Dear Mr Morrison …

Dear Mr Morrison …

We know it’s hard to keep in touch from the corridors of power so here’s what real Australians would like to see on Tuesday.

We realise that this is a very late submission on Budget 2016/17 and that the ink is probably already drying on the documents which will be distributed on Tuesday 3 May, the contents of which will be revealed at 7.30pm that night.

But we feel it is really important for politicians and policy makers to be able to feel the pulse of ordinary Australians, particularly when your jobs force you to experience a more cloistered life in the corridors of power in Canberra.

YourLifeChoices, established since 1999, has 140,000 baby boomer members who receive daily enewsletters on matters of importance in retirement and in the planning stages leading up to retirement. Every year we survey our members on a range of topics, including likely changes to retirement income policy in that year’s Federal Budget.

This year’s results contain some surprises. With more than 4000 responses, it is 99 per cent statistically accurate, so we believe you will be interested to learn that the family home is no longer sacrosanct when it comes to the Age Pension assets test. But if you revive the legislation to lift the age of entitlement to the Age Pension from 67 (2023) to 70 (2030) you will be going against the wishes of the vast majority of Australian baby boomers.

So below is a summary of the responses to this survey. We are happy to take questions or add clarification on any point.

Our recommendations and comments on behalf of older Australians are as follows:

Overview statement on Australia’s retirement income system

Australia’s retirement income system is fundamentally flawed. Letting market forces largely control the superannuation savings of a majority of the population has seen a widening poverty gap in retirement. Put simply, those who own their own homes in retirement will at least muddle through. Those who do not are condemned to live in poverty for the 25-30 years they will probably spend in retirement. The oft-quoted Association of Superannuation Funds of Australia (ASFA) Retirement Standard gives a false picture of income needed in retirement. It assumes all retirees, whether experiencing a modest or comfortable lifestyle, fully own their own residence. This is far from the truth, with recent CPA research confirming that the percentage of boomers hitting retirement with a mortgage is rapidly increasing. CPA Australia – Household Savings in Retirement 2012 notes an average debt of $117,000 for those aged 60-69, not retired and $55,000 for those who are. If interest repayments on $55,000 of debt are included in retirement expenses, then even more Australians are living below the poverty line than is currently understood. We know the OECD states that one third of Australians in retirement are living in poverty, we know that the Age Pension as a percentage of GDP is the third meanest in the OECD nations and we know that fees on superannuation are the third highest in OECD nations. It is well documented that the top quintile of households benefits most from the generous tax concessions on superannuation – put simply, the more you earn, the more you can put into a tax-free structure, the more you save, the more you have later in life. So our system benefits those who need it least, the most. And those who need support the most, the least.


YourLifeChoices Budget 2016 recommendations

  1. Removal of generous superannuation tax concessions by lowering the upper limit for concessional tax from $300,000 to $250,000.
  2. Funding for an immediate ‘root and branch’ review of all aspects of retirement income policy is urgently needed. Such a review should be a bi-partisan process which covers the Age Pension, superannuation and taxation matters.
  3. Adoption of agreed changes to make our retirement income equitable for all, rather than high wealth households.
  4. A moratorium on changes to retirement income policy and superannuation in particular for a minimum of five years, following above recommended changes becoming legislation
  5. A review of the base amount of the Age Pension, with an increase for those on the full pension, in particular support for those renting.
  6. No change to Age Pension entitlement age from 67 to 70 until an improvement in the opportunities for older workers to gain employment is realised. Currently the average time for an older worker to become reemployed is a disheartening 483 days. For all jobseekers, the average is 294 days.
  7.  A consideration of including at least part of the family home in the assets test for an Age Pension if that home is valued at $2.5 million or more.
  8. Funding for an exploration of a government-backed equity release scheme to help retirees supplement their retirement income.


Thank you for taking the time to consider our feedback and recommendations.

What do you think? Has YourLifeChoices correctly summarised the situation of many retirees? Does this accurately represent your point of view? Or do you have a different perspective?

Related articles:
Budget 2016/17 – what do you want?
How the PM plans to tax super
Budget 2016/17 – what would you ask the Treasurer?

Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

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