Pension taper trap hits savings of middle income retirees

Actuaries worry means test will force Australians to spend savings before retirement.

Middle Australia’s mean pension test

A quarter of Australians approaching retirement face spending their savings or losing access to disposable income from the Age Pension, putting them at increased risk of running out of money.

That’s the view of Spending in Retirement, a paper written by Andrew Boal, chief executive of actuarial firm Rice Warner, for the Actuaries Institute. It argues that the means test applied to retirement savings encourages older Australians to spend their nest egg before they retire.

Though most Australians have so far proven to be cautious in their spending, the paper says complexity around the means test also makes it difficult for retirees to plan for the future without professional guidance.

“Without assistance, it is impossible for the layperson to know how much to withdraw and when deferred lifetime annuities (DLAs) might be a suitable product given their circumstances,” he said. “We need to find a way to deliver appropriate advice cost effectively to help the growing number of people entering retirement with sufficient superannuation savings to encounter these problems.”

Mr Boal identifies a ‘middle group’, likely to be eligible for a part Age Pension for much of their retirement, as most needing guidance.

These Australians have $300,000 to $800,000 in retirement savings. This group, according to Investor Daily, “covers around 25 per cent of retirees currently, but it is expected to grow to more than half of the population”.

“If a retiree has less than $300,000, they will be entitled to a full Age Pension for most, if not all, of their retirement as their main source of income,” says Investor Daily. “Meanwhile retirees at the other end, with more than $800,000 and home ownership, will be less likely to be eligible for any Age Pension.”

A mid-income retiree could lose as much as $40,000, according to the Spending in Retirement report, which adds that the more they save, the worse off they are.

The taper rate acts to restrict a retiree’s access to Age Pension payments based on the level of their assets through retirement.

Prior to 2017, the taper rate was set at $39. But from 1 January 2017, a retiree’s annual pension was cut by $78 for every $1000 of assets held above the relevant thresholds.

This ‘taper trap’ “encourages some retirees to spend their savings quickly, and risk living on the Age Pension alone”, the Actuaries Institute claims.

If a retiree has less than $300,000, they will be entitled to a full Age Pension for most, if not all, of their retirement as their main source of income.

“While the system needs to be affordable and fair, it also needs to help Australians spend their money in retirement.”

Mr Boal urges an “equitable taper rate that does not unduly encourage retirees to spend their savings too quickly”.

“The wealthy end will be okay: they can afford to get their own advice and have enough money to get by reasonably well,” he said.

The lower-income people generally use their smaller account balances to subsidise the Age Pension. But the middle group is really in need of advice and new retirement products, to give them the confidence to spend their savings, so they can afford to live as good a lifestyle in retirement as possible.

If, according to Mr Boal, one of the objectives of the superannuation system is to “facilitate consumption smoothing over the course of an individual’s life”, and during retirement, then this ‘middle’ group would benefit from:

  • encouragement to acquire longevity protection to give them more confidence to spend their savings during retirement
  • a fairer taper rate that does not unduly encourage them to spend their retirement savings too quickly
  • low-cost access to information, guidance, and advice to help them make better decisions about their retirement.

The report says that longevity is one of the major risks faced by retirees and that the system should provide retirees with the confidence to safely spend more – “enjoying a better lifestyle, particularly during the early and more active years of retirement”.

The federal government’s Retirement Income Review is set to be handed down on 24 July.

Are you confident the taper rate will be part of the government’s review?

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    COMMENTS

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    older&wiser
    10th Jun 2020
    11:13am
    My single elderly neighbor over the road is a self funded retiree and she kicks herself for saving her butt off over the years to be self reliant. She did not spend the money on holidays, lavish home repairs, or new cars. Now she is still only a small bit over the limit, and gets NO help, no assistance. None.
    Farside
    10th Jun 2020
    11:25am
    fremdscham is alive and well. Your neighbour should focus more on her good fortune to be financially independent than jealous of the perks enjoyed by some of her cohort. There are many living off pensions who would gladly exchange places.
    Anonymous
    10th Jun 2020
    11:39am
    Farside you are the one green with envy here.
    Farside
    10th Jun 2020
    1:44pm
    Retiring Well, remind me what envy do I have?
    KSS
    10th Jun 2020
    3:24pm
    If this lady is single, 'elderly', a homeowner and has enough money to not be eligible for a Government pension, she must have assets worth more than $578,250. So what is she 'saving'it for?
    dabi56
    10th Jun 2020
    4:06pm
    Maybe she is saving the 500 k so that in ten years time she is not left trying to scrape by on just the old age pension. People are living well into their 80s these days and a single old age pension is not much.
    Youngagain
    10th Jun 2020
    4:14pm
    She may be saving because she anticipates high health care costs down the track, or perhaps she will need to pay for household repairs or household help. Or maybe she wants to have good quality aged care. But having saved to afford those comforts, she is now expected - by greedy people - to spend her savings for the sole benefit of the taxpayer and no benefit for herself, while the greedy people who spent up big during their earlier life live off the taxpayer and call people who want to benefit from their own money 'selfish'.

    If the government doesn't do something about the taper rate, those about to retire will be increasingly tempted to blow their savings and claim a pension, because there is simply no benefit in having a little more and losing the pension.

    BTW Farside - there is NO good fortune in having savings. It's a result of hard work and careful planning and management. Those savings didn't fall from the sky. But somehow those who didn't save seem to think those who did were 'lucky' and should forfeit all the benefit they earned and just gift their savings to people who didn't strive so hard.
    Youngagain
    10th Jun 2020
    4:14pm
    She may be saving because she anticipates high health care costs down the track, or perhaps she will need to pay for household repairs or household help. Or maybe she wants to have good quality aged care. But having saved to afford those comforts, she is now expected - by greedy people - to spend her savings for the sole benefit of the taxpayer and no benefit for herself, while the greedy people who spent up big during their earlier life live off the taxpayer and call people who want to benefit from their own money 'selfish'.

