ABS data: asset-rich older Australian in poverty

Around 1.2 million asset-rich older Australians are living in poverty.

Despite being asset rich, nearly one-third of older Australians living on a low income are at risk of experiencing financial hardship.

Figures released last week by the Australian Bureau of Statistics (ABS) confirm what has been widely recognised for some time – that asset-rich but income-poor is an all too common story for many older Australians.

According to the ABS Program Manager of Labour and Income Branch, Jacqui Jones, in the year 2013-14 low-income households accounted for 54 per cent of the top 40 per cent of wealthy Australian households, which are defined by the value of assets less the value of any liabilities. On the other end of the scale, just 19 per cent of younger low-income households had wealth in the top 40 per cent of Australian households.

“While many older low-income households have liquid assets such as bank accounts and shares available to them, there was large variation in the amounts available; one-third had over $50,000 worth of liquid assets in contrast to one-third of older low income households which had less than $5000 in these sorts of cash assets,” Ms Jones said.

Almost three-quarters (74 per cent) of older low-income Australian households owned their home outright, owing nothing on repayments, while just eight per cent were renting. In contrast to this, just one-fifth (19 per cent) of younger low-income households owned their home outright, while almost two-thirds were either renting or had a mortgage.

“Half of all younger low-income households have less than $1000 in liquid assets and two-thirds of younger low-income households had liquid assets of $5000 or less” said Ms Jones.

The average housing costs were $106 per week for older low-income households and $215 per week for younger low-income households.

In 2013-14 when the data was collected, the number of people living in low-income households was just over 4 million, with 1.2 million being older households. In both older and younger households, the equivalised disposable income was between $205 and $511 per week – recognised as being below the poverty line (set at 60 per cent of the median income for all households).

The ABS categorises older households as those in which the reference person (either single or in a couple) is aged 65 years or older. Younger low-income households are defined by having a reference person aged younger than 65.

Read more at abs.gov.au

Opinion: Need for policy to end poverty

The ABS data tells us that despite being asset rich and (in many cases) free of liabilities, over 4 million Australian households were living below the poverty line in terms of disposable income in 2013-14. What this disconnect exposes is the gaping hole in availability of comprehensive financial support services for Australians in need, as well as the necessity for better policies.

In March, the Actuaries Institute released a Green Paper, titled Unlocking Housing Wealth, which looked at a range of policy ideas geared at helping older Australians gain access to their wealth in retirement. This Green Paper represented a huge step forward in recognising the need for solid policies in support of pensioners – rather than finding new ways to save the Government money.

For older Australians in low-income households, having wealth tied up in the family home regularly means relying on the Age Pension for disposable income, which is often barely enough to cover basic bills. The fear of jeopardising Age Pension entitlements – as well as the high-interest repayments associated with the commercial equity release products – means many older Australians are stuck living below the poverty line.

If the Government wants to lift the 4 million Australian households above the poverty line, it needs to look at enacting fair policies that will enable asset-rich, cash-poor Australians to access the wealth in their property without having to sell off assets. These policies should make it easy to unlock the wealth of their assets and offer fair repayment structures so that living in retirement is both comfortable and manageable for Australians, older and younger, and for years to come.

What do you think? Would you be inclined to borrow against your assets if the right scheme was available? Can you see any drawbacks to the government offering equity release products?

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    COMMENTS

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    Chris B T
    6th Apr 2016
    8:44am
    Anything that is Equity Based is a very poor option. There needs to be a far Greater Oversight on these sought of products.
    The liquid asset now received has problems and how this is treated by Means Testing.
    As in Mean by Centerlink.
    Scrivener
    6th Apr 2016
    8:53am
    Just let older retired pensioners earn a little money to supplement their Centrelink incomes without it being a disincentive. I could earn money writing but I don'r because writing offers a very sporadic and lumpy income and there is no way I could keep up with notifying Centrelink every time I get a small cheque. So I don't - and writing is my passion.
    There are so many ways - including the ones set out in this article - that a pensioner can employ to help maintain interest in life and income. But the loopy government won't let us.
    Why is that the people we put in Canberra to foster our needs and interests then become policemen? Why is it that idiots elected to Canberra suddenly think they own Australia. Listen to the subtext of the current slosh on State v Federal taxes - "It's our money we have to give to the States." Where the hell do they think the money comes from in the first place? They grow it on the trees that line the leafy boulevards of Canberra... I knew that!
    Use Australian taxpayer money for Australian taxpayers - and that includes those who spent their lives working and paying taxes. Force the crooks to pay their share of taxes. Wow! 250 billion dollars - possibly trillions, sent offshore to dodgy tax havens. If you are going to turn a blind eye to the big time swindlers at least let retired people earn a little money legitimately - even if it is by using their assets or by doing honest work, and do it without penalising them. Keep them agile.
    Idontforget
    6th Apr 2016
    9:13am
    Totally agree. I have a farm. I could greatly increase production that would also have economic benefits down the line for the wider community but Centrelink would cut my pension payment. So my property lies unproductive.

    However, I work for my next door neighbour on his farm, and that allows me to earn twice as much as I would from my own farm before there is a cut to my pension payment.

    And we pay a fortune to Politicians to come up with something like this.

    And before the hyenas come yapping in, my house and farm is only worth approximately 20% of what the median price of a house is worth in Sydney.
    Grateful
    6th Apr 2016
    10:22am
    Good on you Scrivener. The whole "system" is a joke and a nett result of politicians of both persuasions using their temporary "power" by messing around with all the rules and laws to try to garner enough votes to retain that "power". A classic example of a horse designed by a committee turning out to be a camel.
    And, we certainly do have too many layers of government forcing us into that farce which we saw at CHOGM last Friday. How right you are with your disgust at one government claiming ownership of what is every Australian's money. POWER!!!! Disgrace.
    Grateful
    6th Apr 2016
    10:44am
    P.S. Re your "keep them agile" comment, how ironic in what I see as the only thing this government has done for the elderly is to reduce the cost of high cholesterol and blood pressure medication while stressing them out trying to survive on their pension and/or threats on their homes!!!!!
    Anonymous
    7th Apr 2016
    8:22am
    Yes, the system is a joke alright! I'm with all of you on this. The removal of incentives and rewards is what's causing our economic demise. It's STUPID.

    Now we face the introduction of a means test that actually pays people to shed their savings. My neighbour worked out that after Jan 2017, it will COST them $20,000 a year, rising with inflation, to have an extra $500,000 in assets. So if they sell their $800,000 home and buy one worth $1.3 million, they will be $20,000 a year better off. Good way to help the housing affordability crisis, eh? Pay retirees to upgrade their accommodation?

    Another friend figured out that if he gave $500,000 to his kids now, at age 60, he'd be at least $20,000 a year better off in retirement, and the kids would be better off as well and not have to wait until he dies for their inheritance - by which time they probably won't need it anymore.

    What kind of STUPIDITY is this that drives people to approve policies that make it beneficial for people to stop working and saving and claim higher pensions?
    Phil1943
    6th Apr 2016
    9:17am
    Although the present government seems focused on finding ways to force older Australians to sell their homes and downsize into little boxes in tower blocks, it just ain't gonna happen. Too many of us planned for our retirements and can live - albeit not in luxury, from the resources we managed to stash away in our own super funds, mostly because we own a house and don't have to pay rent.
    If the government could come up with some sensible plan to unlock the value of my home equity I'd happily embrace it to ensure I can maintain a reasonable quality of life until the inevitable last trip in a hearse. And that would also mean I'd never need the age pension.
    But when I hear all the rubbish about doing away with stamp duty and taxing all homeowners something like $7500 p.a. just because it's easier to rob us than to chase corporate crooks or resist the urge to purchase a fleet of submarines, I don't have much faith that anybody in Macquarie Street or Canberra cares enough about us to come up with an equity release scheme that would be fair and genuinely help us.
    aly_rob60
    6th Apr 2016
    9:25am
    We shouldn't have to sell our homes and live in little boxes.....this government is forcing us to the grave with their bloody mindedness and total disrespect for the people who put them in power and who have paid their taxes to contribute to the infrastructure that we have now!

    We worked hard, paid all our bills on time, rarely travelled, just to pay off a mortgage and live the Australian dream of owning our home and having something to leave for the kids.

    We are not that old (mid fifties) and find ourselves in this situation (asset rich, cash poor) because we have had to dip into our savings, just to live! We have not been able to find work in over three years, fast approaching four!

    We are leaving the country for good....fed up with being bled dry and watching illegal immigrants, rich chinese and would-be terrorists being handed everything on a platter!
    Grateful
    6th Apr 2016
    10:09am
    Doesn't this just keep telling us that our "welfare" payment system is a dog's breakfast. Just aside from the asset rich income poor argument, why are comparatively "rich" people, way above the poverty line receiving "welfare" payments which they genuinely do not NEED and denying genuine recipients from at least having a half decent quality of life? Start with a complete overhaul of the assets and income tests and the definition of "entitlement" against "need".
    Just a window of opportunity regarding some of those with valuable homes but "living under the poverty line"(there would be thousands in that category), where applicable and mutually agreeable, provide huge incentives for sons and daughters to purchase those homes from their parents at a set discount rate from the "market price", with no stamp duty, with funds made available for borrowing at below "market" rates, set for the life of the parents, and allow those parents to continue to live in the homes free of all costs. Even, maybe, stay, at a set discount to market rental thus enabling those children to negatively gear that property. Everyone wins.
    Those children are more than likely going to inherit those house "for nothing" anyway.
    Bonny
    6th Apr 2016
    11:27am
    That opportunity already exists as long as you do it five years before your apply for the pension.
    Blossom
    6th Apr 2016
    1:30pm
    aly_rob60
    Little boxes built so close together, touching or joined should be called fire boxes. I guarantee they are built using bricks the same as chimneys are. If one house/unit/townhouse/apartment catches fire you can expects to catch fire or at least be damaged.
    In most cases our grandparents or even our greatparents houses were built on a very tight budget when housing materials were in short supply. Even in the early to mid 1950s you could not get corrugated iron to build a garage, carport or any other outside building.
    Houses that were built and sold in the later 1940s - mid 50s under contract by Govt. Housing Depts were worth very little compared to what they are now even taking into account wages etc.
    Housing in some areas of Adelaide is rising fast, partly becuase the value of land is being pushed up, not just by demand but by the Valuer-General's Dept. People building new houses on blocks that have been sub-divided are being charged as much or more than larger blocks are. The Councils, Govt. Depts. don't care because they are getting more revenue. In many cases the older generation cannot buy a house on a smaller block of land in the same area as they currently live on what used to be a standard size block of land with the money the sell their old house for. The only way most achieve that is to go to an area with less facilities including health further away from Adelaide city ot even out to a country area.....go into a retirement village, or wait until they need to go into an Aged Care Facility.
    Gra
    6th Apr 2016
    4:40pm
    Bonny, what opportunity already exists? Please enlighten us.
    Bonny
    6th Apr 2016
    5:01pm
    You can give away whatever you wish as long as you do it five years or more before you apply for the pension.
    Anonymous
    7th Apr 2016
    8:30am
    Grateful, if we keep denying those who worked hard and sacrificed to save the benefit of their endeavours, we'll have very few able to support themselves in old age and the pension bill will skyrocket and then there will be less for everyone.

