Treasurer announces guidelines for retirement income review

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Federal Treasurer Josh Frydenberg announces first major review of Australia’s retirement income system in 30 years, with a focus on ‘putting more money into the pockets of retired Australians’.

And he led with some good news for most older Australians, ruling out including the family home in an assets test for the Age Pension.

The Government’s announcement follows continued pressure from the Productivity Commission (PC) to conduct a retirement income review prior to increasing the superannuation guarantee rate from 9.5 per cent to 12 per cent.

The review will examine the machinations of the Age Pension, compulsory super and voluntary savings.

“It will be very important in helping to determine future policy positions by creating a fact base of what is happening in the system, particularly as we have an ageing population, people are living longer and our superannuation pool is growing dramatically over time,” said Mr Frydenberg.

He said the Government would not consider including the family home in the assets test.

“Our position hasn’t changed and that will never be part of our policy,” he said.

So far, the Government has announced very broad terms of reference for its inquiry.

Mr Frydenberg and Assistant Superannuation Minister Jane Hume said in a statement the review “will cover the current state of the system and how it will perform in the future as Australians live longer and the population ages”. It would “establish a fact base of the current retirement income system that will improve understanding of its operation and the outcomes it is delivering for Australians”.

The terms of reference say: “It is important that the system allows Australians to achieve adequate retirement incomes, is fiscally sustainable and provides appropriate incentives for self-provision in retirement.”

The review will examine the three pillars of the retirement income system: a means-tested Age Pension, compulsory superannuation and voluntary savings, including home ownership.

It will also identify how the retirement income system supports Australians in retirement; the role of each pillar in supporting Australians through retirement; distributional impacts across the population and over time, and the impact of current policy settings on public finances.

The family home is off the table, as is, it seems, increasing the pension age to 70. It remains to be seen whether superannuation concessions and dividend imputations will be analysed. However, the superannuation guarantee increase remains government policy.

“Our position hasn’t changed, it’s legislated,” said Mr Frydenberg.

“The Productivity Commission recommended we conducted a review; we’re going ahead with the review. Our focus is putting more money into the pockets of retired Australians.”

YourLifeChoices has been researching and analysing retirement income and retirement affordability since its establishment in 1999. Over this time, despite the growth in superannuation savings, little progress has been made for many retirees, says YourLifeChoices publisher Kaye Fallick, with money spent on superannuation concessions (according to the Australia Institute, currently $43 billion) set to overtake that spent on the Age Pension (currently $48 billion) in 2024.

“The retirement income review is the first comprehensive review of the different facets of retirement income for decades. It presents a real opportunity to get the settings right – and to ensure a more equitable division of Australia’s wealth pie,” she says.

“Sadly, it seems it is already compromised. Any review of retirement income should include all aspects of retirement funding, not just super, private savings and the Age Pension – but also the very significant role the family home has to play. If the family home is not important, why then did the Federal Government introduce a greatly expanded Pensions Loans Scheme in July?

“Unlike most Federal Government reviews and inquiries, this review is not required to offer recommendations. It is, instead, being asked to put ‘facts on the table’ for the government of the day to consider.

“So it is fair to ask if we could be spending millions on a review that goes nowhere and does nothing, while so many retirees continue to live out their days in genteel poverty?”

The Actuaries Institute also has succinct views on what should be achieved by the review.

“The overarching objective should be to ensure that Australians can confidently live their retirement years in dignity. At a minimum, it will require better integration of the current disparate Age Pension and superannuation systems, but it can go much further and better integrate with our aged care and healthcare systems. In assessing any proposals for reform against such an objective, the institute has considered three guiding principles: Australian retirees should have financial security; the system should be efficient without unnecessary complexity or costs, and it must be fair,” it said in a paper released earlier this month.

“Ultimately, at stake is the opportunity to deliver landmark reforms which will deliver a better quality of life to Australian retirees in a way that is efficient and fair for all Australians. The Actuaries Institute encourages that debate to start now. If it does not, Australians may lose the opportunity presented by the fiscal headroom of the projected declining Age Pension costs, and the lead time we have to prepare for known longer-term changes such as patterns of home ownership and work, longevity, and growing health and aged care costs.”

The review will be overseen by a three-person panel led by former senior Treasury official Michael Callaghan accompanied by Carolyn Kay, a member of the Future Fund’s board of guardians, and Deborah Ralston, chair of the Self-Managed Super Fund Association and a member of the Reserve Bank’s payments system board (and coincidentally a spokesperson for the Alliance for a Fairer Retirement System which opposed Labor’s franking credit policies).

The Opposition has concerns about the Government’s commitment to the review, evident, says Shadow Treasurer Jim Chalmers, by the timing of the announcement.

