One million will be caught out by ‘perverse pension tax’: ISA

‘Harsh tax’ hinders those who have responsibly saved to fund their own retirement, says ISA.

A couple retiring with $1 million in super will be worse off than a couple that retires with $400,000, according to new research from Industry Super Australia (ISA).

Analysis of the Age Pension means test revealed that in the next decade more than one million Australians will be caught out by an “unfair retiree tax that will mean they will end up with less spending money after saving more”.

ISA highlighted how asset taper rates cut the Age Pension by $3 a fortnight for every extra $1000 in savings that retirees have over the asset threshold.

This means couples who have saved $1 million to fund their own retirement will be hit by an “effective retiree tax” and will receive less annual income than those who have just $400,000.

“This harsh rate drastically wipes income from those who saved more,” ISA statement said in a statement.

“The trick tax arithmetic creates a disincentive to save and punishes those who have taken responsibility for their retirement during their working life and built a modest nest egg.”

The taper rate, which doubled from $1.50 to $3 back in 2017, has been a hot issue of late, with some decrying it as a “heavy tax on retirees” and others saying it makes the pension system fairer for all and not just the wealthy.

ISA believes it does not favour “hard-working Australians” who retire with $400,000 to $875,000 in super. A couple with more than $875,000 will have $12,000 less per year to spend than if they had retired with $400,000, estimates ISA.

“This perverse pension test means their retirement income actually goes backwards with the more they save,” says ISA.

“These workers have saved hard their whole life only to reach retirement and find out they are being penalised for their financial responsibility,” says ISA chief Bernie Dean.

“It provides a disincentive to save, it flies in the face of reason and is just plain unfair.

“These responsible retirees, who took their savings upon themselves, deserve to be given a leg-up by the government – not dragged down by an unfair retiree tax.”   

Reinstating the taper rate to $3 in 2017 taper rate “caught more than 330,000 retirees in the taper rate trap and more than 700,000 people who will retire in the next decade will also be impacted”, says ISA.

“These middle-income workers find that instead of their diligent saving delivering them a comfortable retirement, their incomes are falling off a means-tested cliff as their part pension is wiped.”  

Rather than scrap the taper rate or set it back to $1.50, ISA said that a $2 rate would reward retirees who save, leaving them with more income in their post-work years.

What do you think of taper rates? Are they unfair? Or do they balance the system?

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COMMENTS

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Ted Wards
6th Feb 2020
10:05am
For older retirees I can see how this would not be good news. For people like me in their early 50's it will be a completely different story. Many of us have super and invested well and from the summit I was at on the weekend with 100s in their 50s we are finding ways to make more money through whats called 'Side hustles.' If done correctly we won't be even looking at the pension. The government is really looking at making the pension for those that really need it like those who stayed at home and looked after the kids and may only have worked later in life and dont have much super. Its that bracket that I feel most for.
Anonymous
6th Feb 2020
11:43am
What's your preferred side hustle?

I used to get paid $50 for freelance writing jobs now one is lucky to get $5.
sunnyOz
6th Feb 2020
12:21pm
Retiring Well - totally sympathise re your comment on 'side hustle'. I used to assist with resume set up, presentation, etc. 5 years ago, even whilst working, could comfortably do these for $50-$80, which I was always told was too cheap. Now can get done for $20-$30. For the time involved that I put in, no longer do it.
Anonymous
6th Feb 2020
1:14pm
I occasionally cop a small cheque for book royalties... very small and in US dollars..
Jacka
6th Feb 2020
10:12am
The taper tax is an absolute disgrace, it's criminal. Hard-working people are not only disadvantaged but robbed by greedy governments who can't manage their own budgets. It takes you back to the parable of the ant and The grasshopper. If you don't know it check it out it's very prevalent with today's society. People who have worked hard and saved for their own future should not be penalize for those who have had an easy ride most of their lives on the taxpayers' back. Jacka
Anonymous
6th Feb 2020
11:11am
Governments do not miss much....
Anonymous
6th Feb 2020
12:23pm
Quite right, Jacka, also noting that many who saved also paid huge taxes on the way, and are then getting their savings attacked by the nasty Govt when it comes to pension age.
However, while is is called "new research", I wonder where ISA has been since Jan 2017, I thought they were well across it? Nothing new here, and I hope they did make a submission to the Retirement Income Review.
wheels
6th Feb 2020
10:28am
I'm 73 and my wife 66. Shes been retired about 5 years and myself about 10.
I absolutely support the thrust of the article and had done some figures that support what was said. We have four funds of which two were g/fathered and two not ,so in terms of income breaching pensions income rules ( from 2017) , we are within and not affected. ie The G/fathered ones are not considered for income ...but my wifes is affected as she was not a pensioner in 2017, however the combined DEEMED assets do not exceed income allowed. All good so far....by accident. We get a part pension and it is an assets based one and save the Govt money because it is a relatively small amount. In line with the article, I can't help feeling that my worry about my Account based pension returns daily, and I suppose I'm saying that some countries have a pension irrespective. So, having say nearly $400k in assets and a full pension seems a reasonable alternative. It shouldn't be that way.
PJ
6th Feb 2020
10:46am
I am sick and tired of ridiculous statements like:

“hard-working Australians” who retire with $400,000 to $875,000 in super"
"These responsible retirees"
"These workers have saved hard their whole life"