    The socialist approach WON'T WORK, however nice it might sound.

    What we need to do is restructure the pension system so that rewards and incentives are maintained and people are ENCOURAGED to save for old age, to work and earn when they can, and to plan responsibly. And to be honest! (The current system rewards dishonesty richly!)

    Please read the second post on this page - started by Scrivener - carefully. We need the populace to understand the real flaws in the system and to withdraw from insisting that the solution is to strip those who have earned and saved of all that they worked for to give to people who claim (rightly or wrongly) greater need. When there's no reward for effort, effort will cease.

    There have been suggestions that a universal pension plus a fair tax system in retirement would work better than the current system. It may well be the solution. But if we keep on our current path of taking from everyone who has struggled to acquire a little, we will destroy the pension system completely and there will be NOTHING left for the genuinely needy.
    student
    7th Apr 2016
    9:42pm
    Today I signed the contracts for a reverse mortgage. I am asset rich but cash poor. My plan is to live here while my son and d-i-l build a granny flat then move there. However, I need to paint my home before I sell it, thus the reverse mortgage. I have to give away some of my independence so I can stay out of assisted living. So the reverse mortgage will only be used for 2 years at most.

    That is my plan. I am sad I have to do this but ... that's life. The rich get richer and the poor get poorer. I am lucky I have children who care for me and about me. But that doesn't solve the inequality in Australia (or the world for that matter) With the recent news of the bribery and corruption in the world of the elite and powerfull, I doubt anything will improve the case of the non-wealthy. They, the wealthy elite, make the rules and sure wont change the laws to disrupt their luxurious life style.
    nena
    6th Apr 2016
    9:18am
    I´m rich!!! because I´m asset poor and just enough cash to live, while poor, but with dignity. I´m one of the few fortunate human beings on the planet who is a free, compassionate, non-materialist and critical thinker...
    Travelling Man
    6th Apr 2016
    10:36am
    You're an absolute gem, Nena. I can see you're not into the "blame game" but enjoy life to the full by meeting it head-on. I would also wager you have a wonderfully diverse cultural life. Well done! ????
    biddi
    6th Apr 2016
    1:07pm
    Super, Nena! A spin-off from veganism! x
    Blossom
    6th Apr 2016
    1:33pm
    Asset poor -- no self supplied roof over your head --rent assistance or housing commission rental.
    nena
    6th Apr 2016
    3:20pm
    Nop, Blossom, I own my little home, enough for my pet and me. A few shrubs in the small yard for the birds picking the flowers while singing so beautifully that enriches my soul. I´m happy.
    Patriot
    6th Apr 2016
    5:14pm
    Nena,
    I'm much in a similar situation like you and totally agree!

    Unfortunately, those who we elect to act on our behalf to look after our welfare seem to turn into "Greedy Monsters" once they are elected and then start to serve Foreign Masters who will destroy us (and ultimately them) and ensure that they (The Banksters & Cartels) own everything there is to own.
    In the process destroying the planet and ALL who live upon it.

    If only they could leave "Well Enough" alone!?!?!?
    Anonymous
    7th Apr 2016
    10:30am
    Nena, I'm guessing you are ''rích'' because other people are supporting you (apologies if you are not a pensioner!). Good luck to you, and great that you are happy with your lot. But have you ever considered that if the government continues to bash people who worked hard and saved aggressively those people might give up that behaviour and spend up big, and then there will be no money in the pot to support pensioners?

    The current message to workers is ''don't save for retirement. We punish anyone who saves above a low threshold. Unless you can be quite rich, it's better to be relatively poor.'' If we keep pushing that message, there will be far fewer people looking after their own interests and far more putting their hand out for pensions, and then there will be much less to pay pensions to the needy.

    This simplistic view of pensions as ''welfare for the needy'' sounds nice, but it can't work in practice unless pensions are very much lower than they are now. Wait for it! The reductions are coming.

    If you want a welfare system that pays a living income to the needy, you had better stop bashing those with a little more than you have and start defending their right to benefit from their efforts. Otherwise they, and their kids, will change their behaviour and join you in the queue for a full pension.
    Bonny
    6th Apr 2016
    10:27am
    The main problem is that people will only spend the interest on their capital and not their capital. Personally I have trouble working out why? After all it's your money so why not spend it.

    The house is also a lumpy asset which is the most inequitable part of the welfare system. It needs to be included in the assets test ASAP.

    Also if you have assets then any pension you receive should be deducted from your estate when you die. HECS debts should also be deducted from your estate as well.
    Travellersjoy
    6th Apr 2016
    11:17am
    Better to go straight to death duties like we used to have before the toffs decided they wanted everything for themselves.

    They claim they earned their wealth, without admitting how much government policies have given them a hand up - and another hand in OUR pockets to fund all the services they use.

    All smoke and mirrors to conn us into feeling sorry for wealthy people, and doff our caps because they are just so smart. Smarter than us anyway because to many of us swallowed the sugar coated sh** sandwich, and keep on voting for the LNP rich people's party.
    Bonny
    6th Apr 2016
    11:25am
    It is not fair that some people have to fund their retirement while others have more valuable assets but get the full pension.

    A couple with a $2 million dollar house can get the full pension whereas another couple with a $500,000 house plus $1.5 million in other assets gets nothing. This is grossly unfair.

    It has nothing to do with wealthy people at all. Also nothing to do with death duties which we already have in the form of probate.

    It is also unfair that our kids have to pay back their HECS debts whereas retirees can accumulate big HECS debts and never have to pay them back.

    Both the LNP and Labor are now looking at this very issue.
    Abby
    6th Apr 2016
    12:15pm
    Well put Bonny
    Blossom
    6th Apr 2016
    1:49pm
    I feel it depends on the value of the house. Some people are still living in old houses they have had since during or just after WW11. Houses were hard to get. There was actually a waiting list. Some families lived with their parents until they could buy a house. I know of families who did that 50+ years ago.
    In some the quality of building materials was not good but they were in short supply so you bought what you could get. Because some have sold their houses and $600,500 + houses have built all around them their values have increased but the old structure actually lessens the sale price of the value of the land when the property is sold. Some manage to keep their homes and pay Govt Rates and taxes on them. The higher your current land value the more sewerage rates you pay regardless of whether is one person adding to sewerage or 10. That is hardly fair....Some live in housing commission housing which the Govt owns and is supposed to maintain structually.
    Gra
    6th Apr 2016
    4:45pm
    Says Bonny who openly stated here not so long back she doesn't own a home. I wonder what Bonny has contributed to this country that she is so ready to shoot down pensioners who do own their home?
    Farside
    6th Apr 2016
    5:23pm
    well Gra, I own my own home, have done since I was 21. I have paid plenty of taxes, put three kids through school and university, all without government support except for a disabled parking permit. Having paid taxes does not entitle you to receive a government safety net; that is for those who need them. The cash poor, asset rich class do not need welfare handouts while they choose to sit on their assets so their inheritors are advantaged. Let them move into something they can afford or alternatively borrow against the asset HECS style. As a society we cannot afford to support millionaire welfare recipients while the disadvantaged stay on struggle street.
    Bonny
    6th Apr 2016
    5:29pm
    It's irrelevant if I own a home or not. The home is an asset and should be included in the assets test for the pension. It is so inequitable and unfair.
    In Outer Orbit
    6th Apr 2016
    7:45pm
    I totally agree Bonny. I keep suggesting that the asset test is simply scrapped. There is no need to live in poverty in a giant house just to protect your wealth. It's an arbitrary, self-inflicted utterly bonkers system, plain as the nose on our faces. I say end all the bureaucracy, fiddles and distortions to markets. Pensions for everyone. Nobody tell me that it can't be afforded in one of the richest countries in the OECD; plenty of other countries manage to do it - the only obstacle is the uber-wealthy minority defending the status quo, ie a 'winner-take-all' system. If the national wealth was distributed more fairly, it wouldn't be all the battlers and the hard working responsible people in the middle strata who would have to lose out - it would just be the greediest b----ds sitting on the top of the pile who manipulate and exploit the rest of us.
    Anonymous
    7th Apr 2016
    8:31am
    The assets test is stupid, unfair, and economically and socially destructive. And the recent change to it made it 1000 times worse.
    Anonymous
    7th Apr 2016
    8:53am
    I love your logic, Bonny. Make sure nobody is rewarded for working hard and saving. Strip retirees of their assets. Deny anyone the right to work to benefit their children. And then wonder why the hell the nation is going to hell in a basket, 'cause nobody wants to work for the good of others.

    You make no sense at all. People want to protect their assets because they don't know how long they might live and what their future needs might be. And yes, some want to help their kids have a better life - or provide a little for grandchildren. I want to leave my disabled grandson something so he won't live in poverty on a pension all his life. But apparently the ''Gospel according to Bonny'' declares that I don't have the right of free choice and I don't have the right to benefit from my past efforts.