“If the Government was serious about this retirement income review, they wouldn’t have dropped it out on the eve of (AFL) Grand Final weekend, hoping nobody would notice,” said Mr Chalmers.

What would you hope to see included in the review? Do you think it’s fair that two key items have already been removed from the table prior to the review?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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123 Comments

Total Comments: 123
  1. 0
    0

    Nothing in it for those who plan and save for their own retirement. They will get fleeced even more.

    • 0
      0

      You got that right – and that includes you, who had a good run without all the modern destructions that rip the heart out of your retirement plans… it isn’t just the fortunate that plan, you know – but you simply can’t see around corners… or control piss poor handling of your economy or the company you are holding together so the bosses can crash it into a wall, leaving you on the street at 50 or so and recently divorced etc…

      Not all beer and skittles, you know….

    • 0
      0

      Very uncaring bear, spare a thought for an old lady or man who pay their rent each fortnight and their bills and look at what they have left which is not enough for their food and medicines. They decide not to eat every meal in order to get to the next fortnight. And it happens all over again and again. They feel desperate and sad even depressed.
      Do you enjoy a wine with your restaurant meal? Do you go on holiday even overseas?
      Count yourself lucky for all the lovely things you can manage financially and be glad you are not in the position of a single renting pensioner.
      I do.

    • 0
      0

      I don’t drink wine or eat out at restaurants either.

    • 0
      0

      You get franking credits even when you don’t pay tax.

    • 0
      0

      If I get franking credit then I have paid tax as they are a withholding tax the same as PAYG and PAYE.

      Are you saying that if anyone over pays their tax by paying too much withholding tax then they shouldn’t get a refund?

  2. 0
    0

    Excuse me for being cynical but will it be the usual $1.50 per fortnight?

    • 0
      0

      Triss… and the usual 2.5% increase of parliamentary salaries to give themselves an extra $192 per fortnight because they worked so hard to achieve an Age Pension payment increase in September 2019.. the usual $6.80 Age Pension and 0.40 cents towards the Supplement for single age pensioners, per fortnight. Oh…did I mention the 0.80 cents per fortnight in Rent assistance? How gracious of them!!

  3. 0
    0

    I can imagine what will happen another 10c instead of anything that really will make a difference, and all the politicians running around crowing and flapping their wings like crows over a dead pensioner.

  4. 0
    0

    “He said the Government would not consider including the family home in the assets test”…Hope he is not having a Julia Gillard and a Tony Abbott false statement moment.

    • 0
      0

      As many times before – an asset such as that bought and paid for out of post-income tax, is an absolute personal ownership thing, and must not be taxed again in any way… it is owned, lock, stock and barrel, and should have no part in any assets test – and nor should anything else bought out of honestly paid, post-income tax….

      Reducing pension for having bought and paid for assets is double taxation…. no matter how you look at it…. and Colonel C’Link reduces pension in accordance with any sale income derived and banked…. how many bites does The Good colonel want at the one cherry??

      Tell ’em to go to buggary….. and mean it at the election…. hammer your opposition to bring in a reality based assets test….

    • 0
      0

      Furthermore, since it was not treated as an asset for taxation purposes along the way to its final ownership – it cannot now be classed as an asset…

      Simple enough…. leaving it out is merely compensation for not including it – like a serial house owner can – for tax deduction while it is being paid for through the nose…

      Same applies to EVERY OTHER OWNED ASSET, BTW – No Double Taxation!!

    • 0
      0

      I agree with Trebor. If you buy a home for 300k. and then pay rent to the banks.. oops I mean interest for 30 years, Then your cost on purchase is 300k Plus the interest paid. In my case near 310k. So total cost to me is 610k for that home. Now add on the cost of rates, insurance, maintenance, renovations, stamp duty etc. Over 30 yrs probable cost is 180k. so add it up. To date my home has cost me approx 790k to own and live in. It is worth around 780 to 820 now. Everything has been paid for in after tax dollars. So every time I pay the bank $1000, the government has taken $300 in payg tax. If they want to treat a house as an asset then all costs paid should be able to be offset against it…. otherwise what is the point of owning a home?

    • 0
      0

      So does the govt assess me on an actual 30k gain after costs, or do they assess me on valuation price minus bought price (520k). or do they assess me on the market value? 820k. I don’t trust governments.. any govt.

  5. 0
    0

    What I see as important is firstly that the family home is excluded from the assets test and secondly that the increase in age eligibility by Labor to 67 will not be increased to 70. To include the family home would be unfair due to the differences in values, not only from state to state but from cities to country towns. The legislation to try and overcome this obvious disparity would be almost impossible. The retirement age will sometimes depend on the type of work carried out as those who work physically may not have the stamina to continue to a later age and this is discriminatory.