    If the government doesn't do something about the taper rate, those about to retire will be increasingly tempted to blow their savings and claim a pension, because there is simply no benefit in having a little more and losing the pension.

    BTW Farside - there is NO good fortune in having savings. It's a result of hard work and careful planning and management. Those savings didn't fall from the sky. But somehow those who didn't save seem to think those who did were 'lucky' and should forfeit all the benefit they earned and just gift their savings to people who didn't strive so hard.
    KSS
    10th Jun 2020
    5:45pm
    So define 'elderly'. She may not have 10 years!
    Farside
    10th Jun 2020
    8:00pm
    Youngagain, I wonder whether you recognise "good fortune" – it means having had the opportunity to save and not having setbacks take it away from her. It is her choice to sit on her money but don't cry about others receiving a pension while she does not need one. She is in the fortuitous position of having a choice over how she spends or saves her hard earned – that choice, priceless. There are plenty of elderly people that have eked out an existence while living in poverty all their lives and could never dream of spending up big. Why do you feel that this old gal needs special recognition? Good luck to her if she is saving for repairs or help or aged care or just keeping it, that's what elderly people do.
    Youngagain
    10th Jun 2020
    9:04pm
    What a load of bollocks, Farside. EVERY Australian of our generation - except the small percentage of genuinely disabled and perhaps some who were widowed with a family - had the opportunity to save. Vast numbers CHOSE not to, and of course they now claim they didn't have the opportunity and that those who did were 'fortunate', but it's garbage. I eked out an existence living in poverty for 30 years, and I was forced into early retirement by ill health, but I still saved for retirement. If I could, so could others. I can't find a pensioner retiree who didn't earn twice my income and have far more opportunity than I could ever dream of.

    And NO, the poor self-funded retirees DOES NOT have a choice about anything other than whether to spend quickly and enjoy their early retirement and be poor later, or spend slowly and give all their savings to the taxpayer, and STILL be poor later. She CANNOT save for future repairs or aged care, because a stinking system denies us all that privilege and forces all but the wealthy into hardship. That's why the system is wrong. It denies us any reasonable choice, denies us the benefit of saving, and encourages people to manipulate to qualify for the pension.
    Greg
    10th Jun 2020
    10:37pm
    Well she's only a small bit over no doubt she's spending money to live and very soon WILL be eligible for the pension/benefits.
    Youngagain
    11th Jun 2020
    8:52am
    She'll get a pathetic pittance, Greg, while neighbours who throw fifty dollar bills down the throats of poker machines every week get around $1 million from the taxpayer purse. Great system some of you are endorsing!
    Hoohoo
    11th Jun 2020
    3:05pm
    That's what I was thinking, Greg. Actually, the article quotes: “...Meanwhile retirees at the other end, with more than $800,000 and home ownership, will be less likely to be eligible for any Age Pension.”

    According to this, the elderly lady is already WELL within the "extra benefits" income bracket. She should already be easily eligible, on a reduced Old Age Pension. This lady is rich and secure, however she made and saved her money! Has she or hasn't she got over $800,000? I think you're making up her misery, olderandwiser.

    As a small business partner and recipient of Jobkeeper, I'm receiving a regular income for the first time in twenty years. It's amazing! I can plan spending for the first time in ages and the assurance of that regular payment is simply life-changing. If someone has a regular payment from OAP they should be happy.

    Perhaps the solution is to have a much sharper tapering at the richer end of the pension eligibility, to stop what can only be called middle class welfare in the form of a pension to very wealthy people, when that OAP was designed to look after people who don't have adequate Super to fund their retirement. Crumbs, the mega wealthy still get Seniors' cards and all the benefits, even if they don't qualify for ANY OAP or those perks! That's upper class welfare!
    Suze
    14th Jun 2020
    10:43am
    You are quite right older&wiser
    People that save for their old age get penalised by our system
    Like other civilised countries we should have Universal Pensioon.
    dabi56
    10th Jun 2020
    11:29am
    The Australian Pension system stinks. You save all your working life and then no pension, no fringe benefits. My solution is give everyone a full Age Pension and tax all income including super if you are streaming. Then everyone is equal. No income or asset test.
    Mark
    10th Jun 2020
    12:26pm
    Agree completely. This would be a much fairer system.
    SuziJ
    10th Jun 2020
    12:51pm
    If you're going to tax ALL, then people, like me (on the full DSP, and, then when eligible, the full Age Pension), with no savings or super, no investment in a home, just my household goods and a 14 year old car will be taxed just to have a full refund in July. What's the use of that if you 'need' the income during the year, and not a lump sum at tax time?
    dabi56
    10th Jun 2020
    1:43pm
    Hi SuziJ the DSP is non taxable and you would pay no tax on it. Once you are on the AGE pension you would be eligible for the Seniors and Pensioners tax offset SAPTO , plus LITO (Low income tax offset) and pay no tax. Centrelink would not withhold any tax from your pension. At least that is the way I believe it works currently.
    Mez
    16th Jun 2020
    12:25pm
    Not possible to make it equal in practice!
    Just look at the Communist systems which believes in equality but never works in practice!
    People who have worked all the lives and are on the full pension in effect are living off the taxes they paid so they deserve it!
    Lastly, when one thinks about it, it is not worthwhile having accrued a lot of money unless when prefers to have a more luxurious lifestyle in their remaining 20 to 30 years!
    Really! One cannot take the wealth with them to the other side so happiness is the most important thing in life and that comes with being free from worry, being healthy and living comfortably within one's means.
    We are spiritual beings, after all!
    Lescol
    10th Jun 2020
    11:35am
    Yes & this is the reason of why I believe there should be only income testing (ATO). If true to current form, this July review will be another marketing exercise & produce nothing.
    Tanker
    10th Jun 2020
    11:40am
    It is amazing that so many who are really well off still keep trying to get the age pension as well. Be grateful you don't have to rely on it.
    It is almost a perverse reversal of the Tony Abbott cry of "wealth jealousy".
    Most of those who possess that degree of financial security achieved it through favourable tax concessions that were simply not available to the less fortunate.
    Anonymous
    10th Jun 2020
    11:42am
    Your jesting I believe. I certainly would not like to live on the return on $1 million today. Only have $500,000 and you have heaps more income.
    dabi56
    10th Jun 2020
    11:49am
    Tanker some people did not negatively gear property, we just worked ,saved and paid taxes. And for most of my life I was promised a dignified Age Pension and not income and asset tested Welfare.
    Farside
    10th Jun 2020
    1:50pm
    and don't forget the cognitive dissonance when it comes to spending capital if the returns on it don't provide an adequate income in retirement
    Youngagain
    10th Jun 2020
    4:21pm
    Tanker, you obviously have no comprehension of the problem. This is nothing to do with 'wealthy' people. This is about people who do not have sufficient income to live on. Many have much less than aged pensioners. The people referred to in this article have modest savings, little income, and want to BENEFIT from their savings - not GIFT every cent to the taxpayer.