    CRAP! That's communism, Bonny. It STINKS and IT DOESN'T WORK.
    Farside
    7th Apr 2016
    9:28am
    Rainey, you have every right to free choice. The point is that to remain asset rich and cash poor is free choice. If one wants told onto assets to benefit their estate then fine, just don't cry poor and put the hand out for welfare that should be directed to those genuinely need it.
    Anonymous
    7th Apr 2016
    9:36am
    So, Brian, it's okay to CHOOSE to spend up big in working life and put your hand out for welfare later, but NOT to save during working life and ask for a little government help when your investments aren't returning adequately, so that you can benefit from your savings later?

    That's HYPOCRITICAL AND SELFISH IN THE EXTREME.

    If people sacrificed their savings for the NEEDY, I'd say ''fine''. But for the most part they are sacrificing to give more to the GREEDY who lived more lavishly in earlier life and CHOSE not to save as much, and now they want to deny those who did save the benefit of their savings.

    NO BRIAN! YOU ARE DENYING PEOPLE FREE CHOICE WITH YOUR MISGUIDED ASSERTIONS.

    People have EVERY right to hold on to their assets to benefit their children and grandchildren if that's what they saved for, and until you deny pensions to people who have expensive holidays, restaurant dinners, new cars, and nice clothes during working life, don't you dare tell me someone who went without those things to save isn't - in a fair world - entitled to the same benefits in retirement.
    Farside
    7th Apr 2016
    10:06am
    There are leaners and lifters in this world. But yes people are free to choose to spend rather than save their income. If they have no savings when they reach retirement then it is the welfare safety net and a big drop in lifestyle for them. Before you cry foul about their lavish consumer lifestyles, just think about the economic multiplier and resulting benefit to the community from their spending, and how many people are employed and providing for their own futures as a result. Certainly more than if they were to entirely rely upon the frugal or miserly. In my experience the biggest spenders have also been those with the biggest incomes and the biggest super funds, holiday homes and lavish lifestyles.

    Those who choose to save and enjoy a modest lifestyle will be able to do that longer into retirement while their savings last. Most people are not being asked to sacrifice their savings for the needy; they will enjoy their savings and the welfare budget will be entirely directed to them rather than propping up the lifestyles and estates who could otherwise provide.

    If you concern is the top end who game the system to put assets and income out of reach of the government while putting their hands out for welfare and enjoying the amenity that our communities provide then that is a separate issue.
    Anonymous
    7th Apr 2016
    10:43am
    Brian, my concern is the GROSS UNFAIRNESS and EXTREME GREED of those who claim that someone who chose to sacrifice lifestyle to achieve a particular goal - such as leaving a legacy to a special needs grandchild or having money to pay for high quality care for themselves or a spouse through an anticipated health crisis in old age - should be deprived of the right to use their savings as they were intended and instead forced to go without while others who chose to enjoy a better lifestyle are supported from the public purse.

    I have a major issue with anyone who ''games'' the system. But I also have a major issue with the selfish folk on here who want to deny anyone the right of free choice and reward for effort.

    Pensions should NOT be a reward for those who choose to be less responsible and enterprising, and the pension system should NOT be used to punish people for their lifestyle choices.
    Anonymous
    7th Apr 2016
    10:51am
    BTW. Brian, I have no issue with means testing income and deemed income. I see that as fair. My issue is with this cruel and unfair notion that someone who can't attain sufficient income from their savings to be substantially better off than pensioners should have to drain their savings and forego their savings goals to get live. It isn't their fault investment returns crashed, and they should not carry an unfair share of the burden of economic downturn.

    Couple who struggled to save in anticipation of 7% interest giving them an income of $59,500 pa. are now struggling on $25,500 a year with no pension, while people who didn't bother to try to save are drawing $33,000 + a wealth of benefits from the public purse. To deny the battler whose income has already been halved a part pension is patently unfair, and to claim he shouldn't be allowed to retain his assets in the hope of maybe getting higher returns down the track, or having money for special needs later, is just IMMORAL.

    As a nation, our aged pension outlays are very small and not growing. We can afford to let all retired Australians live in dignity, without those who battled to save being denied the benefit of their endeavours.
    Farside
    7th Apr 2016
    11:06am
    Rainey, I think you will find we have more in agreement than disagreement. I do not disagree with dignified retirement.

    I share your dismay with the plight of the self-funded retirees who now find themselves on struggle street. Provided they are in a modest home then I have no disagreement they should be topped up so they are no worse off than pensioners and receive full benefits that flow to pensioners until they no longer need the supplement. The name says it all ... "self funded" and their funding is not earning adequate returns. If they are sitting on millions of dollars in assets then they should be liquidating some of those to cash to supplement their reduced incomes.

    Whether or not it was responsible to have planned on 7% is another thing and indeed whether compulsory super should be government backed are separate discussions.
    Gra
    7th Apr 2016
    12:30pm
    No Bonny, it isn't irrevelant whether you own a home or not. You have claimed before to live rent free in someone else's house so obviously have nothing to lose if the family home is to become classed as an asset. Rainey raises some good points, there are those of us who have gone without during our working life to put a bit away in super to supplement the pension when they retire. Not everyone has the multi million (or even million dollar) super fund which should see them living extremely well nor do they live in a million dollar home.
    If someone is lucky enough to have a massive super fund good on them and if they are also fortunate enough to be living rent free in someone else's house, good luck to them but that doesn't give them the right to wish an imposition on others.
    Retired Knowall
    9th Apr 2016
    1:48pm
    So do you think it's fair that the current Tax Payer funds your retirement so you can leave a legacy to your offspring's ?
    Or because you chose the wrong investment strategy ?
    Anonymous
    11th Apr 2016
    3:47pm
    Retired Knowall, I don't see why the taxpayer shouldn't pay X, who saved to leave something to his offspring, when it happily pays Y, who earned just as much (or more) but spent his money enjoying luxuries.

    Some folk seem to have no sense of fairness or justice. They can't see past the communist line of ''you have money. Hand it over'', with no regard to how that money was acquired or what it was intended for.
    Lescol
    6th Apr 2016
    11:29am
    There are many other possibilities too. This concept of reverse mortgages has been around for many years. It is not government run and so there are motives among its few supporters.

    Give all people of retirement age the full pension and tax all income in the normal way. This gets rid of the bureaucracy associated with monitoring the current ineffective system and put everyone on an even footing. Also you are not punished for saving to fund your retirement as is happening in the current political climate

    The current right wing conservatives are a disgrace and so many 'once in a decade' opportunities have been squandered. The treatment of seniors has become a disgrace; Oz has very much lost direction in that regard.

    How will I vote this year? Formal and the current government shall be placed last. Only this way can we ever hope to replace the current right wing conservatives that have exceed their use by date.
    In Outer Orbit
    6th Apr 2016
    7:49pm
    Glad to read some common sense Lescol. If Australia took the time to see what works best in the rest of the world the current mess could be cleared up.
    Old Man
    6th Apr 2016
    11:53am
    I have a problem with statistics. Who is it that has decreed that a certain amount of money, either earned or owned, puts a person into a "poor" category. I have said in this forum on a number of occasions, please define "rich". We are fortunate in that we don't go without anything we need and we enjoy going out occasionally but not too often. We have much less in our super than we have been led to believe is necessary to have a comfortable retirement and it makes me wonder what the criteria are for a "comfortable" retirement.

    This topic was always bound to attract government bashing and, so far, that has happened. Some people like to live frugally and save, others like to live a little and a third group likes to have everything now and live from payday to payday. All of these groups are entitled to live as they choose but if there is an empty pot at the end o a working life then surely the blame lies with those who own the pot. Governments can only do so much and regardless of how much tax a person has paid in their working life, it's the current taxpayers that have to foot the bill for pensions.

    Downsizing a home is an interesting exercise. There is a large part of the transaction that is eaten up in government fees and duties. Perhaps those entitled to an age pension could be exempted from these cost which might help with decisions when the time comes to move. Maybe the federal government could subsidise the state government for the loss in revenue because in a lot of cases, the downsizing will leave surplus funds which may cause a drop in the pension rate for a time.
    HarrysOpinion
    6th Apr 2016
    2:20pm
    Old Man-"it's the current taxpayers that have to foot the bill for pensions"? So, when we as current pensioners were tax payers, didn't we have to foot the bill for pensions during our working life? Of course we did! I don't understand current tax payers who keep finger pointing the blame on to us when we helped their grandparents to live off the pension. I don't recollect us complaining like the younger generation is today with outrages impunity. Not to mention the blatant impunity against aged pensioners from most politicians of all sides in parliament State and Federal.
    As for downsizing,look around regional areas for retirement. Two bedroom ground level strata village style units under $200,000. Purchase stamp duty is exempt for aged pensioners in Victoria.Try Wodonga on the border of Albury NSW where healthcare is a large industry.
    Old Man
    6th Apr 2016
    4:00pm
    Thanks HS, I was thinking of the current group of retirees or those near retirement who bellyache about all the tax they paid over the years and how they should get that back. I'm not aware of any current taxpayers who resent having a part of their tax being used to support people like me.

    I take your point about regional areas but there are a couple of things I don't agree with about moving to them. Firstly, all of our friends and some family are here and moving would involve leaving them behind. A downside of retirement for those who move to a different area is that they don't have work colleagues to socialise with, they don't have children who make friends with other children which allows the parents to meet. It is harder to make new friends. Hopefully NSW will follow the lead of Vic as regards stamp duty for pensioners.
    Anonymous
    7th Apr 2016
    9:43am
    ''it's the current taxpayers that have to foot the bill for pensions.''

    So, Old Man, is it the poor little darlings who are currently paying 4% on their mortgages on lavish new 4+ bedroom, 2.5 bath, 2+ living room, landscaped garden homes, dining out several times a week (just look in the restaurants and coffee shops!) and taking their kids to Bali for annual holidays you are concerned about? Or are you disturbed by calls for companies making billions to pay their fair share of tax?

    Why the hell should retirees who worked and struggled with 17%+ interest rates, bought 30-year-old run-down 2 bed + sleep-out cottages and renovated, sewed, grew vegies, made furniture, and went without holidays and luxuries to pay off their mortgages now give up what they worked a lifetime for so the much better off, but much greedier, current generation of workers don't have to pay for aged pensions the way we did?

    Excuse me, but all this ''bash the retirees'' is crap. And the ''the pot is empty'' BS is just that. We contributed enough to a ''retirement funding pot'' to pay everyone $500 a week in retirement, non means tested. Where'd it go? Um. $22 billion hidden in Panama give you any hint?