Someone with a lower super balance may have struggled even harder to get their modest balances. It is impossible to know each individual circumstance - i.e. Family inheritances, illness, lack of education opportunity due to family socio-economic class, etc. Can we please take these ridiculously superficial and prejudicial statements out of the debate.
Anonymous
6th Feb 2020
11:13am
Many have no idea how very hard such a struggle can be... and how very many pitfalls are engineered into society these days to suck the cash away from people...
Anonymous
6th Feb 2020
12:27pm
PJ, life is not all about you! All the statements are quite accurate, and they do not suggest that people who did not accumulate larger savings did something wrong. Yes, luck plays a major part in where you end up, but then you do get the full Age Pension if your savings were less. This article is about people who achieved a bit more who also deserve fairness, especially with many of those also having paid huge taxes on the way.
PJ
6th Feb 2020
1:01pm
GeorgeM
Who said I was talking about me!!!

I am merely pointing out that working hard isn't the sole determinant of how much you have in retirement savings and people who work hard come from all walks of life and have all paid their taxes!!

I am also for fairness for all and definitely would support restoring the taper rate back to pre-2017 levels or even granting the old-age pension to everyone without the Asset or Income tests.
Tanker
6th Feb 2020
2:19pm
Correct PJ. There is this believe by those who are better off than the average person that those of us who did not accumulate as much as they did must have been lazy and did not work hard.
Reality check here.
The old saying of "not understanding another person until you have walked a mile in their shoes" definitely applies.
Tanker
6th Feb 2020
2:19pm
Correct PJ. There is this believe by those who are better off than the average person that those of us who did not accumulate as much as they did must have been lazy and did not work hard.
Reality check here.
The old saying of "not understanding another person until you have walked a mile in their shoes" definitely applies.
Anonymous
6th Feb 2020
9:26pm
Thanks for your clarifications, PJ, especially your last para. However, jealous people would misread your initial comments and see them as a signal to attack those who saved more, while these people also don't understand that many who saved hard and are being unfairly attacked also may have suffered many adversities on the way, besides paying heaps of taxes. Hence as per the focus of this article, they must not be hit by this nasty Retiree Tax.
MjP
6th Feb 2020
10:52am
Stop referring to thin gs like this as a ‘Retirees Tax’
Anonymous
6th Feb 2020
12:28pm
It its absolutely a Retiree Tax. So is the impact of the Deeming rules on the Income Test.
All designed to cut back on what you should get, hence these are taxes.
Anonymous
6th Feb 2020
1:18pm
Yes - once you get your mind around all the 'new' ways that governments are paid 'taxes' - such as this one and 'holding shares in privatised public utilities - no responsibility but cop the cash' - you'll see clearly what a tax really is, regardless of what a government labels it.

Increased costs are the rule, with government gaining an increasing revenue windfall as prices rise and 'profits'.... and that doesn't include the share government electees and their families hold in those...
Discontented
6th Feb 2020
11:06am
Don't really understand! If you have a million dollars can you not spend some of it to get to the point where you get maximum pension benefits?
Dave R
6th Feb 2020
12:12pm
Of course they can just spend some of it by having a good time before they are too old to have such a thing.
Those with million dollar supers are misers just having a whinge instead of getting out and enjoying what's left of their life.
Ron Raines
7th Feb 2020
4:09pm
If you have excess cash , draw it down and put it away safely before retirement age, that way you will not be penalised and will still retain your cash, (that is at least for as long as we have a cash based society!)we live in one of the most highly taxed and regulated countries in the world, do some research on the aged pension and find out what our”Public servants” aka the government have done with the pension since its inception, thieves of the highest order.
You’d be amazed at the number of people that believe that government funding is just that, when it really is taxpayer funding, everything they spend they rip from the taxpayers
Pocket.It doesn’t matter whether Liberal, Labor or what none of them show any fiscal responsibility and let’s face it they couldn’t run a chook raffle!
Youngagain
7th May 2020
1:21pm
Discontented and Dave R, you are completely missing the point. If you went without holidays to put money aside for, say, home renovations and dental care at age 80, would you think it okay that the government says 'Well, you can't keep that aside. You have to spend it to live so we can give pensions to people who DIDN'T put any aside?"

The people you are insulting are not misers. They are people who worked hard and planned well to try to avoid imposing too much on taxpayers in their old age, and they are being deprived for it. And it's an idiotic system that rewards people for spending and punishes for saving. We will have far fewer self-funded retirees and more people draining the taxpayer purse as a result of this idiotic and unfair policy. And when there is no benefit to saving, there will be far less money to fund welfare and pensions will have to be reduced. Maybe stop insulting people who are doing what's good for the nation and show some respect and empathy. They ARE getting a raw deal.
Discontented
6th Feb 2020
11:06am
Don't really understand! If you have a million dollars can you not spend some of it to get to the point where you get maximum pension benefits?
Rae
6th Feb 2020
12:44pm
It is foolish. They may be planning for aged care but it seems best to not have any assets or money and then let the taxpayer pay for you.

Those savers could sell everything, gift the kids, keep enough for 5 years and a few hundred thousand extra for rent and go on the full pension. No problems then.

