Increasing the Age Pension could solve super problem

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The Grattan Institute has suggested that increasing superannuation tax breaks could actually worsen gender equality in retirement and has instead proposed changes to the Pension system as a possible solution.

Grattan Institute fellow Brendan Coates explained that Australia’s superannuation system is failing Australia’s poorest, who are “disproportionately women” and explained why the push to increase the caps on pre-tax super contributions would make the situation worse.

“Women save less via superannuation because they earn less. The current generous annual caps on pre-tax contributions are predominantly used by older, high-income men to reduce their tax bills,” Mr Coates said.

The Grattan Institute’s research paper proposes two reforms that together could help close the gender gap in retirement incomes and provide a boost to the savings of Australia’s most vulnerable women.

Pension increase
A targeted boost to the Age Pension for retirees who do not own their own home, delivered as higher Commonwealth Rent Assistance, would do the most to alleviate poverty in retirement.

Single women who are retired and do not own their own home are the group most likely to rely almost solely on the Age Pension, and are at the greatest risk of poverty in retirement.

This proposal is affordable: a targeted $500-a-year boost to Rent Assistance for Age Pensioners would cost just $250 million a year.

Better targeted tax breaks
Better targeting super tax breaks to the purposes of superannuation would reduce the gender gap in superannuation savings.

Super tax breaks provide the greatest boost to high-income earners, who don’t need them. Most of these high-income earners are men.

Better targeting of super tax breaks could free-up revenue to provide more targeted support for retirement incomes for people who need it most, and to reduce marginal effective tax rates for low- and middle-income earners to encourage greater female workforce participation.

Industry response
The Association of Superannuation Funds of Australia (ASFA) attacked the Grattan Institute’s research, calling the proposals “Victorian era”.

ASFA Chief Executive Dr Martin Fahy said the Institute’s paper, canvassing the best way to close the gap, adopted a fatalistic view of the future earnings of women and low paid workers and condemned them from an early age to poverty in retirement.

“This is simply Grattan having another go at super, urging abandonment of legislated increases in the Superannuation Guarantee (SG) and ignoring the reality that lifting SG and in fact, doing it faster, is the real solution to improving women’s retirements,” he said.

“This paper adopts a set-and-forget view of class and income inequality. Proposals to fix the Budget by substantially cutting back on super entitlements and then giving a relatively few older, low income, retired women in rental accommodation less than $10 a week, are insulting and demeaning.

“Instead, we should be lifting women’s long term prospects with more money in super. Dignity in retirement requires a decent retirement income.

“There are around 270,000 Age Pensioner households on rent assistance and giving each of them the additional rental assistance proposed by Grattan would cost only around $140 million a year. Such a measure is affordable within the overall Budget context and should be considered on its own merits.

“The Age Pension and rent assistance alone cannot provide an adequate or acceptable retirement for Australians. The paper misses the reality of retirement living costs in Australia and the aspirations of the community to live comfortably, not just survive, in retirement.”

Read the Grattan Institute’s report.

What do you think? Do you support an increase to the Age Pension for pensioners that don’t own their own home?

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Written by Ben

82 Comments

Total Comments: 82
  1. 0
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    Why should it be just for the Age Pensioners? I’m single, in my 60s and have to survive on the DSP and I still have to wait for just under 5 years until I’m eligible for the Age Pension. I still have all the same bills as one on the Age Pension, yet I wouldn’t be eligible for any further breaks. Why don’t the government increase the DSP, Carer & Age Pensions by $100 pw for singles & $75 pw for couples. We could then live comfortably. I have no Super.

    • 0
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      A person is allowed to draw their super at 55 if they are not returning to full time employment, but it is worth looking into any alternatives to drawing the whole lot.

      I had to leave work at 58 with chronic illness and despite drawing my super, I found myself quite disadvantaged on disability support pension, as it provided no incentive to reinvest a portion of my super.

      Instead I was treated like a person on the dole who had a lot of money in the bank.

    • 0
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      Typical Grattan rich man’s spiel.
      The Grattan Institute now wants to bring back the greatest tax dodge ever invented for rich Australians where they can launder their income to avoid the correct rate of tax. What a bunch of crooks this so called ‘Institute’ is! None of us should be giving it the time of day.

