mariner
10th Feb 2020
8:32pm
Your point 2 neglects to mention that we are already impacted by the $210000 home owners deduction of what a renter can own (check the list). I have a place slightly worth more than that. Not all of us have houses in Kew.
hyperbole
10th Feb 2020
6:24pm
someone has been calling for a universal pension on her for ages...are they happy with what is proposed?
Mariner
10th Feb 2020
8:28pm
Yes I would be, although I certainly would not be better off.
Anonymous
11th Feb 2020
12:17am
See my post below, being one of those proposing UAP often.
panos
10th Feb 2020
6:45pm
Smoke and Mirrors, not in our lifetime maybe in 50 years
Viking
10th Feb 2020
8:07pm
Whatever system is finally applied needs to encourage hard, smart work, thrift savings and investing in our own and the nations future and success. If it doesn't w'ell go further down the tube and progressively sell out to other countries.
Mariner
10th Feb 2020
8:26pm
Maybe Kevin Davis could be appointed as an assistant to the Treasurer, seems to have a lot of financial knowledge. His scheme possibly could bring a lot of mattress money into the light again. At the moment a lot of that is saved throughout the year and handed over to the kids at Christmas (check gifting rules). Give us oldies the full pension and tax us on the lot of our assets, possibly a small asset tax on the family home as well; too much finance is going into housing because of the exemption and the young ones cannot buy their own place any more. Think about it.
Fliss
10th Feb 2020
10:37pm
I used to think this would be a great idea until I was discussing it with a friend who explained that NZ has a similar system. When it was explained to me & I did a bit of number crunching, it is NOT good at all. It keeps the retiree doing tax returns, & if you have accumulated a decent super balance then you will be much worse off than with the current system.

11th Feb 2020
12:04am
Hallelujah! I have been calling for this (as also a few others), i.e. Universal Age Pension with NO tests, on this website for around 3 years, and now some Professor discovers it! Has he been reading YLC???

By the way, I think my proposal was better:
a. Universal Age Pension for all Individuals, from Age 65, with Residency of say 15 years, with NO other tests. No confusion as the Professor seems to be in regarding "household tax".

b. Scrap Centrelink role for Age Pension for the above, with ATO issuing out payments (not mentioned by the Professor) after a single Application Form. Massive savings for the Budget.

c. Allow up to $600K in Super with existing tax-free status, then tax earnings on all amounts above that at marginal rates. This keeps the incentives for Savers (not suggested by the Professor) to help in their own retirement, while scrapping the huge Super TaX benefits currently being exploited by the rich. Major source of Funding for the UAP.

d. Scrap all Special Pensions paid to Govt bureaucrats, Judges and Politicians (defined benefits without tests), as they can also then receive this UAP, same as all other people. Not mentioned by the Professor, and as per his proposal, these people will double dip.

e. For Funding, set up a Future Fund away from Govt hands, by diverting the 7.6% contributed in Individual Taxes for ensuring funding is secured to pay age pensions in future (idiots called Keating and Fraser destroyed the previous one). Not suggested by the Professor - how will he ensure future politicians (like Keating) won't destroy the universal concept by bringing in tests again?

f. Implement Minimum Taxes for all, ensuring the Rich will pay at least 25% on Gross Income, and Large Companies will pay 20% on Gross Revenue (minus only local verifiable expenses). This will ensure there will be huge Budget surpluses which will even enable increasing the amount of Age Pension to a more reasonable level. Not suggested by the Professor.

Overall, I am still glad this Professor has put forward his proposal, which is close to mine, while YLC were too shy to recommend such a radical and bold approach, i.e. UAP, to resolve the pension issue once and for all.
Bundabergian
11th Feb 2020
8:45am
George M for PM! I'd vote for you...
Play Fairly
11th Feb 2020
1:52pm
"Retiring Well", I.Thank you for that good news about the Indue Card. You have made my day. The sooner this government and their rich donors and hangers-on get shown the door, the better this country will be.
Play Fairly
11th Feb 2020
1:52pm
"Retiring Well", I.Thank you for that good news about the Indue Card. You have made my day. The sooner this government and their rich donors and hangers-on get shown the door, the better this country will be.
bobm
11th Feb 2020
2:36pm
The proposal by the Professor looks to be in line with UK and NZ.
At least do away with the over governed Centrelink. No if, or but, you arrive at the retirement age, bingo the pension arrives. NZ have family trusts with multiple RE investments in the trust.No concern if the old age want to work 1-2 days a week to supplement their expenses, fine no restrictions to the amount per week not like our Centrelink who hunts you down--Robodebt.
My observations in NZ where my Daughter and Grand child live in NZ on my visits
Bundabergian
11th Feb 2020
3:33pm
it is the same for UK residents. I have many friends in France who have left England and live in France (where real estate is dead cheap) , renting out their UK homes and living quite well with their little part time jobs if they want to. None of those things affect their pensions which just happen when they reach a certain age. (Of course exchange rates do and things might be different after brexit but that is another issue).
QuickeyeQld
14th Feb 2020
4:39pm
If you take the time to read this properly and think about it, its looking like it might be a fairer system. It has to be tested of course in various scenarios of course.
Franky
16th Feb 2020
10:37pm
Fully supportive of these proposals, a universal age pension would be sensible and save lots of administration and red tape. It would bring Australia in line with other developed countries.
mike
9th Mar 2020
5:50pm
Again you are talking about Dividend Imputations on receiving refunds on Tax you havnt paid.
What part of Divident Imputations is a refund of Tax paid by retirees who put their savings into shares and receive a divident on the tax paid on behalf of the shareholders DONT YOU UNDERSTAND.


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