    If you went without holidays to put an extra $50,000 in the bank, would you be content to forfeit $50,000 in pension income and just spend your $50,000 savings? I don't think so. You would expect to be a little better off for having saved. And so do the people you are referring to - and rightly so. But of course we can keep being nasty about them and supporting a system that is unfair to them, and they will be sorely tempted to spend all their savings quickly so that they actually DO get some enjoyment from them, and then the cost of pensions will skyrocket.

    Farside, your envy is showing, and it's not nice. It's nothing to do with 'cognitive dissonance'. It's about fairness, equity, and what's good for the nation. But you keep taking your nice pension cheque and insisting that others should be punished for saving well.
    Farside
    10th Jun 2020
    8:02pm
    Youngagain, what envy? I have no pension, never received a dollar from the government. I think you are projecting your set of values.
    Youngagain
    10th Jun 2020
    8:56pm
    No Farside. I'm lobbying for what is GOOD FOR THE NATIONAL ECONOMY.
    Farside
    10th Jun 2020
    9:20pm
    Strange way to lobby Youngagain by writing of my perceived envy of the well heeled elderly living in penury.

    p.s. you are projecting austerity values and the national economy disagrees with you.
    Youngagain
    11th Jun 2020
    8:45am
    No, Farside. YOU and the national economy are projecting austerity values. Everyone but the very rich must be equally poor. Can't let savers benefit. Can't make hard work worthwhile. It's socialism at it's worst.
    Farside
    11th Jun 2020
    2:06pm
    You are confused Youngagain. The economy is not arguing for austerity. That seems to be the province of a certain group that want consumption spending reigned in and intolerance for others that choose not to live the same sort of cloistered lives as themselves. There are undoubtedly people who could have made better choices with spending but overall the economy is better off for it. We are undoubtedly living better lives today than our ancestors living austere lives did before us. You come from a very conservative place if this is socialism at it's worst. Morrison would be surprised.
    Hoohoo
    11th Jun 2020
    5:09pm
    Youngagain, we're not talking about someone who has saved just $50,000, so why even use that example?

    We're talking about someone who has saved over $800,000. I guarantee they didn't save it by not raiding the piggy bank once in a while! Or take an overseas holiday after a lifetime of slog and camping holidays only.

    The problem has mainly arisen because interest rates are so ridiculously low and people who have saved cash for retirement (like their parents did) aren't getting any interest flow to fund their retirement.
    Youngagain
    12th Jun 2020
    8:40am
    Hooboo, I was referring to savings AN EXTRA $50,000. And plenty of people saved over $800,000 by sacrificing holidays and restaurant dinners and new cars. Savings at that level did not fall from the sky. The spendthrifts and bludgers and selfish folk love to pretend that somehow those with a little more were 'more fortunate'. That's BS. They worked harder and spent less freely. And now they are suffering for it - very unfairly. But yes, interest rates are the key problem. If they were even at the 7% they were at when I started work, there would be no problem.
    Farside
    12th Jun 2020
    8:22pm
    I suspect there are plenty of folk sacrificing holidays and restaurant dinners and new cars but not sitting on $800k in savings ... what are they doing wrong?
    Youngagain
    13th Jun 2020
    8:26am
    They left it too late in life to start making sacrifices, Farside. Or they spent the money they saved on other indulgences instead of investing and making it grow. And now they are insisting that they should have higher incomes than people who tried to position themselves to live off their own savings, and those who tried to be more responsible should suffer unfairly. Jealousy is a curse.
    Farside
    13th Jun 2020
    10:43pm
    Jealousy is indeed a curse but who is jealous of whom? I am not hearing a chorus of pensioners arguing they should have higher incomes than the SFR. Glückschmerz can also be a curse.
    Youngagain
    14th Jun 2020
    10:28am
    Farside, there ARE vast numbers of pensioners with much higher incomes than vast numbers of SFRs. Those pensioners who do not should not begrudge savers their savings and certainly should not support a system that deprives people of what they earn and deserve.