    The sacrifices of today's retirees are NOT going to benefit anyone other than the crooks who have their billions stashed in tax havens.
    Anonymous
    7th Apr 2016
    11:26am
    Sorry, that was $22 trillion. And that's only one law firm in one of some 31 recognized tax havens.
    Retired Knowall
    9th Apr 2016
    1:50pm
    Can anyone else smell the pungent aroma of gross envy?
    hope
    6th Apr 2016
    12:08pm
    this is not new it was in a few years ago not a good products
    Polly Esther
    6th Apr 2016
    12:40pm
    Statistics again. Depends what is actually meant here by rich. Having heaps of the folding currency does not necessarily make a person rich.
    Elteear
    6th Apr 2016
    12:45pm
    Is it possible to move investment property into a family trust with a succession plan to include all members of the family? The income from investment propety should then be split among the beneficiaries reducing the income assessment to the pensioner. Would the value of the investment property would also be split among the beneficiaries?
    JoMojo
    6th Apr 2016
    12:46pm
    How about those who own the house but have a relative as CARER, a partner living in, or companion ? What will the Lender do to and for them ? i.e. If I took a loan - I die then my carer gets chucked out ?

    Most of these existing insulting schemes lend you say 20% equity but in reality one only gets 11% in the hand. At the end of say 10 years you then owe them the whole value of the land/house getting their kicks for free off our backs. NOPE you are barking up wrong tree here let retirees once again go pick vegies and fruit take cash in hand for how many buckets picked. No tax - too expensive to follow up admin wise and deterent to senior pickers going round Australia. Get tough on all the snouts/politicians and their largess first. Once they lose or retire no more offices secretaries, trips freebies goodies get their Super at 67 too. Only agree to those with Sydney $2 million buck houses Melbourne $1.5 Million Adelaide $1 Brisbane $1.5m dowsizing living off some of that equity.
    Farside
    6th Apr 2016
    2:17pm
    If you want a carer to enjoy lifetime tenancy then make a life tenancy deed with the carer and owner. Understandably this will affect the discount rate applied to the asset as it will take longer before the asset can be liquidated and the lender or remainderman can see the return from the loan.

    Another option is to give the carer some skin in the game by changing the ownership to either joint tenancy (if you want them to inherit the lof, and the binding debt tied to the property, or tenants-in-common to give them part-ownership of the property.

    Seek legal advice.
    JoMojo
    6th Apr 2016
    2:31pm
    Thanks for info Brian. Has been huge on my mind as my health going down hill. As a Carer (+ cousin) she has lived with me for last 10 years. I thought that would give her automatic rights/equity to the house should I die ? I have Willed her the whole estate. Have been worried if I have to go nursing home how that would pan out ? I did look at the property as Tenants in common but was going to cost $8,000 to do this thru land titles. with solicitors costs on top.
    Farside
    6th Apr 2016
    3:23pm
    Have a chat with a local solicitor; these deeds are not complex. Your concerns are well founded.
    Farside
    6th Apr 2016
    1:14pm
    The financial hardship that results from being asset rich, cash poor is a personal choice. The solution is simple ... retirees either sell assets to raise cash or borrow against the assets to generate income. Equity release products are a good idea. As someone facing the situation of having to sell my property, buy another for half the value and then live off the cash released. I for one would prefer to stay where I am and access an equity release product.
    Bonny
    6th Apr 2016
    1:32pm
    It is understandable given that a house is not a liquid asset but lots of people will only spend the interest on their cash assets. Makes no sense to me.
    Farside
    6th Apr 2016
    2:08pm
    Bonny, people have free will as to how they spend their cash. Run out of means i.e. the sum of assets and cash, then there is the safety net. Only spend the interest and do without, also a choice. Buy an annuity, another choice. The problem at the moment is two fold - people crying poor because they want to retain asset to gift to their estate, and secondly robber banks wanting to access equity in the property at a discounted bargain price. I have no interest in supporting wealthy welfare and increasing inheritances nor facilitating the robber barons effectively steal wealth from the estate. A sound equity release scheme would benefit the asset rich, cash poor.
    Bonny
    6th Apr 2016
    2:43pm
    Why would you want to go without to leave money to your estate? No sense in that at all.

    I'm not talking about any of those equity release schemes. It would be like a HECS debt payable on your death.
    Farside
    6th Apr 2016
    3:20pm
    I think we are on the same page Bonny, HECS style debt settled from estate is perfect.

    You ask "Why would you want to go without to leave money to your estate?". Exactly, yet that is what the asset rich, cash poor are doing. Why should they sit on a $1 million property when they could downsize to a $500k property and have $500K in cash to supplement their living.
    Anonymous
    7th Apr 2016
    8:44am
    Brian, people who appear to be ''asset rich'' at age 65 might well want to preserve their assets in case of further economic downturns or collapse, and might worry that their assets won't last them through retirement if they anticipate living, say, another 30 or more years. I sure don't want to sell my assets to live now (though I'll probably have to) in a depressed market, with actuarians telling me I don't have enough to last me until I'm 90, yet some folk say I should be forced to sacrifice all that I worked for and risk poverty in later life, so people who lived it up in younger years or structured their affairs a little deceptively can get more. Sorry, I'm not buying it.

    The solution isn't as simple as telling people to sell their assets. That could merely generate greater poverty in future years - just as people not saving for retirement (because it's a punishable offence, apparently!) is putting more people on full pensions.

    You can't on the one hand say that we need to save and invest to get out of economic troubles, and on the other create incentives for people to NOT save and invest and to shed assets.

    Sure, some folk out there could downsize their $1 million property and live on the assets. But right now that would be dumb, wouldn't it? It costs you about $20,000 a year, rising with inflation, to have an extra $500,000 in assessable assets. By removing the incentive to save, the government has created a situation where people over-invest in the family home. Next step, include it in the means test. Then you force people out of homes they have lived in for a lifetime and away from their family, community and support network - not to mention the trauma you impose by making them cope with selling, buying and moving.

    The solution is to abolish the assets test, revise the income means test sensibly (or abolish it) and tax retirement income in an equitable and sensible manner.

    BTW> I know a very old lady who ''downsized'' her home and used the cash to live on, believing she didn't need the extra assets. Now she can't afford the cost of the old age home! Good move!
    Bonny
    7th Apr 2016
    8:55am
    That's rubbish about not being able to afford the cost of an old age home. Nursing homes places are available to everyone.
    Anonymous
    7th Apr 2016
    9:04am
    No, Bonny, they are NOT. There's a shortage of beds and there are only a percentage of government funded beds in each home. Many homes have long waiting lists of people who can't pay. If there aren't enough paying for their bed, the system will collapse.

    This is the problem with people with your short-sighted self-serving logic. You never look at the wider implications of policy - only at what suits your purposes.

    Ultimately, if people are forced to sacrifice their capital to live, we will have higher rates of poverty, lower pensions, and a far less prosperous society. It's STUPID to suggest destroying personal wealth and all incentive and reward can help the nation. Like the changed assets test, it's short term gain for long term pain.
    Anonymous
    7th Apr 2016
    9:31am
    And BTW. Bonny. It's just possible some people might not want the low standard of care the government provides. Maybe some want to save their capital now so they can have a higher standard of aged care later. But once again, the ''Gospel according to Bonny'' (read, Communist mantra) forbids such choices.
    Farside
    7th Apr 2016
    9:42am
    Rainey, wanting to preserve assets "in case of economic downturns or collapse" is a choice. The point is that you should not expect welfare handouts while you have assets that you could use to pay your way. It's not the role of the wider community or government to subsidise your living so you can pass on assets to your estate. Being wealthy simply means you can afford freedoms and trappings that go with it, while you can. Want it to last longer then be more frugal. It is not an entitlement to receive welfare.

    And as for homes, yes many have wait lists but many do not. THey are expanding all the time; my parents operate one for dementia patients. As a society we will have to deal with the ageing demographic bubble and provide accordingly, just as we will have to deal with changing adult and youth employment due to technology innovation and global trade.
    Anonymous
    7th Apr 2016
    9:47am
    I say again, Brian, you are denying people free choice and being selfish. You claim pension entitlement for people who chose to spend on lavish holidays and nice clothes and parties, yet you deny anyone who chose to save for later. Yes, some chose to save for greater luxury in later life. Only the extraordinarily selfish and self-serving would suggest that they are not entitled to the same government benefits as those who chose to spend earlier in life.

    What you suggest is the taxpayer should subsidize the enjoyment of those who choose to spend during their working life, funded by denying those who choose to delay their enjoyment until later. Sorry, that's SELFISH CRAP. Doesn't get any more unfair - or any more detrimental to the economy and society, since it encourages irresponsibility and drives more people to spend up big and then put their hand out.
    Farside
    7th Apr 2016
    10:22am
    Rainey, we have different ideas as to what constitutes selfish crap. You argue that those in retirement should keep assets for their estate while receiving welfare handouts - seems pretty selfish to me. I argue that if you have assets in retirement then these should be to supplement your lifestyle so you are more comfortable than if you were on welfare.

    We seem to be on the same page however that those who fritter away their incomes during their working life leaving no savings are entitled to welfare. Welfare is not a comfortable wage however I think it should be same as unemployment benefit,

    People with high incomes generally do not aim to survive on a pension in retirement. They often have accumulated superannuation and assets over the course of their working lives. Seems perfectly reasonable to me to rely on these to supplement retirement lifestyles than giving more handouts.
    Anonymous
    7th Apr 2016
    10:39am
    Brian, it's a question of where to draw the line. People with high incomes can and should support themselves in retirement. But people with low incomes shouldn't have to drain their hard-won savings and forfeit all that they worked and saved for while those who didn't save get generous handouts.

    I have no issue with an income/deemed income test. I have major issues with anyone asserting that someone whose assets are not returning adequately should be denied a part pension because they went without holidays and nice clothes and restaurant dinners in the hope of having a little more luxury in later life.

    X has a disabled grandchild who will have extensive needs in later life. Y has a grandchild who is very talented and aspires to study in an exclusive academy overseas. So X and Y both decide to forego holidays, restaurant dinners, nice clothing, new cars, etc. and put money aside for their grandchild. Z has a spouse with a chronic condition that implies high care needs in old age, so Z also goes without all those luxuries to put money aside to fund those care needs.

