Age Pension ‘not liveable’

The base rate of the Age Pension is not a liveable amount, deeming rates must reflect reality and too many older Australians are hell-bent on leaving an inheritance for the kids at the expense of a comfortable retirement. That was your message from our Friday Flash Poll: Deeming rates and the Age Pension.

New Social Services Minister Anne Ruston was put under intense pressure to reduce deeming rates after the Reserve Bank of Australia (RBA) cut official interest rates to a record low of one per cent. She responded with the first change to deeming in four years, but were the cuts enough? Your feedback was emphatic.

Asked, ‘Was the deeming rate cut from 1.75 per cent to one per cent for investments up to $52,000 (single pensioners) and $86,000 (couples) enough?’, 76 per cent of respondents said no.

Asked, ‘Was the decrease from 3.25 per cent to three per cent for amounts over $52,000 (singles) and amounts over $86,000 (couples) enough?’ and the response was even louder with 89 per cent of respondents saying no.

We also asked if there should be an independent and transparent process to decide on deeming rates and the result was comprehensive. An overwhelming 96 per cent of the 519 respondents said yes.

YourLifeChoices member Eddy spoke for many when he said: “I am not against deeming rates per se, even though it is the deeming rates that keep me from qualifying for a part Age Pension. However they must reflect reality.” Eddy suggested deeming rates be tied to the official cash rate and go up or down automatically.

Our poll then sought to gauge your views on the Age Pension in the wake of the Federal Government’s announcement that it will conduct a wide-ranging review of retirement income.

We asked, ‘Should there be an urgent review of the base rate of the Age Pension?’ and 93 per cent of respondents said yes. Asked by how much the fortnightly rate should be lifted and 53 per cent said $71-$100, 27 per cent said $51-$70 and 21 per cent said up to $50.

YourLifeChoices member terrib said the basic pension was not a liveable amount. “[The] last increase I did not receive any more money, in fact I am now 60 cents worse off.” Terrib was unsure why that was the case and was not looking forward to trying to find out. “… how I am worse off I have no idea. I guess I will have to contact Centrelink … but the time you spend waiting on hold is daunting to say the least.”

Terrib’s concerns about contacting Centrelink were reflected in another question, ‘Do you trust Centrelink to ensure you are receiving all applicable payments and allowances?’ Again, the response was a roar with 84 per cent of respondents saying no.

So would a universal Age Pension solve many problems? Yes, said 86 per cent of respondents.

Funky referred members to the New Zealand system. “NZ has a simple solution to the ridiculously complicated pension system we have here. That is: ALL over 65 receive full pension irrespective of their wealth, or lack thereof. No asset test, no income tests.”

Thoughtful was another in favour of a universal Age Pension: “A UAP should be a replacement for all tax incentives and then taxed normally on top of any other income received in retirement. Simplifying the tax system and OAP avoids rorting, is an incentive for people to save for their retirement (the incentive being any amount saved is beneficial as it is better than just the pension which everybody would receive), avoids the unbelievable bureaucracy involved with the OAP and keeps funds flushing through the government coffers.”

Arvo said: “The Government is out of touch with age pensioners – not because they are unable to make improvement but by their oppressive design to keep age pensioners on the edge of poverty.”

GeorgeM issued a call to arms. “The Government’s Retirement Incomes Review is coming up soon, and that is the right time for all to act. Too often, people in Canberra claim they did not get much input for such reviews, and that is squarely the fault of inertia among the lazy people. The other option is to start a petition – I have suggested to YourLifeChoices to start one …”

Berryupset followed up with: “ALL these comments should be brought to the attention of the Minister and our rep! I`ve emailed and complained to my fed MP! Please do the same!!!”

Members also used the poll forum to highlight another ‘problem’ – the desire of many older Australians to leave an inheritance for their children.

Tanker said: “The problem with the Age Pension is that so many view their retirement investments as something to be hoarded to pass on to their children.”

In2sunset concurred: “Nothing galls me more than hearing seniors talk about how they are scrimping and saving in order to ‘leave something for the kids’. At the same time, I see them complaining about the cost of running the aircon, or the cost of medication.”

Will you lobby your local member of parliament for a say in the government’s retirement income review?

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Senator’s Ruston’s tough week
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Janelle Ward
Janelle Ward
Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.
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