    • 0
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      Mick, I am surprised by your comment on the Grattan Institute as I always thought they were much more left leaning than right. I guess no-one from either side of politics likes them that much then. I don’t agree with more tax breaks for high income earners but I do see there could be some good out of more rent assistance for struggling pensioners, (providing of course that it didn’t go straight into a poker machine). The issue of raising the SG is something that has to happen soon, but though by doing that may help in the more distant future, it doesn’t help the pensioner who is struggling now.

  2. 0
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    Absolutely agree.

    To imagine private enterprise, or employers of any kind have an interest in improving the wage and retirement outcomes of women, is naive to say the least.

    Nothing will change until we have a government with gumption enough to shoulder its responsibilities to all its citizens, not just the fortunate and fully employed.

  3. 0
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    Home owners need a supplement to pay rates and taxes to enable them to stay in their own home not just non home owners and some of those are by choice as they get rental assistance etc and have the maximum dollars invested.

    • 0
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      Exactly. Hubby has just gone to pay our rates, $2500.00. He is almost 67 amd I am only 63 and will not be eligible for the aged pension until 66. He only gets a part pension because I opted for a pension from my Federal Government superfund which although is deemed as a pension on Federal Government letterhead, is deemed to be income by Centrelink. It is not equivalent to an aged pension and we draw money from our super to make ends meet.

  4. 0
    0

    I agree with the ASFA the Grattan institute is using so called gender equality to stop an increase of the super guarantee. It’s not an either or question. They are trying to stop Australians getting a 2.5% pay rise that goes into their super by making it all about gender. It’s an easy target feminists throw themselves on the ground and foam at the mouth at the first opportunity and they’re as thick as bricks. Women generally get into trouble once their husband dies and they are down to one pension especially if they rent , it’s very difficult to live on and many don’t manage it well.
    Increasing the SG won’t help them much unless they work, even today there are many that don’t work or only work part time. Depending on your husbands super may not get you a nice retirement and you can’t expect him to work till he’s dead for your comfort. Increasing rent assistance will help single pensioners and believe me there are some men as well but most die earlier than women. The only thing that will fix the problem is for women to get a job and keep it, the days of living on your husbands wage are done.

    • 0
      0

      Tib it sound like to me that you are a “Male Chauvanistic” sorry if the spelling is wrong but I’m sure you getthe idea

    • 0
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      No not at all as far as I can see this is the only way to solve this problem. Unless you can suggest a better solution. But I wouldn’t expect the government to pick up the tab, just won’t happen.

    • 0
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      By the way I don’t think it’s chauvinistic to suggest women get a job isn’t that what feminists have been demanding, well here’s your big chance.

    • 0
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      It would be ideal if all women could get a job and therefore have superannuation when they retire.
      The truth is that many can’t get a full time job because there are no jobs, or they have children and older relatives to be looked after. Expecting women to solve that problem themselves is a bit much of a stretch.
      If stay at home mothers received the same assistance from the government that child care facilities and working mothers receive then that assistance from the government could be paid into superannuation for the stay at home mother’s retirement package.

    • 0
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      Autumn Men have to find jobs whether there are jobs or not. Men have older relatives and children. But we don’t use them as an excuse to do nothing. Men don’t get money going into their super when they don’t have paid employment. All they get is the dole or are suggesting that men should get superannuation when they are on the dole?

    • 0
      0

      It would be far better for society to enable women to stay at home with children and reduce demand for jobs. A one breadwinner per family rule would eliminate unemployment and greatly conditions for children as well as overall mental health and well-being. Pushing women out to work was the stupidest thing ever done both in social and in economic terms.

  5. 0
    0

    If rent assistance is to be increased for non-homeowners then how about rates assistance for homeowners. After my pension discount my rates are still around $3,000 a year or $60 a week.

    • 0
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      Having just paid my rates, now costing $3400 a year, I added the cost of just house insurance & found it costs me $109 a week just to own & insure the house.

      To live in it I have a rapidly increasing maintenance cost. Increasing as it is now 40 years old, I am too old to do a lot of what I always have done, & costs of paying for work are increasing rapidly.

      I have averaged another $75 a week on things like new guttering, new stove, 2 water tanks a pressure pump, & a grey water pump out pump over recent years.