    People who work hard and plan responsibly are entitled to complain when unfairly deprived such that those who didn't strive as hard are better off. It's disgraceful of you to suggest that such deprivation is acceptable.
    Farside
    14th Jun 2020
    12:55pm
    Youngagain, do you have any facts to support your opinion "there ARE vast numbers of pensioners with much higher incomes than vast numbers of SFRs"?

    But let's assume you are right, it does not mean those pensioners you refer expect or covet the incomes and assets of SFRs. Not all SFRs that worked hard and planned responsibly feel the need to complain on the little that pensioners get, they are busy getting on with life than fixating upon glückschmerz. Those that feel compelled to complain should take a moment to smell the roses and consider their situation – realise the way out of penury is in their hands, and there is a safety to catch them if they stumble and complaining will achieve little if anything. They are hardly deprived except out of a sense of taking personal responsibility for their predicament and working through it so they can at last enjoy their retirement.

    Government policy changes in this area are inevitable however they will reflect the changing financial profile of future retirees. The war generation and older boomers are dropping off the perch faster than before further reducing the proportion of retirees reliant on full pensions. Who knew, but there are already more SFRs than aged pensioners among young retirees at pension age.
    https://www.yourlifechoices.com.au/age-pension/news/profiling-australian-retirees
    Youngagain
    14th Jun 2020
    9:57pm
    Farside, I DO have facts to support my statement (not my opinion - but a fact) that there are vast numbers of pensioners with much higher incomes than vast numbers of SFRs. And logic says that must be the case, since it takes only a simple mathematical calculation to evidence that generally a pensioner couple with $400,000 has a much higher income than a pensioner couple with $900,000. (Maybe you didn't bother to actually READ this article before jumping on your high horse and throwing insults at me?)

    'What little pensioners get?' Garbage. The average pensioner gets around $1 million over the course of their retirement. They get far more than vast numbers of SFRs could even dream of earning. It's NOT 'little'. And they are NOT in penury, unless they have saved NOTHING for themselves over their entire working life.

    The issue for SFRs is that they are denied the right to use their savings in the way that is most beneficial for them. They are denied ANY freedom of choice. They are forced to either gift their savings to the taxpayer, or spend early in retirement and have too little later. That's wrong. No matter how you try to justify it with your waffle implying there is something inherently wrong or selfish in expecting to be able to use your own savings for personal benefit, the fact is that the system is cruelly unfair and detrimental to the nation. And a lot of experts and government advisers are now recognizing this fact and lobbying for reform. And they are issuing valid warnings that increasing numbers of younger retirees will draw their super and spend it in order to qualify for a pension and be better off, as it is becoming more widely known among them that they will suffer punishment for retaining their savings and self-funding their old age.
    Farside
    15th Jun 2020
    1:06am
    Actually Youngagain, I did read the article and the referenced paper and also noted who funded the paper. It focuses on retirees with $300-800k in savings, "the middle group" and the need for them to have certainty in retirement and reduce longevity risk so they can spend their capital. Those with more than $800K in super and savings "often have the capacity to not have to draw down as much of the capital component of their savings".

    The author writes "a higher taper rate does encourage retirees to spend their savings as quickly as possible until they become eligible for the full Age Pension, but there is little evidence that this occurs in practice". However, he observes "many retirees will live an unnecessarily modest retirement or even behave as if they are in poverty" because of longevity risk, which is pretty much one of the themes you have been commenting.

    And the solution he proposes to this is the deferred lifetime annuity (DLA) to enable SFRs to push the exclusion of 60% of the cost of a DLA from the assets test until the annuity commences. This he writes "allows the retiree to more safely draw down the remainder of their savings up to that point, thereby enjoying a lifestyle that is better than would otherwise be the case during the early and more active years of retirement". His words, not mine – actuaries love this stuff.

    In other words if you are concerned about longevity risk then purchase a DLA and ringfence a chunk of change from the assets test.
    Youngagain
    15th Jun 2020
    8:25am
    Except that option isn't available right now, Farside - at least not in any reasonably acceptable form. He is saying reform is needed, which might include creating new products and offering new and more affordable advisory services. Right now, there is no solution for someone who is struggling to achieve a decent income, is excluded from the pension, and is aware of substantial future needs. There simply is NOTHING that they can do to enable them to secure their future. Check out the terms of the existing DLAs. They are a sick joke. You might as well convert half your savings to hundred dollar bills and burn them. And they all come with strong warnings that if the provider experiences economic challenges, you might actually get nothing in later years.

    And as for advice... Well, there are incompetent fools and there are greedy rip-off merchants, and if there are any advisers offering good advice at a fair price they are harder to find than a single spec of gold on a sandy beach.

    The reform we need is a fair pension system. Simple. It would cost far less because more people would save and plan for their old age. I canvassed a group of people aged around 50 at a party on the weekend. Every single one of them said they are contributing the minimum to super, do NOT support proposals to increase the levy, and plan to draw down and have a huge spend up as soon as possible, because the pension system is unfair to savers. I was surprised. I didn't think people that young would be aware of the unfairness and planning already to circumvent the hurt it causes, but they are.

    Yes, an INDIVIDUAL with $800,000 might not need to draw down much on their capital. But the pension cuts out way, way below that. A couple with $850,000 is disqualified and they would struggle to get an income anywhere near that enjoyed by a pensioner with no other income. A couple with $850,000 has only $425,000 each and fits exactly into the category the 'middle group' the author referred to.
    Farside
    15th Jun 2020
    5:30pm
    I don't doubt the existing DLA are sketchy, just like the reverse mortgages and other equity release mechanisms, but nevertheless that is where we are at. I would not buy one but then I am not weighing up my options.

