What you want in Budget 2016 will change the face of retirement.
In April this year YourLifeChoices website once again surveyed its 140,000 baby boomer (aged 50-70) members to ask which measures, relevant to retirement income, that you would like to see in the upcoming Federal Budget. With 5.5. million Australian baby boomers either in retirement, or likely to be so within the next 10-15 years, such policy is of critical importance to our future income prospects.
But even we were surprised by the strength of your response, and your willingness to change policy to better serve all Australians, not just a privileged few.
Budget wishlist 2016/2017 – What older Australians want received 3946 responses to 21 questions.
A summary of the top level responses follows.
As most commentators have noted, in an election year when the gap between parties is narrowing, the May budget will be all important in demonstrating to voters that the Turnbull Government can deliver effective policies to manage the economy and that this economic message is on song – particularly in the wake of Mr. Turnbull’s speech on the night he replaced Tony Abbott as Prime Minister, declaring “You can trust me to deliver a stronger economy”.
Perhaps the most surprising result in the survey, and contrary to expectation, is that the family home is no longer considered sacrosanct when it comes to the Age Pension assets test – with 60 per cent agreeing or strongly agreeing that a home valued over $2.5 million should become part of this assessment.
Older Australians are not as averse to change nor overly protective of all retirement assets and tax advantages as much current ‘generational warfare’ hype might lead us to believe. Supporting last year’s poll on the same question, 67 per cent of respondents believe that it is important or very important to change the current concessional rates of tax on superannuation (Q.5), with a majority (Q.6) supporting both a 20 per cent rebate (suggested in the Henry Tax Review) and a lowering of the upper limit (Labor Party policy).
The legislation, proposed in Budget 2015, to increase the age of access to the Age Pension from 67 in 2023, to 70 by 2030, remains unpopular (Q.7), with 68 per cent disagreeing or strongly disagreeing. The difficulty of retaining regular employment, or being rehired after job loss is most likely a factor here.
Most respondents (55 per cent) believe that our current retirement income system has NOT allowed them to have a reasonable income in retirement (Q.12).
And an overwhelming majority of 82 per cent either agreed or strongly agreed that an urgent review of this retirement income system is necessary (Q.13) before further changes to the system are instituted. This would mean a ‘root and branch’ approach which includes tax, super and the Age Pension, rather than tinkering with individual elements.
Although not directly asked, in answer to ‘What do you believe is the single most important change to retirement income in the budget’ (Q.21), many suggested that an increase in the rate of the Age Pension or cost-of-living pension increases are required and others called for a re-instatement of the legislation lifting the Superannuation Guarantee Charge (SGC) to 12 per cent.
In order to help the Government and Treasury better understand the challenges of life on a fixed income in retirement, a summary of the Budget wishlist 2016/2017 – What older Australians want survey results has also been submitted to the Treasurer, Scott Morrison.
This is big news and took us completely by surprise. The conventional wisdom is that your home is your castle and safe from any assets test. Not so, you told us.
The question asked in our survey was:
The family home is currently exempt from the the assets test for an Age Pension. Should properties valued at $2.5 million or higher have at least part of their value included in the assessment?
And 60 per cent of respondents either agreed or strongly agreed that this should be the case. A supplementary question, If you disagreed with the proposal above, is there another dollar value at which the home should no longer be exempt? was even more interesting. Of the 32 per cent who had disagreed with properties valued at $2.5 million or more becoming, at least, partially assessed, 50 per cent stated that it should always be exempt (i.e. just 16 per cent of all respondents supported this policy). Of the balance who disagreed, a surprising 19 per cent feel homes worth more than $1 million, should be included, 19 per cent set the bar at $2 million and 8 per cent said it should be $3 million plus.
Who’d have thought?
What did not come as a surprise is the age of entitlement to an Age Pension.
Consistent with last year’s YourLifeChoices Budget survey response, an overwhelming 68 per cent disagree with the Turnbull Government pushing ahead with the plan to change the age from 67 to 70.
As Homer Simpson would say, D’oh!
Of course we don’t want to have to work longer to get access to what most of us believe is an entitlement after a lifetime of paying taxes. Those who can work longer - and wish to - are able to keep going. But those who are retrenched, unwell, or unable to continue in their careers due to physical limitations or lack of job opportunities should not be punished and dumped on inadequate New Start payments for the sin of growing old. This legislation is still hovering and it is clear that our members are vehemently against it being passed into law.
And another surprise is the strength of support (82 per cent) for an immediate review of retirement income, including tax, super and the Age Pension, before any further changes are made. This supports the 55 per cent response stating that Australia’s current retirement income system has NOT allowed you to achieve a reasonable retirement income, providing a dignified life in retirement.
Let’s face it. A system which was once described as ‘world best practice’ by the World Bank is now broken – and needs bi-partisan support to fix it, fast.
What do you think? Is it time to put the home on the line when it is worth $2.5 million or more? And should the Age Pension age remain at the legislated 67 by 2023? Or is even this a bridge too far? What other messages should be shared with Mr Morrison pre-Budget 2016?
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