Then when they need aged care there is no worry either. They don't have to pay hundreds of thousands that savers are up for.
Eddy
6th Feb 2020
5:49pm
Instant solution, upsize by selling your current house and spend an additional $600k on a new house. No assets test on home, assets preserved for your family when you pop your clogs, qualify for a age pension and borrow against your new house using the pension loan scheme. Any smart accountant could give you the same advice for a fee, I'm giving it for nothing.
ex PS
7th Feb 2020
8:45pm
If you are going to spend money to reduce your assets, spend it on solar panels, water treatment systems or other items that will actually reduce your living costs. A solar power system and electric car will reduce your assets and save you a great deal of money in the long term.
It has been said that their are distance problems with electric vehicles, but how often will you need to travell over 300 klms in one go.
Chrissy
6th Feb 2020
11:08am
PJ ... I completely agree with you and thank you for your words. I am just one of the people you are talking about. Incredibly difficult circumstances a few years ago led to all of my hard earned Superannuation savings being lost. I might be stupid for trusting my ex husband but having worked for 40 years I do not believe I am irresponsible or lazy as suggested in the article. I am now 64 and still working. I will have to retire on the pension but will not do so until I’m not able to work.
As PJ says, we all have different life journeys. All we ask for is a system that is fair for all of us. I’m not asking for government handouts but just a bit of understanding would be nice.
Anonymous
6th Feb 2020
11:18am
So true... many have lost through poor spouse behaviour etc... poor management ruining your career at the time when you were set to build that nest egg up to adequate level.. poor government policy in enforcing high unemployment as the 'norm' and making it difficult for good people to re-start... stupid policies in bringing in more and more people to weaken the opportunity for people to get a meaningful job any more.. poor industrial relations set in place that have worked to reduce incomes and offer too much power to idiots with no idea how to run a company ...

There are many who have a lot to answer for..

6th Feb 2020
11:10am
I'll get in first:-

Obviously women will suffer more from this.....

Now that's out of the way - let's get to the issues....
trickyv
6th Feb 2020
11:10am
We had not long retired when the change came through from$1.50 to $3, it made a big difference to how we managed our money, in the middle bracket for super so our pension was cut fairly dramatically so we are now chewing up our super to live the lifestyle we had saved for, not overly extravagant but able to do most things we had done before. Many people far worse off than us but many people with loads of money doing way better. Yes we are one of the many who did without while working to have enough super to have a good lifestyle but sadly the governments (all previous and now) see us as cash cows
Chris B T
6th Feb 2020
11:17am
Those who Started working at 17 years old in 1992 when compulsory Super Contributions was Introduced still have another 22 years before reaching OAP age 67.
They can access their's without penalty's early at 60 years old at "This Stage" no one knows of what rule changes in the future.
Just remember There are No Guarantees with Super or any Other Financial Product.
Who predicted the GFC or the Keating Recession we had to have.
Until 2042 it's a hard call, from then on yes go for it as the possibility was there for all.
{;-(0)
Horace Cope
6th Feb 2020
11:19am
"What do you think of taper rates? Are they unfair? Or do they balance the system?"

I suppose the fairness depends on which side of the fence one sits. There are some who want all to have an age pension regardless of income or assets when reaching retirement age. Some of those same people want politicians to have their lurks and perks reduced which is the opposite because the granting of an age pension to all will include retired politicians.

Governments have to spend taxpayers money wisely so there has to be a limit on who will be eligible for pensions and welfare. If there is no limit then the obvious answer will be higher taxation. To address the "problem" of having too much super, the answer is quite simple as I see it. Those on a lower super balance who are eligible for a part or full age pension can get about $1000pw with the age pension and compulsory drawdown so why don't those on too much super draw the difference between what they earn and $1000pw from the principal. When the super falls to the amount where an age pension becomes available then the $1000pw can continue. Why do people over retirement age need to maintain over $1M in super and do nothing with it?
Anonymous
6th Feb 2020
1:21pm
Hardly Horace - a pollie etc will get an OAP but will be taxed on their income from all other sources, including deemed income from assets that actually pay them to get by etc, and 'gifts' from their 'former' companies etc such as a lazy million to spend at the races...

