Hands off the family home

The Friday Flash Poll, Should the family home be part of the assets test?, drew a strong response from 2481 YourLifeChoices members – on that and a series of related issues, including politicians’ allowances, the assets test for the Age Pension and deeming rates.

Many members went after the politicians and the two per cent pay rise for federal MPs that takes effect from July. This comment from YourLifeChoices member NY19 was typical: “[Prime Minister] Scott Morrison got a rise this week of $11,000 pa, which brings his salary to $549,000 pa. All pollies got a rise apparently. They have crippled unions, removed penalty rates and have done nothing to help low earners or the unemployed on Newstart. But, hey, they’re OK getting their regular increases.”

Chris B T added: “I believe politicians need to bring their rorts under control before chasing after OAP home ownership. Receiving a living away from home allowance and staying in ‘partner’s’ property or friend’s property when parliament is sitting.”

Triss called for “an in-depth investigation into the sly way early politicians decided to line their own pockets with pensions and perks by robbing taxpayers of theirs”.

An overwhelming 85 per cent of respondents said the family home should not be part of the assets test for the Age Pension – unsurprising given 96 per cent of respondents either owned their home outright or with a mortgage.

But the question whether the home should be part of the assets test in future drew a very difference response, with 45 per cent unsure, 26 per cent saying yes and 29 per cent no.

To the question “If yes, when do you think this might occur?”, 37 per cent said “not in my lifetime”, 18 per cent between five and 10 years, 16 per cent within five years, and 11 per cent within three years.

Most responses were highly critical of the concept of including the family home in the assets test for an Age Pension – and many were critical of the assets test generally.

Trebor wrote: “In order to keep the government honest, given their proven history of moving goal posts – no home included in assets test! Furthermore, the assets test needs to be revised and countless items excluded, and only income-bearing assets included.”

Thommo took a different view on the family home, but also sought changes to the assets test. “Any government that includes the family home in the assets test will be removed from office pronto. However, any family home worth more than say $3 million should be included in the assets test … But for the assets test otherwise, only the income factor should be included in the assets test, not sundry other items like your car (unless it is worth a million), essential living items for the home (e.g. clothes, kitchenware etc) and house contents. At the moment, your toothbrush and toiletries even count in the assets test. What a joke.”

Gerry also believed the family home may be fair game, writing: “A house is money, same as the bit I have in term deposit. I have to use mine, a house owner doesn’t. They get to leave their house to their kids. I will have nothing to leave mine.”

Nanday was on the fence: “It’s a complicated issue, not as simple as yes or no. Some people have lived frugally and paid off their home, and due to property increases in some parts of the country (e.g. Sydney) end up owning a home worth over a million. However, there are other people who undoubtedly consider it a smart strategy to invest solely into their primary residence, trading up until they have acquired a home as an sole asset worth a lot of money instead of divesting into other assets which would be included in an assets test (such as a stock portfolio for instance).

Deeming rates came in for their fair share of criticism – the fact that they are unchanged since 2015, while official interest rates have continuously fallen.

“We are being robbed already with 3.25% deeming rate!” wrote Tricky.

Old Man Roo added: “… there is no move on reviewing the deeming rate to a realistic level. So now they are fishing for what they can still take from us. Soon they will tell us we are living in utter luxury, if we live in houses and only caves or mud huts will be exempt from pension cuts.”

But the dominant view on including the family home in the assets test was – no, no, no.

“Sure, use the hard-earned home as an asset; we all enjoy bricks and mortar for dinner as it’s all we have to eat if we don’t get a pension!” wrote Bella.

“No definitely, definitely NO. This government needs to get its act together and do the job it should be doing. Fix the taxation department so that it, for once in its miserable existence, becomes efficient in making sure that tax from money earned in this country is paid and not disappears in foreign banks,” wrote Travelman.

“No, no, no. Just had to cancel my appointment at the dentist because I can’t afford the work. A family home should go on the debt side of the ledger, given all I spend on maintenance. I would be better off renting!” wrote La Verne.

Would you like to see a review of the Age Pension assets test in the Government’s review of retirement income? What are the key features that concern you?

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Related articles:
Age Pension under pressure?
Pensioners the losers in CPI stakes
Why Age Pension rises fail retirees

Janelle Ward
Janelle Wardhttp://www.yourlifechoices.com.au/author/janellewa
Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.
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