  6. 0
    0

    It would appear that the review panel has been selected to give the government the “facts” that the government want to hear. Governments of all colours use such devices to obtain so called “independent” advice which is then used to legislate in the way the government wanted all along.
    Given the LNP’s favouring of the well-off it confirms why there is no one from a social welfare background on the panel. Inequality is an ever increasing fact of life in Australia and I don’t hold out much hope of the current government doing anything to modify that.

    • 0
      0

      Another Commission of Useful Idiots handed a hefty retainer and a rubber stamp and told to go for it???

    • 0
      0

      I remember a comedy show many years ago “Yes Minister” and one of the thing highlighted was that no government calls or initiates any enquiry without ensuring the result is what they want, though on second thought there are a number of enquiry ended where Our benevolent big brother has decided it is secret to save us any anxiety.
      ALL governments stack the members or enquiries and the like with people they know will support what they want.

    • 0
      0

      Yes Tanker, another confederacy of dunces for us to pay for.

    • 0
      0

      I am sure you don’t mean “Usefull” in your comment above TREBOR, I can think of many other names to call the idiots but useful is not one of them, Useless maybe, what do you think of that one for eg?.

    • 0
      0

      I meant in the limited sense of being a blind follower… one that suits the party first and foremost and has no real mind of his/her own…. Useful ONLY to the party, Comrade…

    • 0
      0

      I noticed Don Pedro Castella (Peter Costello or Costalot), Il Treasurio to Don Juan Huarte (The Rat Weasel John Howard) of Central American potentate fame… was on tonight talking about super … what could it mean to him? His overly massive preferential ‘super’ is paid for every time on the dot and fully indexed for life, out of the $130Bn he and Don Juan stole from Il Treasuria Nacional and lodged in The Caymans so it pays no tax here.

      And that’s just this parasite’s parliamentary gig…

      I don’t think we want to hear from him or his kind………. they have ZERO idea what they have done and continue to do to this nation and its people… and they care even less..

      GEXIT anyone? Global Economy Exit?

  7. 0
    0

    It would appear that the review panel has been selected to give the government the “facts” that the government want to hear. Governments of all colours use such devices to obtain so called “independent” advice which is then used to legislate in the way the government wanted all along.
    Given the LNP’s favouring of the well-off it confirms why there is no one from a social welfare background on the panel. Inequality is an ever increasing fact of life in Australia and I don’t hold out much hope of the current government doing anything to modify that.

  8. 0
    0

    Excuse my cynicism on this news and any said benefits for those on pensions. I am 72, was medically retired in 1988, deemed unemployable back then, my records of the incident that caused my retirement were lost/never put in to the compo section by the witness to my injury. My wife and & I then had to raise three children on an older sickness pension. Through the loss of both of our Parents we were able to get a home, we now own but now struggle on the aged pension.

    Whenever the 6 monthly increase in pensions is about to come in, the thing notices in our shopping is prices for essentials go up. I have watched for around 10 years now and coined the term, High Cost of Low Inflation, and that happens as a result of so many of the general bare packaged nessecities have in general gone up ever so slightly but they have been reduced in size, meaning one has to buy more items, that overall cost more.

    These include Soaps, was 125gm now most are 94gm, drinks down is size and increased prices, Biscuits, cheeses, breakfast cereals, are just a very few items that have gone that way. Many other items have been reduced in sizes from the older (not that long back either) of rounded weights eg, 100gm down to 93gm 1.25ltr down to 1.1ltr A visit to supermarkets of all brands finds the amount of delicatessen items, up by 20% at least.

    Companies that also change canned product sizes, one being to reduce Baked Beans from 250gm down to 240, now to 220gr. Another removing the same product size in the 200g range to under 200, at same old price and introduce a lager can that’s more expensive. The old 500gm jars of jam, have gone from the shelfs and replaced by 400gm for one company and 480gr by another.

    All these and many other items, including both essential and non essentials have been reduced in size, yet the prices have stayed the same as what the larger items cost.

    I doubt many if any of our politicians and those on high incomes would really notice these areas. but even a 5% reduction in size of a product, and the price remains the same, hurts aged pensioners in more ways than the governments would like to consider.

    Its no different also when the pension is split with different components in it, and the increase in pensions are also applied on the % base of each component rather than an overall amount of the total pension payment.

