Older Australians are the big beneficiaries of months of pre-election promises, so who will be getting your vote?
The Reserve Bank of Australia (RBA) decision to raise the official interest rate yesterday sent shockwaves through many Australian households as it mostly means more cost-of-living pain in the short term.
The hip-pocket hit is unlikely to make Prime Minister Scott Morrison more popular with the general public, but he may have less to fear from older voters at the election because they will benefit from many of the Coalition’s policies.
In among the headlines signalling economic doom and gloom, there are some real gems for those nearing or in retirement.
Almost buried under the news of the interest rate rise was social services minister Anne Ruston’s statement that Age Pension deeming rates were to be left untouched for two years.
A deeming rate is a way for Centrelink to estimate the income you derive from assets. Set between 0.25 and 2.25 per cent per annum, the deeming rate assumes the assets earn a set rate of income, no matter what they really earn.
This number has an effect on the amount of Age Pension, if any, you are entitled to. Raising official interest rates means that those earning income from savings will begin to receive more. But because deeming rates have been frozen, any increased profit will have no impact on pension eligibility.
Super drawdown extension
Announced a few days ahead of the Federal Budget was an extension of the temporary reduction in superannuation minimum drawdown rates.
These rules dictate what percentage of their super balance a retiree is legally required to withdraw from their pension account each year they are in retirement, based on their age.
The minimum amount was slashed by 50 per cent at the start of the pandemic, and this discount has remained in place ever since.
Extending this discount until the end of the 2022-23 financial year means many retirees will be thousands of dollars better off as they won’t be forced to take money from super and can let it grow.
Labor’s shared home ownership scheme
The federal opposition has revealed a scheme intended to address housing affordability by splitting the cost of a mortgage (and ownership of the property) between individual homeowners and the government.
This policy may appear to be aimed at young first-home buyers, but experts say the primary beneficiaries of policies such as these are older people.
“Most customers with shared equity generally tend to be older,” says Lindsay O’Sullivan, chief operating officer of low-deposit home loan lender Keystart.
“In our experience, there might be people who have previously been homeowners and through a relationship breakdown are no longer the family homeowner,” he said.
Any age pensioner who has had to deal with Centrelink would probably tell you there are a number of flaws in the online portal.
The system has been the subject of many complaints over the years, perhaps leading to some pensioners missing out on payments they were entitled to.
“Millions of Australians interact with myGov every day and rely on it to provide essential services,” says Labor leader Anthony Albanese.
“It’s not up to scratch, and Australians deserve better. That’s why we will review myGov, and make improvements where necessary.”
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