    Now, what you say is that while A, B and C, who earned as much or more as X, Y and Z but lived it up more in their working life get a full pension, X, Y and Z should have to withdraw from any hope of leaving money to their grandchild or caring for their needy spouse adequately and instead drain those savings to live without a pension. If you think there's any fairness in that, you have no idea of fairness, much less of the definition of selfish.

    Anyone who suggests X, Y and Z shouldn't get the same pension as A, B and C and be allowed to save their money for the purposes they put it aside for is PATENTLY UNFAIR AND SELFISH IN THE EXTREME.
    Farside
    7th Apr 2016
    10:54am
    If deemed or actual incomes are below the welfare thresholds then these should be topped up. If families want to provide for disabled grandchildren or future chronic illnesses or repay carers then they should do so using the appropriate methods e.g. trust, insurance bonds, gifts etc. before putting hand out for a slice of the welfare cake. Sitting in a $2 million house while crying cash poor is not one of those methods.
    Anonymous
    7th Apr 2016
    11:30am
    I'm not referring to anyone with a $2 million house, Brian. Anyone that well off should certainly be self-supporting. My concern is for those with a $500,000 house and maybe $750,000 in income-returning assets as a result of years of struggle to save. They are now left to drain those savings to supplement an income that might be half what others who didn't try as hard to save are getting from the taxpayer. And to add to injury, they are denied a raft of benefits and discounts because they are presumed to be ''well off'', since they can't get a pension.
    Anonymous
    7th Apr 2016
    11:34am
    BTW. Brian, I agree with your concerns when it comes to the genuinely well off who manipulate their affairs. I have neighbours who gave $2 million worth of land to their kids before turning 60, with an agreement that the kids would pay all their bills for them in retirement (undisclosed to Centrelink of course!), then sank $1.5 million into a house. Now they are on a full pension, and they are actually planning to declare that they are ''separated'' so they get higher pensions. The house was built - on purpose - with private suites at each end and only the living areas shared, and they are claiming they don't live together because they only meet occasionally in the living areas.

    But are they really any worse than the woman who, having had a high income as a journalist married to a high-flying journalist, lived it up all her life and spent her $500,000 inheritance from her parents cruising around the world for a couple of years, and now gets a full pension and lives in public housing, claiming ''need''.

    The whole system is broken. It needs throwing out and starting over with a clean slate.
    Farside
    7th Apr 2016
    11:43am
    Rainey, so your issue is not the principle, just the threshold. I think median house value for previous year is a decent guide for housing cut off but we probably differ on conservation of the $750,000. I do not assume a self-funded retiree to be as "well off" post GFC as they may have been before but you cannot protect people from poor investment decisions while pursuing high risk returns. For me it is no different to running down super. I would also be content with a HECS style loan that was repaid from the $750K upon death.

    You have no disagreement from me that income earning assets delivering an inadequate return should be topped up to be equivalent to pension. If the $750,000 was in super then it would be used to improve the comfort of their lifestyle. It is their choice not to sell assets and join the pensioners on struggle street,
    Anonymous
    8th Apr 2016
    8:05am
    Brian, my issue is the STUPID AND SENSELESS way the government goes about pursuing a sensible objective. There should not be an assets test. It's absurdly unfair and detrimental. Assess income, by all means. Those who can be self-supporting should be. Let people have enough to live well above pension standard, but cut entitlements out at around the existing income thresholds. They seem reasonable. (One thing that isn't reasonable, though, is to allow unassessed earned income ONLY if it's from certain sources - not from self-employment. That's unfair and unreasonable in the extreme!)

    To stop people locking into non-returning assets deliberately, including expensive family homes, apply a deeming rate to any non or low returning assets above a generous threshold, with exceptions for assets that, for valid reasons, are actually liabilities (can't be sold for fair return in today's economic climate and can't reasonably be made to deliver return).

    The threshold would allow people to own a modest home, furniture, car, personal belongings, perhaps caravan or boat, and have a few hundred thousand in the bank unassessed. The only difference to current thresholds would be the unfairness of rewarding those whose assets are locked up in the family home and punishing those who accept modest accommodation and have other assets would be removed, and thus the incentive to over-invest in housing would be removed.

    The end result would be the same as now, except that those who saved and invested responsibly but couldn't achieve an adequate living income would be allowed to enjoy fair treatment. If they hand not locked up assets deliberately in non-returning areas, they would be able to draw a pension until their income rose above $70,000 a year (for a homeowner couple). That would be fair and equitable and economically sustainable.

    For those who have expensive homes they don't want to sell, offer a loans scheme at concessional rates repaid on death to cover their living costs. That is, extend them the same pension as those with less assets receive, but make a portion of it - appropriate to the excess value they hold in non-returning assets - repayable.

    If the government used common sense instead of trying to structure rules to advantage the favoured at the cost of the unflavoured, we'd have a healthy and affluent society. As it is, it's all about looking after their mates, and those in the outer circle are always forced to pay the price. What astonishes me is that some here seem to think that's okay. Well, as long as THEY aren't the ones suffering unfairness and hurt, why would they care? So many, today, have no social conscience. But aren't they quick to falsely accuse based on WRONG ASSUMPTIONS?
    jackie
    6th Apr 2016
    1:22pm
    Greed is an evil mental disease. The rich can never be rich enough and will never be satisfied until they destroy this planet.
    Scrivener
    6th Apr 2016
    1:38pm
    The real death-eaters. And they're Muggles as well. Yuk!
    Patriot
    6th Apr 2016
    5:07pm
    So right Jackie!
    particolor
    6th Apr 2016
    6:57pm
    Jackie wins todays Discussion ! Short and to the Point :-)
    Bonny
    6th Apr 2016
    7:31pm
    The majority of people are never happy no matter how much they earn. Greed is everywhere.
    Farside
    6th Apr 2016
    9:49pm
    "... will never be satisfied until they destroy this planet"; really, destroying the planet will satisfy them? I don't think the greedy give the planet any more thought than they give those less fortunate than themselves. Many rich will never be rich enough because it is not the money but the trappings of money that they desire.
    maelcolium
    6th Apr 2016
    2:16pm
    Increase the age pension to the minimum wage. Change the assets to exclude non financial assets like a car and household goods. Make the deeming rates more realistic to market rates rather than some obscure figure which doesn't reflect the interest rates paid by the banks. Allow pensioners to earn more then is currently allowed without reducing pension payments. Stop whittling away the private health insurance rebate so that the elderly can access timely hospital care.
    In other words treat people with the respect they deserve and stop treating them like welchers because they no longer pay taxation. Foe heaven's sake, they've paid taxes over a life time and now the powers that be want to suck them dry into their dotage.

    The people pushing home equity release are the banks and guess why? They want to get their hands on the wealth that older people have built up to fund their aged care placement and bugger their needs in the future. Anyone who has looked at a home equity release properly would be horrified to find that the scheme favours the banks to the point where there is little left at the end of the process.

    Get rid of Governments that keep the elderly in poverty and that includes both Labor and LNP. Vote with your feet.
    Elteear
    6th Apr 2016
    2:33pm
    A logical thinker who uses reason to come to a conclusion maelcolium, couldn't have said it better myself. Are we a vocal minority or a silent majority?
    Anonymous
    7th Apr 2016
    8:57am
    Abolish the assets test and apply an income/deemed income test only. Nobody should suffer for having saved and be denied the benefit of their earlier savings.
    Farside
    7th Apr 2016
    9:44am
    Scrapping the assets test and applying a deemed income test would go a long way to helping simplify our tax and welfare systems.
    Anonymous
    7th Apr 2016
    10:22am
    Decades ago, I read an article that suggested abolishing welfare completely and introducing a system of low or nil income-earners ''paying'' negative tax. That is, everyone declares their income. The ATO assessed tax at prevailing rates. But there are tax rates for income below the threshold that effectively mean that someone earning less than, say, $30,000 a year receives a rebate that makes their income up to $30,000 a year. Dependants can be claimed that increase the rebate to provide the equivalent of today's pension for a person with those dependants.

    The article suggested the author had gone to considerable lengths to establish the cost of such a program and found by eliminating administration costs for the welfare system (massive!), there would be a major net saving. There was a suggested proviso inbuilt that if someone claimed a rebate, they had to evidence why their income was so low, so there were still protections in the system against outright bludging. Age was one accepted reason for low income. Evidence of certain medical conditions, of being a carer, a single parent of a child under 7, were automatically accepted reasons. Other reasons might also be accepted depending on how much rebate was claimed and how many years in succession a rebate was claimed.

    The beauty of this system was declared to be that it didn't disadvantage anyone who worked hard and saved or invested, but suffered an unexpected period of low income. Retirees automatically received a rebate if they had inadequate income to meet their needs, so nobody suffered for having saved in earlier life and nobody was denied the fair right of benefit of their earlier savings, but if savings returned well, then no rebate and possibly a tax bill.

    This is just another version of the ''pension for all'' proposal put forward by others, and both make a lot more sense than the current convoluted system that totally removes incentive to be responsible and save for retirement.

    If we want the nation to be prosperous, we MUST leave something on the table for people who work hard and save. And if we want the needy to be better provided for, we MUST make the nation more prosperous.

    Honestly, anyone with intelligence should be screaming now that the government MUST URGENTLY abandon the stupid and destructive assets test and drop this total nonsense about forcing people to downsize their home, and implement policies that encourage and reward endeavour and responsible planning and drive people to WANT to engage in the kind of behaviour that benefits the nation.

    It's NOT indulging greed and selfishness to demand that people have the right of freedom of choice of lifestyle and reward for effort. It's about economic health. When people are able to prosper through doing what's good for the nation, the nation prospers. When the nation prospers, there's more for people in need.

    Taking it away from people who struggled to acquire a little but can't really be self-sufficient is going to reduce national wealth, and therefore reduce the capacity to fund help for the needy.