They gain $22,000 - but pay tax on income over and above. Easy. I did some figures once, not hard to work out...
johnp
7th Feb 2020
4:25pm
Where you said. "When the super falls to the amount where an age pension becomes available then the $1000pw can continu". Then you go into centrelink every week updating your financial situation with all the bureaucracy' time wasting crap that goes with that, bring in universal aged pension and save fortune for the taxpayer
Youngagain
7th May 2020
1:26pm
Horace Cope, if the Government were spending taxpayer money wisely, it wouldn't be rewarding people for spending more and punishing those who saved to be self-sufficient. Of course the answer is simple for those hurt by an unfair policy, but that solution will hurt the taxpayer because it will mean fewer people remain independently funded. That's just plain STUPID.
Youngagain
7th May 2020
1:26pm
Horace Cope, if the Government were spending taxpayer money wisely, it wouldn't be rewarding people for spending more and punishing those who saved to be self-sufficient. Of course the answer is simple for those hurt by an unfair policy, but that solution will hurt the taxpayer because it will mean fewer people remain independently funded. That's just plain STUPID.
Dave
6th Feb 2020
11:19am
Grossly unfair.We "did the right thing" as advised by previous governments and spent wisely and saved regularly to finish up firstly losing our part pension and now this? It makes no logical sense to me at all. Isn't the government happy that we are self funded retirees (no pension expenses) and those who lived from day to day and saved nothing saying the government will take care of us. Now the government wants to pay us all a pension! What sort of IQ have these idiots got?
geordie
6th Feb 2020
12:13pm
If someone does not claim an old age pension they should be given the relevant amount as a tax break. Government likes to have their cake and eat it and someone elses cake too.
Lookfar
6th Feb 2020
12:37pm
Dave, isn't a part pension still a pension?
If the system has a part pension that gets smaller the more money you have why would you want it if you have so much?
The concept of a pension for all is imho good, but there will then be tax for all as well so as to reduce inequality, - inequality destroys civilisations, https://www.sciencedirect.com/science/article/pii/S0921800914000615
So justifications such as "I worked harder than anyone else" are hollow if the result is that billionaires control society for their own greed, - the current situation.
Sure their should be some motivation for working hard, - legally, and without destroying the environment, but not at the expense of everyone else.
thommo
6th Feb 2020
11:43am
The changes to the pension assets test on 1.1.17 was made by Abbott and Morrison LNP) with the complicity of that Judas De Anatolia ( The Grens).
This was an act of gross bastardry by these mongrels.
I, and several hundred thousand part age pensioners either lost the part pension altogether or it was drastically reduced, which has completely stuffed up our planned retirement, which was planned under legitimate criteria beforehand.
But Abbott, at the time of the 2015 budget, belittled and insulted us by calling us "liquid asset millionaires".
THE LNP government did this ostensibly to make the pension "sustainable", which was complete bullshit, as it was done to fix up the budget bottom line, just as they've been doing with ROBODEBT scam and of course they're refusal to increase Newstart to a just and fair payment. These are additional acts of bastardry by that charlatan Morrison and his LNP government, and they will pay for it at the next election.
Captain
6th Feb 2020
4:04pm
Thommo, our Federal MP is a Liberal, and I discussed the asset changes with him when they were announced in the 2014 budget. He said that it was necessary as too many people were retiring and there would be a blowout in the cost of pensions. I pointed out to him that every year those retiring were generally retiring with the benefit of superannuation, and under the then asset limits most would be on a part pension, therefore the worrying pension blowout would not be to the level that political were spruiking.

I discussed the asset limits with him again late last year, before the election, and he agreed with me that the pension blowout would not be to the extent that his party claimed. He agreed that the asset limit should be reviewed, however not to hold my breath on that one.

Politicians, all tarred with the same brush. B/S artists, interested in themselves and the donors to their party.

6th Feb 2020
11:46am
Until the government looks after self funded retires instead of fleecing them I can't see any benefits in saving for retirement. Young people today as working as contractors so they can use the money that would have gone into super to pay off their mortgages instead.
Anonymous
6th Feb 2020
1:23pm
Haven't seen an SFR yet who doesn't dress well...
Anonymous
6th Feb 2020
2:46pm
You aint seen me then.
Captain
6th Feb 2020
4:10pm
Trebor, my wife dresses me or tells me to change if she doesn't like what I am wearing (sometimes I change other times not), so I suppose I am well dressed. She on the other hand always looks well dressed.

Ah well, SRF'S apparently can afford clothes. (She shops in Op Shops too).
Youngagain
7th May 2020
1:50pm
Anonymous, I have yet to find a pensioner who isn't living far better than any SFR I know - on a higher income, with better benefits, and with none of the stress and worry SFRs suffer. Total income security. All my soon-to-retire friends are being told to spend up big so they qualify for a pension, because SFRs are the most discriminated against, unfairly treated, and abused and insulted group of Australians today.
Blinky
6th Feb 2020
11:55am
ISA is absolutely correct. On the one hand they motivated us to save money on super, on the other, they take it away.
This is no way to reward hard-working people who even salary-sacrifice x a better pension.This is highway robbery and I cannot understand why the government is taking money away from pensioners!!!!
Richard
6th Feb 2020
11:56am
Firstly we were a couple caught up in the decrease in assets base for part pension. OK I said, not so bad because we only received a very small amount of pension anyway and at least Scott Morrison (Treasurer at the time I think) promised the actual pension card for life. So I wonder how long that will last? Now we have furthur Indexed erosion of pensioners income, which means that as inflation increases prices, more will be taken from retirees.
There is no doubt in my mind that this is another contrived money grab spaced over time to continue to increase the burden in this case to pensioners but with other examples to all citizens, like the stamp duty on property purchase which, over time, has produced a massive increase in the cost of purchase of land.
floss
6th Feb 2020
12:28pm
Can we afford a Federal Government that only cater for the ultra wealthy in Australia but i guess you only get the government you deserve.
Anonymous
6th Feb 2020
1:24pm
.. or the one you can't throw out at will...
Youngagain
13th May 2020
12:50pm
Or the way way way better of two massive evils. God help us if we had to tolerate the awful alternative.
GrayComputing
6th Feb 2020
12:37pm
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?
Joy Anne
6th Feb 2020
1:28pm
TOTALLY AGREE GRAYCOMPUTI.
WP
6th Feb 2020
12:44pm
I agree generally however those with $1 million have one thing that those with far less have : choice.
They have the means to choose to buy a new car, caravan, go on cruises or holidays with that extra money. Those with lower amount of savings may not have that choice.
So that ability to have choice and something in the kitty to pay for them, is really what you make the effort to save for. It is about peace of mind.
Rae
10th Feb 2020
10:52am
Exactly so and punishing those who chose or were forced to save seems terribly unfair.