    Your party friends planning to spend up are a minority as Mercers found "there is little evidence that this occurs in practice". I guess your friends are in that middle group?

    Don't hold your breath waiting for that reform, when it comes will be looking decades ahead. I suspect best can hope for in the near term is reversing the 2017 taper changes.

    10th Jun 2020
    11:40am
    A couple is better off with $500,000 than $1 million under our current welfare pension system.
    Farside
    10th Jun 2020
    1:53pm
    the couple on a million can choose to spend some of their capital to supplement their incomes comfortable knowing there is a safety net when they have spent down $500k, no need for them to live in penury envious of the benefits their neighbours receive
    Youngagain
    10th Jun 2020
    4:26pm
    Yes Farside, they can. They can choose to GIFT every last cent of the extra $500,000 to the taxpayer while the people who saved less get nice handouts. And they can CHOOSE to be poor later in retirement because, despite having saved, they were not allowed to preserve their savings to meet their anticipated future needs. But what they CANNOT do, is preserve a chunk of their savings for future needs.

    Furthermore, before retirement they can CHOOSE to dump Mum in an aged care home at government cost, buy a luxury caravan, tour Oz, and take a world cruise. And they will be richly rewarded in pension income. But they CANNOT choose to stay home and care for Mum themselves without sacrificing countless thousands in pension income - suffering huge penalties for doing what is better for the country. But some people are far too selfish to recognize just how absurd and detrimental the system is. They can't see past 'he has more than me so take it off him'.
    Farside
    10th Jun 2020
    9:28pm
    Youngagain, nobody is taking those choices on how the millionaires spend their savings away from them. They are choices, and if living in austerity and preserving a chunk of savings for the future is higher priority than being comfortable in the near to medium term then nobody will stop them. They are not being penalised, they are making choices. And it is not up to the taxpayers to subsidise the lifestyle choices of those who do not require social security.
    Youngagain
    11th Jun 2020
    8:50am
    You are wrong, Farside. They have NO choice to preserve their savings for future needs. They HAVE to spend their capital to survive today because unlike the spendthrifts they have no other income to live on. They ARE being penalised, and why should they not have the same entitlements as a gambler or drinker who fritters all his money away. It IS up to the taxpayer to treat everyone equally and not unfairly favour the boozers and gamblers and holiday-makers and owners of luxury mansions over those who worked hard to fund comfort in their last years. The taxpayer DOES subsidize bad lifestyle choices - but only BAD ones. The people you are condemning DO require social security in order to enjoy the benefits they worked hard and saved to enjoy. You are promoting THEFT of those benefits, in order to redistribute them to people who make choices that are less beneficial for the nation.
    Farside
    11th Jun 2020
    2:13pm
    Life must have been very sad for you Youngagain. I can assure you that not everyone receiving a pension has frittered the money away on booze, gambling, fancy cars, luxury mansions and holidays. Certainly there will be some who could have been a SFR if they had not gamed the system or made different choices but not everyone.
    Youngagain
    11th Jun 2020
    8:47pm
    My life was very hard, Farside, but certainly not sad. I have had a very happy life and I am happier now than ever before. And I am aware that there are SOME (a very small percentage) pensioners who didn't fritter money away. But does not mean we should condone a grossly unfair and economically harmful system that punishes those who did plan and work hard to be self-funded and reward the spendthrifts.
    Youngagain
    15th Jun 2020
    8:31am
    Farside, why would you think my life was sad because I object to unfairness? There is nothing 'sad' about expecting to be treated with respect and allowed to enjoy the proceeds of your own hard work and responsible lifestyle. What is sad is that selfish creeps want to deny people the benefits they earned - steal from them to give to people who didn't earn. That's a sad person. And it seems you are one of them.

    The system IS being gamed extensively, and it's really sad that greedy people who can't think past 'he appears to have more than me so take it away from him' endorse the continuance of a system that encourages and rewards gaming and punishes responsible life choices.
    Farside
    15th Jun 2020
    5:41pm
    Youngagain, sad not because you object to unfairness but because of your attacks on the spending of people you cannot possibly know. I have no idea why you think I want to deny you benefits, let alone steal from you but your therapist might be able to help you manage your projections and review your prescriptions.

    Nobody is arguing whether the system is gamed, it is undoubtedly gamed by some in the middle group. I doubt you have any insight as to the extent however those in Treasury looking into this just might and it is them who will continue to finesse and reform the system. You might have noticed the Government is not keen to advance the recommendations of the last review any time soon because of electoral consequences.
    Youngagain
    18th Jun 2020
    8:26pm
    Farside, I'm not 'attacking' anyone. But I'm heartily sick of you and others justifying a system that is seriously unfair and hurtful and continually arguing that those it discriminates against should just 'spend their capital'. Apparently you don't have the capacity to comprehend that spending capital too early in retirement puts people in jeopardy. Some of us want the right to choose how and when we spend.

    The system IS gamed, and it's made wide open for gaming. It indulges the person who gifts to kids before retirement or buys a mansion or trips around the world, but don't you dare decide you'd like a boat or a caravan to enjoy in your 70s. And definitely don't expect to retain savings for expensive dental surgery in your 80s. That's not acceptable unless you are in the very wealthy group. If you have only modest savings, you will be dictated to and forced to spend your capital way too early, and if you object, you will be nastily told you 'choose to live in penury' and have no cause for complaint.