    In other words, welfare recipients, you are signing your own death warrant by demanding that people sacrifice their savings in the hope that you can have more. You will end up with very much less!
    Farside
    7th Apr 2016
    10:35am
    Rainey, I am not averse to the notion of a social wage or receiving a tax rebate to supplement wages; either way total income is assessed. In fact I think we as a society will need it as technology innovations and globalisation eliminate many jobs. The modelling for this is very interesting but upon retirement those with accumulated assets still have the choice whether to enjoy a more comfortable lifestyle than otherwise would on welfare alone.

    Those who have saved but insufficient to be independent would still be more comfortable than if they were on welfare alone. The incomes of those retirees earning a little extra or receiving an income stream will reflect the progressive tax rates, rebates for super etc.
    Anonymous
    7th Apr 2016
    11:41am
    And that's as it should be, Brian. Those with higher incomes should contribute more. Our progressive taxation system was designed to achieve that, recognizing that those with higher incomes typically derive more benefit from publicly funded services and nationally-owned resources.

    The problem we face right now is that the rich don't want to pay their share, and somehow want to force the less fortunate to pay it for them. They can't bleed stones, so they attack those who are struggling to sustain a lifestyle that they worked hard to achieve and try to deny them the benefit of their endeavours. Ultimately, that has to result in economic decline (as is happening. We've seen a parallel between the increase in inequity and economic downturn.)

    I have never had a problem with the notion of those with higher incomes paying more tax and receiving less benefits. My issue is with the state claiming the benefit of someone's sacrifices to save, when they have an ongoing genuine need to retain that benefit and a moral right to it.
    Star Trekker
    6th Apr 2016
    2:19pm
    The difference between Home owner's assets and non-home owner's assets is $149,000. When the Assets Test was originally set up values of homes were a lot lower and therefore were included in the Assets test. They need to adjust the difference between the two to a reasonable amount and this should be adjusted according to the Valuer-General or average prices.
    Lescol
    6th Apr 2016
    2:41pm
    An alternate thought: cut the nonsense. Give all people of retirement age the full pension and tax all income in the normal way. This gets rid of the bureaucracy associated with monitoring the current ineffective system and put everyone on an even footing. Also you are not punished for saving to fund your retirement as is happening in the current political climate

    Of course you'd need a change of current government. Too revolutionary for them. cheers
    Rodent
    6th Apr 2016
    3:27pm
    Star Trecker

    Not sure what you mean by a reasonable amount? Do you mean the Gap should be more or less, if so why?

    You are of course correct with the $149k difference between Home Owner and Non Home owner as of TODAY, BUT as from 1 Jan 2017 this becomes $200k, is that what you were thinking, if so its this LARGE difference , coupled with HIGHER thresholds between a Non Home Owner and Home Owner that in JAN 2017 will give the NON Home Owner Couple a Pension of approx. $12,802pa for a ASSET Figure of $850k, while ALL other Pensioner types get ZERO pension at the Same Asset Figure.

    These anomalies apply right throughout the New Asset changes across much lower Asset Figures.
    Star Trekker
    6th Apr 2016
    3:36pm
    Maybe they should look at the difference between Rent and Rates. Rates in a well-to-do area (Toorak) is certainly higher than rates in a middle-class area (Essendon), also adjusted for CPI and Land values.

    They should just put everyone on a level playing field and set the assets the same whether you own a home or not. Count all assets that are monetary or easily sale-able, i. e. Car, boat, caravan etc.
    Anonymous
    7th Apr 2016
    8:58am
    No, Star Trekker, they should abolish the assets test and test income/deemed income only. Nobody should suffer for having worked harder or sacrificed lifestyle in earlier life to save for their future.
    floss
    6th Apr 2016
    2:48pm
    DO I trust the MT government to form policy so I can turn my hard earned assets into income ,I don't think so.MT being a person that has used a off shore country to avoid tax.His big tax policy is to lower company tax, MT you fool they don,t pay tax.
    In Outer Orbit
    6th Apr 2016
    8:17pm
    Policy currently seems a fairly blatant scam to get relatively poor people to hand over taxes to allow a clever rich minority to live the high life and run riot. Most of us just seem to be treated like cannon fodder now by the 'big end of town'.

    'Twas ever thus perhaps, and it's not just Australia, as the Panama Lawyers have demonstrated so clearly - a big cross section of the world's 'leaders' seem ready to put their snouts in the trough, if they believe they can away with it. As for the tax avoidance by the multi-nationals. Where is their 'duty' and 'responsibility', or are these just mantras for the cannon fodder?

    Globally, we seem to be drifting back towards nationalism and selfishness as the norms. I hope it won't require another global war to to bring us back to our senses and remind us to appreciate responsibility, community spirit and solidarity again.
    Anonymous
    7th Apr 2016
    8:48am
    You are absolutely right, In Outer Orbit. That's exactly what it is.

    And ultimately, everyone will suffer, because when the workers and savers have sold their assets to live and now need a pension, the total pension costs will rise and pensions will be slashed. Those demanding the workers and savers hand over all the benefit of their endeavour THINK it will go to making the poor better off. Dream on! Who won from the recent unfair assets test changes. Not the needy! The gain went to those homeowner couples with $300,000 in the bank - and even their gain was only temporary, until indexation freezes wipe it out.

    Wake up Australia. You are being conned! All these schemes are part of the grand IPA plan to restore a feudal society.
    Grateful
    7th Apr 2016
    12:56pm
    Yes, In Outer Orbit. The Prime Minister considers that corruption by building unions is so serious to our economy that he is prepared to put his government on the line and call a double dissolution and yesterday slapped "banks" on the wrist for what will clearly develop into one of the greatest scandals of our lifetime involving the "richest" people in the world.
    Is he now prepared to be consistent and put the torch to this scandal and start by demanding a Royal Commission into the entire financial sector including all Australians that appear in the "Panama papers"???
    Oldman Roo
    6th Apr 2016
    9:28pm
    The whole concept is flawed and ludicrous while our Politicians are not prepared to live by the same rules they are happily trying to impose on us . Sure , if push comes to shove , to make a fair sharing of the welfare burden , there would have to be a limit on the value of the property we live in and , as I have said before , the $ 1 Million should be the starting point . As usual I have noticed the more effluent retirees , that can easily live without Pension are ever so eager to support making life difficult for those who lived a life of sacrifices , but due to a number of reasons in life , did not quite make it to be financially independent . This is no justification to force them to spend their savings as there is always the possibility that the financial market may change , and with returns as they used to be , many of them could live without Centrelink assistance , and I may stress they would not miss them at all .
    Anonymous
    7th Apr 2016
    8:16am
    You are quite right, Oldman Roo. But being somewhat cynical, I see the assets test change as DELIBERATELY DESIGNED to ensure that, over time, more are reliant on the aged pension.

    The Government wanted to cut the pension, but that was an unpopular move. If they drive a major unexpected rise in the cost of the aged pension (which the assets test change will deliver over time), they have the perfect excuse to cut welfare. ''Hey, look, it's out of control. It's growing at an unprecedented and totally unexpected rate. Must reduce pensions to stop this growth.''

    Be careful what you wish for, Aussies, because those who cried ''fair enough. People who can support themselves should - so we can get more'' are the very ones who will suffer most when the chickens come home to roost.

    (Warned you I was a cynic. I hope I never get to say ''told you so'', but I fear I will!)
    Oldman Roo
    7th Apr 2016
    4:47pm
    Rainey , I appreciate your comments but can not agree with your interpretation of the Governments intention to be DELIBERATELY DESIGNED . The whole Pension reform smells of a short sighted quick fix that will not achieve what they are telling us , and will in fact be more costly in the long run as part Pensioners will have to spend money and come back for a higher share of Pension payments .
    If things are indeed out of control , there are plenty of options left to manage welfare . Number one would be to cut off welfare to the 25 % of Dole recipients that do not want to work , the balance could easily be covered by reigning in the generous treatment the wealthy individuals and large companies receive , not to forget negative gearing . Of course a fair approach is too much to expect from a governing Party that represents the wealthy and it reminds me that it sure is " A rich man,s world " .
    Farside
    7th Apr 2016
    6:24pm
    Roy Morgan Research estimates 1,319,000 unemployed and 1,161,000 underemployed, a total of 2,480,000 or 18.8% of the workforce. This excludes the 832,000 on disability support payments and the many who have simply opted out of the workforce or taken early retirement and not receiving a pension.

    Presently more than 27% of Australia's working age population is receiving welfare benefits i.e. pension, unemployment or youth allowance. Of these aged pensioners represent by far the biggest proportion of those receiving welfare. In 2013, 45% of all welfare recipients or 2.36m people were on the aged pension.

    Let's face it the system is broken and we need to rethink in terms of social wages, progressive taxation and no more welfare-in-kind for wealthy and companies.

    Are there jobs for the 75% that do want to work? Unlikely so why does it matter unemployment benefit is paid to the alleged "25% of dole recipients that do not want to work"? I think not.
    Oldman Roo
    7th Apr 2016
    8:33pm
    Brian , I agree with most of your comments but as a matter of principle can not agree with your comments on the 25 % of dole recipients that do not want to work . Yes , financially it probably does not amount to a lot but tolerating their unwilling attitude to working is a bad precedent and , no doubt , affects the moral of the other 75 % , of which at least half are also not particularly keen to work . There is no question that there are job opportunities out there and yes they are not easy work and require a willingness and discipline to succeed in a work environment , and that is where the softly , softly approach only increases the problems .
    Farside
    7th Apr 2016
    9:32pm
    Oldman Roo, how do you know it is 25% and are there jobs for them that are cost effective for them to perform?
    Oldman Roo
    7th Apr 2016
    11:51pm
    Brian the 25 % was very recently quoted in a reputable Newspaper .There are certainly jobs out there and if it was not for my advanced age , I would have no problems finding one even without special skills. The problem with many of the young is they do not want to start at the bottom and work their way up like I did as a young man. An employers door will usually open if you have a good work record , no matter how lowly rated the work was . I am convinced for many it is not a matter of cost effective but being choosy .
    Farside
    8th Apr 2016
    12:30am
    It is an anecdotal fallacy to extrapolate your individual experience to the couple of hundred thousand or so that you assert do not want to work. The world has changed since you and I were young men. Most of the entry level jobs in manufacturing and industry have gone. Employers are reluctant to take on inexperienced workers and train them.