Earners of perfectly good income may choose to spend everything and are rewarded with aged pensions and concessions. I honestly can't see why this is okay.
RayL
6th Feb 2020
12:45pm
My brother is laughing.

While my wife and I worked long hours and saved, my brother did not. We spent any holidays locally, did not buy luxury items and generally maintain a no frills life. Neither our kids or my wife and I went without necessities but we were not extravagant in our lifestyle.

On the other hand my brother did not worry about the future and enjoyed a good lifestyle, speed boat, jet skis, motor bike, new cars, large caravan and upmarket meals while dining out. Essentially he spent what he earned and had a well padded lifestyle.

Now he can only smile when discuss current benefits.

Our kids are still at that stage of life where they and our grandchildren can benefit from enjoying what I call a luxury lifestyle with focusing too far ahead to retirement.
B5YCK
6th Feb 2020
1:01pm
My wife and I, now in our nineties, worked hard and saved whatever we could as we wanted to be self sufficient in our retirement. All was going well and we lived the way we planned in our retirement but still had to pay tax in our retirement. About 10 years ago my wife due to macular degenration lost her eyesight and I took it on myself to look after my wife. But as my health was going backward due to a heart attack in1988 and my heart functioning for around 25% I found about 6 months ago I could not look after my wife as it nearly killed me. So after some searching found a suitable aged care home paid a very large deposit, which was 2/3rd iof our assets + on top of that a very high daily fee.
I am forced to stay home and try to live on the earnings of the remaing assets and die at home as I do not have sufficient to go into the same facility.
I congratulate those people who spent all their savings and have gone in similar aged care facilities for next to nothing and where my wife is now the majority are like that.
panos
6th Feb 2020
6:28pm
Sorry to hear about your predicament, but the pollies have changed the rules so much all the damn time, those that are coming up behind you are cray to save as much as you and your wife...
Cheezil61
7th Feb 2020
6:36pm
Sounds like my parents (tho I never heard my mum complain & she seems to manage ok now that my dad has gone -he had 3yrs in nursing home with dementia). Seems so unfair that hard work doesn't get rewarded in this country., you just always have someone else with their hands out trying (& succeeding) to get hold of what you worked so damn hard for!
Only consolation is the quality of character of the likes of you & my folks! I know who I prefer to spend my time around & it's not the wealthy or lazy!
Hugs to you<3
Joy Anne
6th Feb 2020
1:10pm
Another unfair tax. When GST came in it was suppose to delete many taxes but did not. The Liberals keep attacking pensioners. Why when Politians can do whatever they want and earn what they like and don't pay the tax people pay. Totally unfair system.
Anonymous
6th Feb 2020
1:26pm
If it were Panama or similar, the US would invade...
Skiing
6th Feb 2020
1:14pm
I’ll happily take a million dollars and not have a pension, knowing that as my assets reduce I’ll qualify for some pension at some point in the future. A million would allow for a very comfortable retirement with lots of choices regarding holidays and lifestyle activities. And with a million if you can’t achieve a return of 7% to 8% through a mix of investments then you’re doing something wrong.
Youngagain
13th May 2020
12:54pm
Your poor understanding of economics and finance is why you don't have a millions dollars, Skiing.
Arvo
6th Feb 2020
1:14pm
A couple with $1 million in super would not be renting, they'd be living in a home worth more than $1 million and they would have other cash investments to live off.
I don't see a problem, just an inconvenience, out of comfort zone, to dispose of the home or super asset, down size to a regional city area and live off the proceeds comfortably for the rest of their lives. These people shouldn't be entitled to old age pension. Old age pension is for people who qualify where deemed income and assets are within the lawful thresholds.
Sundays
6th Feb 2020
6:34pm
Arvo, are you saying that if one couple saved $1m in Super between them, they have to fully fund their retirement by selling up and moving, whereas a couple with similar income in their working life, who spent the extra instead of adding to super, and have little in retirement should get the Pension.

Bear in mind that houses in Western Sydney for example bought cheap are now worth More than:$1M. I don’t follow your logic
Arvo
7th Feb 2020
11:34am
Sundays- The logic is that if they have $1million super $1 million home they can cash in ,buy a home cheaper in regional city and live comfortably without being on a pension and not be a burden on the social welfare system.
Do your maths, do your research. They "have" and the other mob "have not". People's past life style is irrelevant.
Age pension welfare is not a reward for past hard work.
Age Pension is a safety net for eligible citizens who cannot fully fund their own retirement through retirement savings. ... If your assets or income exceeds those required for a full Age Pension, you may be eligible for a part Age Pension.
Sundays
7th Feb 2020
1:38pm
I disagree, people’s past behaviour is very relevant. There has to be an incentive to save. Otherwise, why bother, spend up and we can all ‘be a burden on the social welfare system’. The OAP should be a safety net, but those who have saved more should not be penalised which is what the taper rate does.