    One could go on

    • 0
      0

      Totally agree with you changes about ‘downsizing’ of foods. I make a point of reading labels both for quantity and nutrition reasons, and soon – due to so many downsizings – you won’t be able to tell the difference between real foods and the ‘Coles Mini Giveaways’. And it is not just food items – fly sprays, toilet paper, hand towels – all are shrinking.
      When I do have a bit of chocolate, I love the peppermint Freddo Frog, saw one recently so bought it. Opened the pack – and nearly feinted. Suddenly it has become a ‘mini’ frog, but still in the same size packaging. They cut down the size of the actual food, not the size of the packaging/cans, etc.
      Pensioners are also penalised shopping in other ways. A local store often promotes ‘spend $200 on groceries – get $20 free vegetables/fruit’. Which pensioner could spend that on groceries?

    • 0
      0

      yes I remember in school many years ago and this is one of the few things that stuck for some reason. A teacher said that companies can not be trusted that is why the government (in those days governments did care about the constituents) all sizes are deemed, so that there could be no cheating like now, just about everything has shrunk in size and increased in price, and as everything is even the same product from different manufacturers in is a different size, it is impossible almost to compare products, I know the price per whatever is there in very small printing, but very hard to read.

    • 0
      0

      Changes? Manufacturers have a choice: when their costs go up they can either increase the cost to the customer, or reduce the amount packaged and keep the shelf cost the same. Ether way, ultimately the customer pays more. Its just that actually handing over more cash is more evident than reducing package size.

      sunnyOz, it is not just ‘pensioners’ who may not be able to afford $200 on groceries. No supermarket near me offers such an incentive as you mention either. Coles and Woolies do offer ‘points’ incentives of the ‘spend $130 a week for 4 weeks’ to get extra points but if you don’t spend that amount the next offer you get actually goes down! Spend the amount and the next offer will increase. Supermarkets are in the business of selling stuff and making a profit. They are not charitable organisations looking after pensioners any more than any other shop on the high street is. Even the discount days for pensioners are aimed at retaining the customer base i.e. you may shop tthere on days when there is no discount as well!

    • 0
      0

      Who spends $200 a week on groceries? We might at Xmas with a houseful but about half that or a bit more most of the year. Buy half price and watch for when it comes around again as it is cyclical. Buy specials don’t pay full price on most things. Load up when they are half price to last til the next time. Say I pay $50 I can usually expect to same that much.

    • 0
      0

      Damn – when did a schooner become 330 ml? Curses …

  9. 0
    0

    Excuse my cynicism on this news and any said benefits for those on pensions. I am 72, was medically retired in 1988, deemed unemployable back then, my records of the incident that caused my retirement were lost/never put in to the compo section by the witness to my injury. My wife and & I then had to raise three children on an older sickness pension. Through the loss of both of our Parents we were able to get a home, we now own but now struggle on the aged pension.

    Whenever the 6 monthly increase in pensions is about to come in, the thing notices in our shopping is prices for essentials go up. I have watched for around 10 years now and coined the term, High Cost of Low Inflation, and that happens as a result of so many of the general bare packaged nessecities have in general gone up ever so slightly but they have been reduced in size, meaning one has to buy more items, that overall cost more.

    These include Soaps, was 125gm now most are 94gm, drinks down is size and increased prices, Biscuits, cheeses, breakfast cereals, are just a very few items that have gone that way. Many other items have been reduced in sizes from the older (not that long back either) of rounded weights eg, 100gm down to 93gm 1.25ltr down to 1.1ltr A visit to supermarkets of all brands finds the amount of delicatessen items, up by 20% at least.

    Companies that also change canned product sizes, one being to reduce Baked Beans from 250gm down to 240, now to 220gr. Another removing the same product size in the 200g range to under 200, at same old price and introduce a lager can that’s more expensive. The old 500gm jars of jam, have gone from the shelfs and replaced by 400gm for one company and 480gr by another.

    All these and many other items, including both essential and non essentials have been reduced in size, yet the prices have stayed the same as what the larger items cost.

    I doubt many if any of our politicians and those on high incomes would really notice these areas. but even a 5% reduction in size of a product, and the price remains the same, hurts aged pensioners in more ways than the governments would like to consider.

    Its no different also when the pension is split with different components in it, and the increase in pensions are also applied on the % base of each component rather than an overall amount of the total pension payment.

    One could go on

  10. 0
    0

    This mob believe that the pension is a handout even though we paid our taxes to guarantee us an aged pension and they say that they are going to give us more? Better throw those walkers away and start looking for a job goodbye Franklin credits

    • 0
      0

      Yes, ollie, when the handout is really the politician’s pensions with some ex MPs being on it for 20 or 30 years. Some of those MPs were in their thirties when they left Parliament so could easily be a burden to the taxpayers for 60 plus years.

    • 0
      0

      Yes we know who the Leaners are in this society – and it ain’t the pensioners.

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