    It's YOU attacking people who don't wish to spend their capital too soon, insisting that their inadequate income is fair punishment for want to plan and time their spending and that people who plan and time differently - or don't plan and time at all - are entitled to reward. It's you attacking, with nasty jibes about 'living in penury'.

    I don't doubt Treasury is looking for more ways to cripple savers. They won't 'reform' anything. They will make it crueller and more unfair. The Greens and Labor will demand it and we no longer have a right-wing party to resist the wrongs. The left wing insists that everyone except the very rich must be equally poor, and sadly the LNP has conceded to that wrongful thinking.
    Farside
    19th Jun 2020
    6:30pm
    oh dear, how sad, never mind Youngagain. If the IPA driven LNP is not right enough for you ... well, it explains a lot about your worldly outlook. I am not attacking anybody or defending the system. The cards have been dealt, we may wish they were different but at the end of the day each of us make our choices according to the hand we have been dealt and bear the consequences of our choices whether we like them or not. You clearly are unhappy with the choices others have made for themselves, but if they are comfortable with their choices then all good.

    Spending down retirement savings is recognised to be an anxious task. Try the rule of thumb suggested by Actuaries Institute President, Nicolette Rubinsztein. She says “The reality is that many people can have a better retirement if they have higher confidence that they are able to draw down a little bit more of their savings than the minimum required by the government. Many retirees draw a bare minimum from their account-based pensions, or their savings, after they stop work. They can’t afford to pay for professional advice from a planner, and they live frugal lives because they fear outliving their savings. But the ‘rule of thumb’ is simple and accurate and takes into consideration a retiree’s asset base and age."

    https://www.actuaries.asn.au/Library/MediaRelease/2019/ActuariesInstituteRuleofThumb071119.pdf
    Horace Cope
    10th Jun 2020
    11:46am
    I don't agree with this article for a number of reasons. The threshold of $300,000 to be eligible for a full age pension is incorrect as there are different amounts depending on whether a pensioner is single, in a relationship or if a home is owned or rented. The figure quoted of losing $78 per $1000 of assets, although technically correct is misleading. That is annualised whereas the bulk of the article deals with fortnightly payments which means losing $3 per $1000 of assets fortnightly.

    If we look at a couple who own their home and have less than $394,500 in assets (excluding the family home) they are eligible for a full age pension. Of the assets, if we look at super as being $300,000 of those assets the normal drawdown of 5% allows a return of $15,000 per annum. Add the age pension of just over $37,000 per annum and there is about $1,000 per week available to the age pensioner. This equates to someone working who will need to earn about $65,000 per annum before tax and considering all of the discounts and benefits accorded an age pensioner is quite a satisfactory income and well above the poverty line.

    I understand that this is an example which will not apply to everybody just as the article is also not applicable to everybody but it does show that it helps to have some funds in super to support the age pension. None of us has the same situation as others, all of us are different but to suggest that all funds should be spent prior to retirement is not helpful. Remember, if people are ineligible for an age pension because of assets then they can spend the cash component and, if necessary, sell some assets to enable eligibility for an age pension.
    Youngagain
    10th Jun 2020
    4:33pm
    You miss the point of the article, Horace Cope. The point is that the pensioner couple is doing just fine with his $300,000 in assets and a pension. It's the struggle self-funded retiree couple who saved $900,000 and gets NO PENSION, but only has maybe $36,000 a year - with ZERO concessions and benefits - who is being dealt with unfairly. If they draw down on their super at the rate of $20,000 a year to match the pensioner income, they are effectively gifting $16000 a year to the taxpayer and getting no benefit from it. Every year, their income reduces because their is less super invested, while the pensioner couple sees their income increase twice annually.

    The problem with this system is that it encourages people to save less. Instead of caring for aging parents, the soon-to-retire couple is urged to dump their folks in aged care at Govt cost and take an expensive trip, because they will be better off and get the full benefit of their saving. Or they are urged to buy a more expensive house so that they, instead of the taxpayer, get some benefit from their extra saving.
    Mad as Hell
    10th Jun 2020
    12:08pm
    To answer the question.
    Are you confident the taper rate will be part of the government’s review? No.
    The new taper was orchestrated by Scott Morrison who was the then Social Services Minister. The 2017 changes to the Pensioner Assets Test was implemented under the guise of a budget emergency. These changes should have been grandfathered the same as those pre 2004 politicians who had their pensions grandfathered.
    Broken election promises, stolen assets, never trust politicians.
    floss
    10th Jun 2020
    12:32pm
    Mad as Hell you are correct it was Joe Hockey's blunder and what a mess it caused and set the once good super system into to decline from which it will never recover.
    Captain
    10th Jun 2020
    1:08pm
    Floss, it was not a blunder on Fat Cat Hockey's behalf, it was a deliberate kick in the teeth for 93,000 part pensioners who lost their entitlement and a further 374,000 part pensioners who lost some of their pension. The flow on effect for those who were going to retire after 01/012017 is continuing today and evermore.