Neither, should they have to relocate whereas the spender gets to stay in their comfort zone. Fortunately, most people can do the maths which is why affairs are structured in such a way to ensure eligibility for at least a part pension. It’s the Government which should have done their research!
Arvo
7th Feb 2020
2:15pm
Sundays- People who have assets above the OAP thresholds should not qualify for the OAP safety net. they have assets that can be cashed in and lived off.
As one Supreme Court of NSW judge stated, " it doesn't matter whether the plaintiff spends their money on wine, fun or song. What matters is whether the plaintiff qualifies".
Past , present or future life style is irrelevant.
Why should people who have combined assets of $2 million qualify for part or full OAP?
Just because it's all too hard to get out of their comfort zone? NO WAY!!!
What if there was no safety net welfare at all, what do you think people with
$2 million in combined assets would need to do to survive? Sell up and move to affordable pasture!! That's reality.
Youngagain
7th May 2020
1:43pm
So, Arvo, you think it is good for the nation to reward spendthrifts and wasters with $1 million in handouts to fund their retirement but working people who save should be screwed over and robbed? Well done! No wonder this country is stuffed. When all of us are broke, who do you think will fund pensions then?

Why should someone have to cash in assets and live off them when others get handouts? Maybe that money was saved for expensive dental care ten years from now, or for household help when arthritis makes movement nearly impossible. Why shouldn't people who saved for those comforts be allowed to enjoy them? Why should they have to use their money to substitute for an income that others are handed from the taxpayer purse?

This article isn't referring to people with combined assets of $2 mil. It's about couples who struggled to save less than $1 mil between them and are now being fleeced of all their savings very unfairly, while people who saved half as much are being indulged from the taxpayer purse. It's brutally unfair, and no decent thinking person should endorse it.

When saving is totally futile, there will be millions more draining the taxpayer's coffers and we'll all be far worse off. It's a stupid notion to steal from savers.
johnp
6th Feb 2020
1:24pm
Yep. Reduce assets to under say $400,000 by buying $2 million home. Then get nearly $40K in aged pension. Even add on another 50% to that thru the pension loan scheme and end up much better off than the couple with over about $1 million in super.
Anonymous
6th Feb 2020
1:39pm
Exactly. Just buy a house worth millions with only enough left for the full pension plus benefits. You then get an income and an asset that increases in value tax free. When you run out of money downsize and keep repeating. I know one couple who have done this now 5 times and their latest house is worth over $3 million.
panos
6th Feb 2020
6:29pm
You are all dreaming if you think they are not coming after your house.....next
Joy Anne
6th Feb 2020
1:32pm
Governments are thieves.
RosePerth
6th Feb 2020
1:34pm
Correct me if I'm wrong (as I'm sure someone will...) but wasn't compulsory super supposed to be aimed at self-funded retirement to alleviate the cost of age pensions?
Anonymous
6th Feb 2020
1:40pm
No you just buy an expensive house just before you retire and pull out all your super to pay off the mortgage. You still get the OAP.
Rae
6th Feb 2020
3:08pm
No it never was meant to replace the aged pension. It was supposed to make retirement better by topping up the aged pension. There is no reason a sovereign nation that issues it's own currency can't pay for aged pensions and aged care. It isn't like a household budget at all.

It was also introduced to fight inflation that was high in the late 1980s. By taking what amounted to an extra 9.5% tax out of the economy. Remember all workers have paid 7.5% in tax towards retirement since 1945.

Theoretically we should all be treated the same and receive a universal aged pension after a set age.

Punishing savers isn't very fair or equitable.
Anonymous
6th Feb 2020
9:07pm
Excellent, balanced summary, Rae.
johnp
7th Feb 2020
10:42am
Agree with Rae. Universal aged pension has been paid for by all thru their working life then rescinded and stolen by govts since assets test first brought in !!
johnp
7th Feb 2020
10:43am
Should have added. The assets test rule applies to all except the Politicians but thru other means !!
Jacka
6th Feb 2020
2:19pm
Pardon my French, but when those bastards (politicians), which ever party (and I mean PARTY) you support, stop moving the gold posts and he'll freezes over, we may have some continuity in the way previously highly taxed generations are treated and supported by Government. Cheers Jacka.
skinner
6th Feb 2020
3:13pm
This rate increase took affect a while ago so why the sudden outrage? The outrage should have started when this idea was proposed.
Captain
6th Feb 2020
4:23pm
Skinner, some of us did have the outrage when the asset limits were proposed in the 2014 budget and have maintained the rage since.

The issue now is that many people who are now retiring are finding out that it affects them.

Many Australians do no take any notice of what may affect them until it is too late.

Maintain the rage, and by the way give everyone over the age of 65 a full pension, with the criteria of paying tax in Australia for a minimum of 15 years and being an Australian citizen.
Rae
10th Feb 2020
10:58am
I was outraged because in my case the LNP/Greens broke the No Disadvantage Rule in that legislation. Tens of thousands were disadvantaged with no recourse because we were locked into permanent contracts.