      I think renters have it easy actually, when I consider finding $13000 to paint the place. Time to stop crying for those who dis not try hard enough when younger.

    • 0
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      Agreed Hasbeen, our house is approx. the same age as yours and now needs some work done on it. That will only happen with a lot of planning and going without other things, we have no luxuries unless running a car is considered a luxury in a rural area with no public transport.
      I find that it is necessary to find another $50 per week or fortnight over and above the cost of rates and insurance just to stay abreast of the repair bills when they come in.
      I agree renting has a lot of recommend it as once the rent is paid there are no further expenses except for the telephone if it is a landline.

  6. 0
    0

    This is a general comment about our complete welfare and pension system.
    You say an increase of 252 million to the budget.
    Do you realise that if the government put in one million for every man woman and child to the comsuper system then devise a system that caters for all the fund should normaly return over $50,000 a year. I dont want to say how it could all be done as there is so much to consider. But by doing this all social welfare and pensions would be covered. No more dipping into the budget.
    Move a large percentage of centrelink to the super system and or to border protection and fraud against the govt.
    Its not simple as we dont want bludgers collecting what they dont deserve but we could reduce taxes to workers, decrease gst and have funds to build the best infrastructure ever.

  7. 0
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    I dont believe an extra $500 a year will really make much difference, in reality its probably only a week and a bit in rent payments. It would be nice if the government built housing for seniors, not “StateHousing” but retirement type villas. Part of the agreement to rent there would be tenants maintain gardens, make meals available to others in the complex by way of a large kitchens (or for the local primary schools for charity events or the homeless) and eating area if required etc. A large workshop on the premises for hobbies and the opportunity to offer services to the public such as mechanical repairs, fixing of push bikes, these are just ideas. My reason for this is simple, there are many retirees and over 55’s who are unable to find employment, yet have many skills available to share with the community. Productive and socially people are healthier if engaged with others and their community.

    • 0
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      Daisy, I like your thinking, well thought through and eminently achievable, if we can get someone with some vision into public office who might realize what a valuable resource we have in the over 65s in this country. Sadly, I wont hold my breath waiting!

    • 0
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      sounds good in theory Daisey, but not in reality, cannot see the Government agreeing to anything like that they are too busy linning their own pockets and handing out benifets hand over fist to those who come to our shores and take take take but don’t contribute in any way, not even learn English let alone abide by our customs etc

    • 0
      0

      Daisy, what a great idea. It is true that we gals do lose out on super because of family responsibilities. I agree that 500. is a token and there must be better ideas. I like yours. I have said this before and will say it here again too. We must insist and demand that the housing issues for young families starting out and for those who are retired and want to downsize can find affordable options. For way too long there are too many incentives for investors and developers to speculate in the housing market and the result is what we have now.

      It must be so addictive for local and state governments that have been able to cash in on these high high property values and so far, only weak attempts have been made towards the housing problems. We need an approach that has several sound strategies that will work in tandem to make living in a home possible for all Australians.

    • 0
      0

      Perhaps you would like an Olympic swimming pool and a live in maid. Sorry ladies the government isn’t going to take over from your husband. But nice try. Ha ha

    • 0
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      Tib, your demeaning attitude towards women doesn’t go unnoticed. One can only assume ‘the little wife’ got the better of you, with your built in bitterness and antipathy towards the fairer sex -what a nasty little fellow you are!

    • 0
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      Oh dear Big Al what a white knight you are. Wifey got you under the thumb. Don’t forget to do the washing and make dinner tonight and if your very very good you may get some. But probably not. Ha ha

  8. 0
    0

    I support an equal increase in Pension equivalent to the rent assistance amount of $163 per fortnight for all home owners and non – home owners and discontinue the rent assistance program. It’s about time all OAP were on level playing field.

  9. 0
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    Yes. I do, pensioners have worked very hard all the lives, they deserved better!

  10. 0
    0

    I heard that “equality” word again which is the first indication to me I am reading something that is not all it seems to be.
    An increase in age pension sure, but finding an excuse to tie it to gender equality is to me a bit far fetched.

    • 0
      0

      Agreed Charlie. Somehow each time an increase in age pension is mentioned, or superannuation discussed that word “equality” does rear its ugly head and manages to deflect and discussion into a gender “war” rather than a discussion as to the best way for pensions and super payments to be handled.

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