    In discussions with our local Federal Member (AsstTreasurer) before the last election he agreed that the change in asset limit was a hasty and perhaps poor decision. However he did not go so far as to say the limit should be changed back to the prior limit.
    Greg
    10th Jun 2020
    10:42pm
    It was changed to $78 to encourage the spending of assets to help the economy gather pace, and to hell with the problems years away when more people would be on the pension.
    Chris B T
    10th Jun 2020
    1:51pm
    At this Point In Time there is Absolutely No Rules On How To Use Your Super/Savings.
    The only Requirement For OAP/age there is Asset Means Test if claiming.
    Retire before OAP age "Whatever that is, which way is the wind blowing" use your super/savings up to comply with The OAP asset tests.
    Some buy their Dream Home, Prepaid Holidays (No Gilt Trippers) just follow the Great Examples of How to Play the System by our Politicians. No "Leaners" amongst them only "Lifters".
    BillW41
    10th Jun 2020
    2:27pm
    I retired with $250,000 in 1992, immediately disposed of $50,000 to repay house, car loan and take an overseas trip. (GFC later took care of another $50,000.) Initially went on disability pension until 65, then age pension. My wife received $80,000 super when she retired. Our funds were combined and total transferred from super into annuity which has been progressively depleted since (replacement cars and holidays) and now has about $55,000 remaining capital. All in all, it's worked out quite well for us as we still receive full pension and all other pensioner discount perks.
    KSS
    10th Jun 2020
    3:20pm
    It has less to do with the taper rate and far more to do with the desire to leave a significant nestegg to their kids outweighing the need to spend on their own retirement needs.
    Anonymous
    10th Jun 2020
    4:29pm
    Nothing to do with leaving anything for the kids at all. The whole welfare age pension rewards those who save only $500,000 but save $1 million and you are screwed. It is simply not fair at all.
    Youngagain
    10th Jun 2020
    4:36pm
    WRONG KSS. It has to do with wanting - quite rightly - to maintain sufficient savings to sustain an acceptable standard of living into old age and to pay for the care and home maintenance needs that arise in later years. But the greedy and envious always lie about it being about the kids' inheritance. Smear campaigns are very effective in supporting the divide and conquer strategy that is stuffing up this country.
    dabi56
    10th Jun 2020
    4:42pm
    You are right Youngagain, I don't have any kids to leave money to but I want my hard earned savings to last me for my twenty years in retirement. That was why I saved my nest egg.
    Youngagain
    10th Jun 2020
    5:01pm
    dabi56, If I follow the pattern of my mother's side of the family, I will spend 35 years in retirement. Of course I don't want to spend my capital in the first five or ten years. My needs are likely to be far greater when I'm 85 or 90 and can no longer manage the home maintenance tasks I now do myself - or when I'm 95 and need a carer. It's downright nasty to carry on about me wanting to leave something to my kids.
    Youngagain
    10th Jun 2020
    5:01pm
    dabi56, If I follow the pattern of my mother's side of the family, I will spend 35 years in retirement. Of course I don't want to spend my capital in the first five or ten years. My needs are likely to be far greater when I'm 85 or 90 and can no longer manage the home maintenance tasks I now do myself - or when I'm 95 and need a carer. It's downright nasty to carry on about me wanting to leave something to my kids.
    KSS
    10th Jun 2020
    5:55pm
    Retiringwell, if you have $1 MILLION you don't need a pension.
    dabi56
    10th Jun 2020
    5:56pm
    You know Youngagain I never thought I would say this but in some ways the United States has a better old age retirement pension.
    In Australia now all we have is old age welfare that is means and asset tested.
    Youngagain
    10th Jun 2020
    8:55pm
    KSS, If you have less than a few hundred thousand, the taxpayer will GIVE you around $1 million dollars to fund your retirement. Why the hell should someone who saved a million be told to go fly a kite while those who SPENT all their money are GIVEN $1 million?
    Greg
    10th Jun 2020
    10:45pm
    RW - how are you screwed? FFS, you spend down that 500k and will eventually get the pension, that's what I'm doing. With that extra 500k you can spend big if you like and get down to that amount that allows the pension and than your just like the guy who only had the 500k in the first place.
    Youngagain
    11th Jun 2020
    8:43am
    Yes, Greg. But what if you happen to NEED that extra saving later in life? Why shouldn't we be allowed to preserve our savings for genuine needs in later years? How can you justify a system that hands over $1 million to people who don't save, yet sends a message to savers that they have no right to preserve their savings to meet genuine needs that arise later in their retirement years? And for that matter, why shouldn't a saver be allowed to leave money to grandchildren? What makes it okay for the taxpayer to subsidize a gambler and drinker putting hundreds of thousand through the pokies and destroying their health (imposing more cost on taxpayers) but NOT okay for the taxpayer to give the exact same support to someone so they can help their grandchildren get a good education and raise a deposit on a home? Surely making some of the next generation better off is good better for society than funding drinking and gambling?
    leek
    13th Jun 2020
    8:50am
    Young again- looking at your mothers side of the family 35 in retirement theory, then I am really screwed. I am physically and genetically tracking like my grandmother when she was my age, I am 62 now. She lived to 105 & 11 months. Oh boy. I really need to have my money sorted out, if I am going to live that long. But she actually did not have a lot of health issues, just really really bad knees, could no longer walk, so was in aged care, and had to be hoisted to the chair/toilet.- she hated this and I reckon broke her spirit in the last 2 years of her life.
    Your health is your biggest issue financially in the later years. My grandmother took really no medications other than asprin etc. You can always tell straight away the people that will have long lives by the amount of medications they are taking. I take no medications but I have people around my age that are now taking daily medications.
    Youngagain
    14th Jun 2020
    12:30pm
    Well, Leek, if medications are the criteria, I've got many years left. The only meds I take are very, very occasional for pain relief when my chronic back pain becomes completely intolerable.
    Youngagain
    14th Jun 2020
    10:02pm
    KSS, how the hell would you know who needs what? How arrogant and selfish can a person be? You have no idea what I need or what anyone else needs or why. Pensioners have about $1 mil GIVEN to them. Why the hell should someone who saved that much get nothing while a pensioner gets the equivalent amount as a gift? Last time I checked, this was NOT a Communist country. Not socialist either. We purport to ensure that those who have a go get a fair go. Our pension system makes a lie of that claim, and it's time it was changed.
    Pacey
    10th Jun 2020
    4:29pm
    I worked for 51 years saved hard all those years thought I would have enough money to live well when I retire BIG mistake my friends get around 1300 dollars a forthright plus all the benefits the pension gets you I tell everybody not to do what I did even if you get one dollar pension it's better then how I am if you own your own house I know a few people who live well on the pension
    Greg
    10th Jun 2020
    10:46pm
    Well I assume you're spending down that money and will get to the point of getting the pension, YES??
    Youngagain
    10th Jun 2020
    4:55pm
    Pensioners whinge endlessly about the deeming rate being just a tad higher than the current interest rate on savings, but it's fine for the asset tested retiree to be hit with a deeming rate of nearly 8%!!!! As long as it's hurting someone you think is better off than you, it's okay, is it?
    Priscilla
    10th Jun 2020
    5:07pm
    I have less than $300,000 in assets and do not get a full pension. Something not right here.
    dabi56
    10th Jun 2020
    5:17pm
    I just looked on the Services Australia web site. If you are a single pensioner and home owner your pension reduces when you have more than $263,250.
    Here is the site. https://www.servicesaustralia.gov.au/individuals/services/centrelink/age-pension/how-much-you-can-get/assets-test/assets#assetstestlimits
    KSS
    10th Jun 2020
    5:54pm
    yes BUT dabi56, you can have upto $578,250 and STILL get a part age pension. There is something Priscilla is not disclosing.
    Greg
    10th Jun 2020
    10:49pm
    Give us more details, all your assets, granny flat maybe??