As far as I can see any group is fair game now. Also anyone putting extra non concessional amounts into super run deeming risks.
Youngagain
13th May 2020
12:57pm
I was outraged at the time and I recall a lot of other outraged people making loud protests. The Greens got the legislation through, and they lost a lot of support because of their bastardry.
skinner
6th Feb 2020
3:13pm
This rate increase took affect a while ago so why the sudden outrage? The outrage should have started when this idea was proposed.
Youngagain
13th May 2020
1:00pm
There was plenty of outrage at the time, skinner. And it has continued - as it should.
Cheezil61
6th Feb 2020
5:05pm
Wish YLC had some good news to deliver to me about retiring...at 58yo still working 12hr stints at rotating shiftwork (manual physical hard labour) there's seems little hope of any of us having a battle-free, non-poverty stricken retirement in future. Feel even more for those younger trying to get ahead as it's likely never gonna happen in Aust any more. My parents generation were the lucky ones (my mum & & dad when he was alive lived quite a comfortable retirement tho they didn't earn a fortune in working life were able to get a half decent pension which paid for the necessities with enough to spare (as I'm pretty sure the cost of living/basic bills were a lot less than they are now)! Breaks my heart to wonder what's in store for my adult kids when they reach my age (& they do it much harder than I did at their age! My 25yo works full time as a fitter & is doubtful he'll afford to rent on his own, far less be able to buy his own home (he lives with me & doesn't pay rent & doesn't have a social life as 11 or 12hrs of his day is taken up working & travling to & from work daily). I don't have spare money/savings to help him with a deposit for a loan as my wage all goes on my basic bills & car/home maintenance & such expenses! Bring back the 80's when life was easy! I left home in 1978 when I got my first job, which paid $80 per week & my rent was $25 per week & I managed to go out drinking & socialising til all hours of the night & could still pay my bills & afford to eat well, things aren't like that now (life is unaffordable unless you do illegal stuff or work for cash/avoid paying tax (tho I do none of these things & wouldn't recommend them as once caught the price is high, tho is very tempting!!
Rae
8th Feb 2020
10:29am
I'd be worried if an adult working full time as a fitter couldn't afford to pay a bit of rent and food. We've had a similar thing here with a daughter in law taking the son's $12 00 a week and having nothing to show for it but a lot of crap and expensive meals. No rent, phones or electricity had to be paid. It appears squandering hundreds every week is easy but I'd love to know where it all went.
panos
6th Feb 2020
6:24pm
Fantastic news......... get those Super Rich Retirees next target is the family home you rich buggers sitting on a million dollar plus houses...Get out and pay tax........LOL The LNP Govt needs the money and they will screw over anyone to get those dollars....

ENJOY..... your meagre retirement
Hairy
6th Feb 2020
6:41pm
One more nail for the aged coffins.designed by goverment to have you all worry yourselves to death .The gov just want you to go away and die when you can’t work or be usefull anymore .check out the movie Soylent Green.

6th Feb 2020
7:24pm
The richest companies in Australia pay NO tax; Newly released data for the largest Australian and foreign-owned companies in 2017-18 showed software juggernaut Atlassian, Shell Energy and investment bank Goldman Sachs paid no income tax on a combined $350 million in taxable income for the year.
Chevron and Santos paid no income tax last financial year, recording revenue of $5.2 billion and $3.4 billion respectively.
With $6.3 billion in revenue, Woodside Petroleum paid no income tax again in the period, but the company stressed its two subsidiaries paid about $493 million in tax.
ATO annual transparency report reveals one-third of large companies are paying zero tax.

How about that?
Why no one is pursuing them?!!
The ATO is pursuing an average worker to pay their tax so that the corporations don't have to !!!
And the mafia politicians in Canberra keep a blind eye.

Many big corporations declared huge profits in 2017-18 but paid no tax whatsoever. These include Shell Energy ($200.5 million profit), Bluescope Steel ($60.6 million profit), Murdoch’s News Australia ($58.5 million), Food Investments Pty Ltd ($65.2 million profit), Lendlease Corp ($69.2 million), Pratt Holdings ($59.2 million)

A total of 2,214 companies are listed with gross earnings shown. Of these, only 1,649 reveal their taxable income. The others either did not generate any taxable income or have not revealed it. These include some of the world’s biggest exporters of Australia’s resources — Chevron, ExxonMobil, Peabody and Santos.

https://independentaustralia.net/politics/politics-display/the-corporations-making-big-money-paying-no-tax-and-laughing-at-us,13419

There would be enough money for pensions if all filthy rich businesses paid their tax !
Retirees should be EXEMPTED from any tax !
Anonymous
6th Feb 2020
9:17pm
Not only they will have enough money to pay all Universal Age Pension without any tests, the pension rate could be easily increased, and even the personal income tax rates could be reduced, if Govt were to act on the massive tax avoidance by companies. Not a peep from Labor either, BOTH major parties have been complicit in this matter for decades, probably getting too much in kickbacks & benefits for themselves.
Federal ICAC is long overdue.
Rae
10th Feb 2020
11:05am
Yes it seems workers can pay tax on all their revenue fortnightly and have to wait until tax time to claim a bit back but companies are protected.

Workers are also levied, tolled, rated etc and cannot claim living costs even though staying alive is vital for being able to work. Most cannot even claim the cost of getting to and from work.

How or Why we let this craziness happen to us is a mystery.

6th Feb 2020
11:47pm
Let's resolve this for the Trebor Scheme now:-

In order to repay, via income tax, the equivalent of the non-taxable OAP - you would need to be raking in, annually $95,000, taxable income exclusive of OAP. Ergo you would be suffering on a mere $117,00 pa TOTAL in order to pay the amount that is currently the OAP back in income tax.

Your taxable income: $95,000
Income tax payable: $22,647
Medicare levy payable: $1,900
Your income after tax & Medicare levy: $70,453

https://moneysmart.gov.au/income-tax/income-tax-calculator

In other words, you would be on a total post-income tax income of around $92,000 pa.