    The fact is there are simply not enough jobs for those seeking them but for the argument let's assume there is a 100% alignment between job location and requirements with the person's skill sets and location.

    For each person who does not want to work there are three that do, so as an employer you are satisfied with giving the job to one of the enthusiastic applicants while rejecting at least two enthusiastic workers for each reluctant worker. The reluctant workers are not even going to be shortlisted so what is achieved by cutting their welfare. Much better for society to regard it as social wage.

    Final point, if your wish came true and you stopped welfare to these couple of hundred thousand youth and other reluctant workers, what are the social consequences? Would you be prepared to live in the same community and wear the social fallout as their circumstances deteriorated and they became more desperate?
    Anonymous
    8th Apr 2016
    7:53am
    Oldman Roo, it's clear you speak from experience and your age is showing. Sorry! The world has changed, and it's also clear that you have never walked in the shoes of the severely disadvantaged.

    Forcing people into jobs that they are severely unsuited to, for whatever reason, is torture. Would you condone the kind of old-fashioned torture that happened in war? Honestly, making someone do a job that they are completely psychologically or physically incapable of IS torture. It will result in suicides, major depressive illness and addictions etc. It will drive some to crime. Furthermore, that sort of social approach encourages and supports employers who exploit and abuse workers. When workers are desperate for any sort of work, or a are compelled to accept any offer, employers can behave unconscionably and get away with it. And from experience, our policing system is appallingly poor and does nothing for the oppressed and powerless worker. It defends those on the next tier above bottom, and those who have choices - not those at the bottom.

    I don't like the idea of 27% of working-age society not earning, but we are moving rapidly to a society in which human labour has a minimal role. Technology is replacing people. What we need to do is stop harping on the old, outdated model and trying to use obsolete methods of solving new problems and recognize that we need to change.

    The aged pension is NOT a major expense for Australia. Check the numbers. It's way, way less than most countries spend and a small portion of GDP. And it's NOT growing much, because of compulsory superannuation and improved general affluence. It's time to bring the retirement age forward and let people enjoy some recreation, if they want to, at the end of their working life. For some, there's very little quality of life while working and very little to look forward to other than eventual retirement. Why is it so unpalatable that the privileged, who find fulfilling and enjoyable work that pays well, give a little to facilitate some reprieve for those for whom work is torment?

    What we need to do is recognize that people's lifestyle preferences vary and some freedom of choice is essential. If someone wants to pursue a creative career, which means struggling on the dole for a few years to hopefully produce a best selling novel or a valuable piece of art, what good does it do society to deny them that choice and bully them into a job that might be soul-destroying, or too physically demanding for their body? If someone prefers making clothes, growing vegetables, keeping a cow and chooks and living in a humble shack to working at a job they hate, why persecute them? There aren't enough jobs anyway.

    Let people choose their lifestyle. Let the severely underprivileged maintain some freedom to pursue the lifestyle they are comfortable with. Society has bashed them enough already! And it's not as if anyone choose life on the dole if they have genuine, reasonably palatable alternatives. It's NOT a great way to live!

    The solution for society lies in recognizing that the benefits of technological change MUST be shared. If we keep allowing the rich to get richer, society will collapse. We need to stop bashing the underprivileged and middle class and reintroduce a proper, working progressive taxation system that compels the rich to pay. Confiscate the $22 trillion in Panama and pay off national debts, and restore an acceptable level of equity globally. Nobody needs that much money anyway. What are they going to do with it? Leave them enough to be very rich and take the rest to restore some sanity in our society.

    We have to stop these stupid messages that welfare is our problem or that people have to work more and that everyone should avoid tax. The messages should be ''Society can only continue in a state of reasonable health if people pay their share. Be proud to pay your dues in full. The wealthy consume more national resources and use more government services. They SHOULD pay for them. And because they profit from the existence of lower classes, so they should support them. And if you are fortunate not to suffer illness, disability, or low intelligence, have some compassion for those less fortunate and accept that the fortunate should give to support those who were born disadvantaged or suffered crisis or trauma. You would want others to treat you with compassion if it had happened to you.''

    Oldman Roo, I respect your opinion, but as one who suffered hideous disadvantage and struggled for many years to rise above it, I have to say you are seriously misguided. If I had been forced to stick with jobs I took in desperation and couldn't stomach, I'd today be very sick, dirt poor and desperate, and my kids would be also. The state owed me (because it's evils caused me serious hurt when I was young and defenceless), and I claimed payment. I make no apology for that. (In a just world I'd have won millions in compensation. A few years on welfare was nothing!)

    Personally, I would never want to live under the sort of totalitarian regime you seem to want, where the least advantaged are denied even the most basic choices of lifestyle and are constantly ground down until they self-destruct - either physically or mentally - and there is nothing left to hope for.

    The Panama Papers made it very clear that our problem IS NOT WELFARE. It's corruption and tax avoidance and the privileged hoarding obscene wealth for no valid purpose.
    Farside
    8th Apr 2016
    8:48am
    well said Rainey, +1. I told you there were more areas of agreement between us than there were disagreement.
    Oldman Roo
    8th Apr 2016
    9:17am
    Rainey and Brian , Let me tell you both tell you what I experienced in my working life , starting off at a time where all the qualifications in the world did not get you the job one desired . I was determined to work and earn an honest income , started with pick and shovel and it has not done me any harm . I do not want to brag about what level of employed I reached , but it shows what you can achieve with determination and willingness .
    In daily life now , I constantly encounter workers that are recent immigrants and having difficulties speaking the language and I say to myself just how did these people get employment when we have scores of unemployed Australian born out there .
    I am also certainly not suggesting to completely throw the people not willing to work into starvation but individually setting a payment for them to just get by with daily expenses would be a good start .
    In Outer Orbit
    8th Apr 2016
    7:53pm
    Rainey I think you're right on the nail with so much of what you've said. Technology and the 'post-industrial' age offers the potential to free us all up to have a little more time and enjoy life a bit more, rather than just slog our way through it as so many of us have had to. OR, it has the potential to divide us into one group selling technology and becoming wealthy, and a majority consuming and paying but excluded from earning and working in techno jobs. Unless we take far more enlightened view to redistribution of wealth, we will indeed end up back with feudal levels of inequality. Frankly, I'd say we're already there.

    Bill Gates is an example. I imagine we all admire the philanthropy he is applying to a proportion of his vast wealth, but do we really want a world in which a small number of self-appointed unelected unaccountable uber-rich individuals swan around the planet deciding what and who is worth saving with OUR money. Payments to microsoft and apple have become like another tax - just try to get by without paying them and see how excluded you become. So we're there already, and need to work out a new way to share the fruits of technology, or most of us can look forward to glorified serf-dom at best.

    As an aside, I gather that 'they' are already setting up companies with a view to start mining in space. When did the rest of us ever consent to commercial exploitation of OUR moon? When did we vote to let Richard Branson start flying tourists into OUR space? Seems bizarre that we have protected Antartica from any exploitation, but it seems the rest of the universe is going to be exploited by whoever can get there first. These are the important themes we all need to be grappling with. No doubt the Gates and Bransons of this world are only too happy to see us instead distracted and squabbling over asset test thresholds, like hungry serfs fighting over the last potato.
    ex PS
    9th Apr 2016
    2:09pm
    Brian, totally agree, if you have people wanting to work and can't get jobs, how in any universe does it make sense to force employers to take on people who don't want to work?
    As far as the unemployed are concerned they should be given tasks like cleaning up parks, roadsides or other jobs that the government hasn't got the money to undertake.
    The hours spent doing so should be the equivelant to those that would be paid for by the Dole taken. In return the people that undertaking this work should be released from the obligation to find fulltime employment.
    Of course this should be by choice, and if they don't want to work they should not be forced to do so, all they have to do is forfeit their Dole payment.
    Anonymous
    11th Apr 2016
    4:04pm
    Oldman Roo, you say ''I am also certainly not suggesting to completely throw the people not willing to work into starvation but individually setting a payment for them to just get by with daily expenses would be a good start .'' OMG! Have you looked at the amount paid to the unemployed lately. It's hardly enough for very minimal daily expenses! If it went any lower, the unemployed WOULD be starving.

    Lay off the unemployed. They are NOT the problem. I also started at the bottom and worked my way up, and I also know others who have. But that doesn't mean everyone can. Abilities differ. People's health differs. Mental health differs. Just one thing that make a massive difference is confidence. Take someone who has been abused and deprived and convinced that they are not worthy of better, and their capacity to strive is destroyed, because they think they don't DESERVE to be able to rise above their current station in life. I was lucky that I had a mentor who convinced me I was smart, capable and deserving, and all I had to do was work hard and I COULD move up in the world. I know far too many who were just as smart, capable and deserving but went nowhere because nobody ever helped them to realize their potential. They BELIEVED they were useless - a blight on society - and they stayed locked into their world of failure as a consequence.

    I think you would do much more good, Oldman Roo, attacking the people who create these problems, rather than their victims.
    ex PS
    6th Apr 2016
    10:28pm
    I wouldn't mind borrowing against my assets as long as it does not mean turning the residual value over to the government. The government can take what is owed but the rest must go into my estate.
    Farside
    6th Apr 2016
    10:40pm
    +1
    MD
    7th Apr 2016
    9:34am
    An interesting read, as many good ideas volunteered with the few balancing criticisms.
    A positive contribution will generally garner like-minded response however, were the total number of contributions to double that realized then we would probably have yet more suggestions to consider and therein lies the dilemma - (subjectively) in complex matters such as this, who decides and how should they go about it.
    Elected representatives and/or their respective departments have vacillated interminably due largely as a result of electoral, party leader, factional, lobbyist or think tank input. No one of which will produce a result that appeals to each and every one of us.
    We could begin to ask ourselves why it is that society seems hell bent on fragmentation; 'every man for himself' no less. If it's wealth then what value is deemed sufficient.
    Always and forever we will have those less fortunate and (dare I say) far too many more seemingly better off than ourselves. Hell is far likelier to freeze over before most folk expressed satisfaction with their respective lot. The 'greasy pole' always appears inviting.
    The Dalai Lama, when asked what surprises him most about humanity, answered:
    "Man. Because he sacrifices his health in order to make money . Then he sacrifices money to recuperate his health and then he is so anxious about the future that he dos not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die and then dies having never really lived."
    Priscilla
    7th Apr 2016
    11:56am
    The only reason I have any money in my retirement is because I OWN my home. If I sell my home to downsize I will have very little left after all the expenses involved in selling and buying something 'smaller', which will mean I will have even less cash on which to manage. As far as renting is concerned this is out of the question as I would need money for rent each week, which I do not have to pay now as I own my home! Retirement homes are out of the question as they are a rip off. You do not own the land so you own nothing and you also have to pay about $400 a fortnight for ??? So I will not be selling my home or borrowing against it or going to a retirement lifestyle as living in my home is the most affordable option I have. Plus, I have worked long and hard to ensure I have my own home to live in in my retirement.
    Farside
    7th Apr 2016
    12:34pm
    And that is how it should be Priscilla. You have made a free and considered choice to own assets rather than spend savings. Assuming it is a modest house then you are effectively receiving income in kind i.e. the benefit of accommodation without paying rent.
    Anonymous
    8th Apr 2016
    8:07am
    Brian, under the existing system, it's questionable if some people are receiving benefit from owning. The difference in asset limits, combined with the burden of costs of maintenance, rates, insurance, etc. again make for massive unfairness at certain levels of asset ownership.