How many of you currently cop that? Anyone on less than that $95,000 would have more in hand from receiving a non-taxed OAP... so it is ONLY the fat cats who would pay more in tax than the aged pension they would now receive...

Tits are tough - if you cant survive on $1900 a week after tax in retirement, there is something wrong with you. A pensioner gets less than a quarter of that... so the Trebor Scheme is a windfall for all, and would reduce costly duplication of 'services' in superannuation and savings etc.
Cat
7th Feb 2020
9:34am
If you can 'save' up a million dollars you're on a pretty good wicket, and in a privileged position. All the same I don't believe that the gov can just keep taxing the wealthy as a way of solving all the problems.
ex PS
7th Feb 2020
9:02pm
I million invested and getting 10% will get you $100,000 a year, but if you take a low/medium risk investment strategy you will probably get 5%.
That's $50,000 a year, neither amount is exactly the income of awealthy person.
Rae
10th Feb 2020
11:09am
Or you lived frugally for the 45 years you worked and saved instead of spending. People on low incomes have managed to save and invest like this but it takes a huge sacrifice and that is never acknowledged.

Still the young are learning. If you spend everything living a high life you'll be rewarded by the safety net.

They are choosing that life now thanks to quite silly government policy.
Youngagain
7th May 2020
1:34pm
Cat, most pensioners will receive around $1 million in pension payments over the course of their retirement. I don't accept that you have to be privileged to save $1 mil. I know lots of battlers on relatively low incomes who achieved that. I don't see why they should have to live on their savings while others are given $1 mil from the taxpayer purse. But Rae is right. The silly government policy is going to make the whole nation worse off.
Florgan
7th Feb 2020
10:26pm
Grant the old-age pension to everyone without the Asset or Income tests.
If you’ve worked hard , you deserve your reward.
johnp
8th Feb 2020
9:54am
Agree Florgan. The govt stole the aged pension capital reserve way back. Think it was in the 50s or 60s !!
Ian202
8th Feb 2020
6:18am
An interesting article with a catchy headline. It seems me that the intent of the article is to stir the pot, which it has done. The article fails to reference the ISA report so without reading that we really can't be certain what ISA were saying. So this is an Editorial Opinion piece. That's fine but have some background. Certainly a home owning married couple with $1M in wont get the the Age Pension at current rates. But to say they won't get as much income as someone comparable with $394k and receiving the age pension. [Full AP $36k pa plus deemed income on $394.5k, say $10k, so only $46k total. But in fact $400k invested in a properly balanced portfolio could return 5% say $20k while only deemed at $10. And the properly balanced portfolio could hold its capital value over time. Need more income requires drawing down on capital. A h/o couple with $1m can draw as much as they like for their living expenses and $100k pa not likely to last as long as $50k pa without capital drawdown. The ISA research may have had an emphasis on the benefits of any one of their super funds and a properly balanced portfolio. Good advice from a good financial planner is also important. Taxation in all its forms is a separate topic for another day.
KeWi
8th Feb 2020
9:01am
Isn't the idea of super that you will spend the capital to improve your living standards - i.e. it's a $ saved while working to be spent later?
I think some people seem to think the concept is that the capital should not be spent and the government should give them the pension so that their better lifestyle is because of the earnings on that capital, rather than being the spending of it.
In saving that capital you got tax concessions, so there has to be some form of pension withdrawal process to ensure that those who need support can get it, and those who got those tax concessions are not treated over-favourably compared to those who could not save (often through no fault of their own)
johnp
8th Feb 2020
9:51am
the politicians all have millions in capital and still get an exorbitant, extreme and obscene pension !!
Captain
8th Feb 2020
2:32pm
Pray tell what tax concessions you get, if over a working life you manage to save some $'s.
ex PS
8th Feb 2020
8:27pm
For a start, no tax for over 60's on Super Income Fund withdrawals.
Captain
9th Feb 2020
11:37am
ex PS, we are talking about the accumulation of capital prior to retirement.
Youngagain
7th May 2020
1:30pm
So, KeWI, you think that if someone goes without holidays for 10 years so they have money to pay for household help when they are 80 and struggling to manage, they should be forced to spend that money in their 70s and have none left, while if they didn't bother to save, they should be supported by the taxpayer? That sounds quite unfair and selfish to me.
Blinky
9th Feb 2020
6:48pm
Yes. That is the govt taking money from pensioners!!! VERY SAD AND A SHAME ON THE LIBERALS!!!
Youngagain
7th May 2020
1:27pm
Yes, Blinky, but LABOR introduced both the income and the assets test. There's is the far greater shame!
Youngagain
7th May 2020
1:27pm
And BTW. Labor refused to consider reversing the change if elected.
Dianne
11th Feb 2020
7:36pm
It is a definite disadvantage to those who have worked hard, paid extra into super and saved. Hard work should be rewarded not punished.
mike
9th Mar 2020
5:58pm
We have been caught by this unfair tax and lost our pension, being just over the $800000 threshold, but what is worse we cannot downsize as our modest regional home is only worth about $250000, so we watch pensioners in Sydney in $3/$4 million dollar homes still getting the pension. Also WORSE, Liar Turnbull promised to give back the concession card to all those who lost it, but the Liar cut it off after just one day. Letters to Mr Gee, and other politicians only resulted in insulting lies about concession card reinstatements.


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