    The whole system is broken! It needs throwing out completely and restructuring to be equitable and economically sustainable.
    Farside
    8th Apr 2016
    8:54am
    I agree Rainey, however it is still Priscilla's choice whether to own assets or spend savings. She can of course encumber the asset with debt using a form of equity release scheme, which was the question behind the article. Not for a moment however am I suggesting the highly leveraged robber baron approach available now but perhaps something more HECS style as suggested above that would enable Priscilla, if she chose, to improve her comfort.
    KB
    8th Apr 2016
    12:59pm
    There needs to be other options, You should only have to use your house as an asset if you need to go to a nursing home or need to downsize. There needs to be a greater increase for the age and disability pension. Australians are poor due to high living costs so the government does not allow for this fact.
    In Outer Orbit
    8th Apr 2016
    8:04pm
    Economically, Australia is basically a mine, like Saudi Arabia is basically an oil well. What Australia needs to do is build up a National Sovereign Wealth Fund, banking the rewards of each commodity price boom. That will enable Australia to weather the cyclical downturns in prices, and guarantee that this generation does not blow the family silver and leave future generations living in poverty in a glorified desert. The smart nations of the middle east have done this. Norway has done this. Their future generations will enjoy the rewards of the nations former mineral wealth. When India and China have finished sucking Australia dry of resources, what will there be to show for it besides unsustainable communities. Look at the UK - the proceeds of North Sea Oil have been squandered and when it's gone its gone. This is a Government responsibility, but their time horizon is their next election, not the next generation. Roll on World Government and an end to the national spivs who currently make fools of us all.
    ex PS
    9th Apr 2016
    1:58pm
    It seems to me that most of the people who are hiding assets are doing so in order to qualify for pensioner entitlements and rebates rather than gain a pension.
    It seems that the simple answere is to give everyone over the age of retirement all of the benefits other than the actual pension automatically.
    Actual pension payments should be then treated on a financial/needs/asset basis.
    Chris B T
    10th Apr 2016
    9:19am
    The problem I see with asset rich in multi million dollar homes collecting full age pension, who's paying the Rates, Insurance's etc.
    These costs could be at the single rate pension in some areas.
    Especially waterfront properties.
    The question should be asked how are you funding these reaccuring bills which only increase.
    Mostly stated by other's here Chemist, Medical, Inhome Help etc. Food and general costs.
    This would be a stretch at a couple full age pension, unbeliveable at single without additional income.
    Supernan
    11th Apr 2016
    12:12pm
    Wouldnt it be nice if they actually consulted people living on Pensions or part Pensions ? Instead they ask millionaires, politicians on good wages & economists (who are famous for getting it wrong !)

    Like no-one predicted the low interest rates. Many of us were counting on earning interest to finance our retirement. But rates are now kept low so people like developers & landlords investing in high rent housing get cheap rates.

    Low interest rates tempt families into buying huge houses. Families are much smaller these days but house are much bigger. No wonder they have no savings.
    Anonymous
    11th Apr 2016
    4:07pm
    Yes, Supernan, it would be smart to consult the people affected by policies, instead of the overpaid idiots whose financial situation means they never have to worry about whether their dumb policies work or not!
    Farside
    11th Apr 2016
    5:31pm
    easy to say but much harder in practice. What advice would would the people on pensions and part-pensions give? Retirees who did not factor in the possibility of low interest rates ... sorry, poor investment decision; I think you should be able to draw on a safety net to set a floor in income but how would the pensioners deal with that? Many of the correspondents above would want to deny pensions to those who should have saved during their working lives. And of course, if the returns were higher than anticipated, would retirees voluntarily share the bounty? I think not.

    Consider for a moment who voted for the politicians on good wages to represent them? A fair proportion of pensioners I'm guessing. My grandparents, both pensioners, and my mother-in-law, another pensioner, voted true blue Liberal every time but it was them that suffered when the Libs cracked down on the pensioners, go figure. If the pensioners organised themselves and voted for pensioner-friendly representatives then maybe they would feel more consulted in policy setting. And even if they sometimes get it wrong, it's the economists and analysts that get it mostly right and the political implementers that get it wrong. You only need look at the independent Reserve Bank to see how well that works. In Parliament we don't even have our best economic minds among the pollies in decision making roles so no wonder it goes pear shaped every so often.

    And when it all goes wrong, the pensioners policy is to pay more in pensions and benefits, who pays the price for that, not them for sure. The only people you can hit for increased taxes on are the wealthy and no doubt the pensioners would like to see fewer of them. Be careful what you wish for, it might just come true. DO you really want to turn Australia back into a developing nation?
    ex PS
    11th Apr 2016
    7:47pm
    The big problem is conservative investors are only earning 3-4% on their nest eggs. This means that they are eating away at the balance of their investment, which means sooner or later they will be lining up for a pension.
    Wouldn't it be wiser on the governments part to start paying part pensions in order to preserve retirees nest eggs while the returns are low, rather than watch them lose all potential for looking after themselves? The help could cut in once the total returns were less than the pension rate.
    This of course would have to be means tested so that people earning adequate returns are not collecting undeserved cash.
    Farside
    11th Apr 2016
    9:26pm
    In principle I have no issue with part or even full pensions being paid so long as they do not morph into welfare for the asset rich.

    I could easily support using deemed returns on assets to calculate deemed income that is topped up as necessary should incomes fall below pension levels, and repaid in HECS style when making windfall returns or from the estate.
    Radish
    12th Apr 2016
    10:20am
    If I was asset rich and living in poverty there is one simple solution.

    "Sell the darn asset" and free up the money. There is no way I would be living like that in my later years. Down right stupid in my opinion.
    ex PS
    12th Apr 2016
    11:24am
    Radish, I suppose it comes down to the old chestnut, "Define poverty?"
    I have, as far as I can remember work on a theory of if you own your own house and spend as much as you can on making that house efficient and cost effective to run you will be able to live on a pension quite comfortably .
    As it happens my determination to own my own home has paid
    unexpected dividends as after paying for it I have managed to invest enough to live modestly as a self funded retiree.
    If I had known forty years ago that there was a chance that my family home would be assessed when applying for a pension I probably would not have embarked on this strategy.
    I would be lining up for a taxpayer funded pension, everyone would lose. This is why asset testing the family home is a bad idea, destroying the incentive to improve someones lot is always a bad idea.
    Farside
    12th Apr 2016
    1:23pm
    Couldn't agree more Radish, which is why I think a good equity release product would offer the best of both worlds i.e. instead of asset rich cash poor, be financially comfortable and content with the lifestyle you enjoy. Selling the asset wholly or partially seems to be a no brainer.

    Not everybody shares this view of course; you will have read in the threads above that many retirees prefer to remain martyrs to the cause so they can leave their assets to their children and bleat on how the government should provide them a welfare safety net bail them out of their investment decisions. Curiously, they don't seem to see that provision of this welfare falls upon the generation most likely to inherit the assets.
    rogerh
    16th Apr 2016
    1:03am
    Don't take out an Equity Release loan with the present rates. I have one with the CBA and they are charging me $12 per month euphemistically called a Loan Service Fee and interest at the rate of 6.75 percent. Since we took out our loan we have drawn down just over $100,000 due to spending money on house improvements, new car and cost of living.
    I tried to take out a standard loan but because around 98 percent of my income is from foreign (New Zealand) government pensions; they are not eligible for mortgage income purposes; (why not?). The monthly payments on the Equity Release Loan are now approaching $600 for interest plus fee only, which is starting to make a real impact on our lifestyle again. Therefore, we will be forced to sell our house in about 12 months to reduce the mortgage; there's another $35,000 going in Stamp Duty - thanks to the Victorian State government.
    Farside
    16th Apr 2016
    1:13am
    This is why a HECS style equity release scheme is required. Btw, you may be entitled to full or partial exemption from stamp duty if you receive a pension and the property is less than $750,000
    http://www.sro.vic.gov.au/calculators/pensioner-exemption-or-concession-calculator
    Alan
    19th Sep 2016
    4:06pm
    Asset rich - income poor. People need to accept that their assets should be used for living and downsizing if necessary. The pension is not their so that asset rich people can keep their assets to pass to their children and receive a pension. I could rearrange my financial affairs to become asset rich and would then just qualify for a pension.

    The pension should provide an adequate standard of living for those who do have the means to provide for themselves. The value of the family home should be included for means testing but should be set so that modest homes appropriate for two to three people meet the requirement but Mc Mansions do not!
    Farside
    19th Sep 2016
    4:41pm
    Leading with the chin my friend. There are many on this forum who take strong exception to dangerous ideas like using one's assets to alleviate cash poverty.
    Star Trekker
    19th Sep 2016
    5:00pm
    A modest home worth $30-50,000 in any suburb 40 years ago is now a modest home in a wanted suburb worth $400,000+ .
    You cannot blame the owners for sitting on this so-called asset. Trying to get the same house in another area might cost even more and not worth the risk.
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    17th Nov 2017
    10:14pm
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