    It's all anonymous on here, no one knows who your are, where you live so don't be shy.
    Youngagain
    11th Jun 2020
    8:38am
    She didn't say she doesn't get a part pension, KSS. She said she doesn't get a FULL pension. With over $263,250 in assets, if she's a home owner, that would be absolutely correct.
    mike
    10th Jun 2020
    5:43pm
    Turnbull said the concession card would be restored to all those who lost it due to Hockey's changes, but he cut it off after only one day. We lost ours a few months later as our super balance crept over the $800000. We contacted Federal member Mr GEE, but all he sent us were lies, inuendo and popppycock. Mr Gee's lies were so stupid, he has no right to be a federal member. For example he told us the Commonwealth seniors card was exactly the same as the concession card and we could use it for our rates, rego, electricity discounts etc. That man couldnt lie straight in bed
    KSS
    10th Jun 2020
    5:56pm
    You had more assets than were allowed so you are not eligible. It is really quite simple.
    dabi56
    10th Jun 2020
    6:00pm
    KSS Stop Trolling.
    Youngagain
    10th Jun 2020
    8:52pm
    KSS, it may be really quite simple, but it's really VERY UNFAIR.
    Fedup
    10th Jun 2020
    7:52pm
    The current pension system definitely rewards spenders and punishes savers. The spenders end up with more money to live off than most of the savers. There is simply no incentive to save for your retirement years.
    And everyone of pension age should get the CS Healthcare card.
    dabi56
    10th Jun 2020
    8:28pm
    Farside I do not think Youngagain is begruding anyone's pension . But the Aged Pension used to be like in a lot of other countries what you got after years of work. Just because you saved your money should not preclude you from it. We are at loggerheads because you see the old age pension as welfare and I see the old age pension as something that people get after years of work and paying taxes. Like in the UK, US and NZ.
    Youngagain
    10th Jun 2020
    9:08pm
    Thanks dabi56. No, I don't begrudge anyone's pension. But nor is it, in my view, a question of welfare vs something people get after years of paying taxes. In my opinion, it's a simple matter of economics. It's is STUPID to punish saving and reward excessive spending that makes people dependant. Not only is it not good for the economy, but it's not good for society either. Its actually a COMMUNIST philosophy that everyone except the rich should be equally poor and dependant. It's totally contrary to the LNP's stated philosophy, which is 'a fair go for those who have a go'. The pension system does the opposite. It bashes those who have a go and rewards those who don't.
    Farside
    11th Jun 2020
    2:50pm
    Dabi, I firmly believe there is a need for wholesale reform of the welfare and tax systems however I tend to think in terms of self-reliance and safety nets. I support the notion of a living wage and support to ensure nobody has to live in poverty. I think the tax system and the support system should encourage self-reliance and facilitate social mobility. But equally I do not believe that public monies should be subsidising family wealth preservation. However the fact remains that the pension is not an entitlement and has not been provided for in the same way that social security contributions are in some other countries. The pension is an expense picked up by the government of the day.
    Youngagain
    12th Jun 2020
    8:36am
    Farside, the pension HAS been provided for in the same way as it is in other countries. It's just that the government has chosen to manipulate and report differently. What is sad is that Australia has now adopted a retirement funding system that is clearly designed to force taxpayers to subsidize the retirement of the wealthy very generously and to leave the genuinely disadvantaged to wallow in poverty in retirement. The design was deliberate - by the Labor Party - and there is now a push to make it worse by increasing the superannuation guarantee, which will increase the huge concessions to those on high incomes and make life harder for those earning very little. We now spend billions on superannuation tax concessions and 80% goes to the top 20% income-earners. The low income earners and the spendthrifts get $1 million dollars+ in handouts to retire on, but struggle none-the-less. Those at the lower end in the average earning group who save well get totally screwed at both ends - stuff all in superannuation tax concessions and deprived of pension income as punishment for having saved.

    And what is really, really sad is that the vast majority are either too dumb or too politically motivated to recognize where the problem lies and support demands to fix the system. (In fact, vast numbers are supporting a proposal that will make it far worse - swallowing the political lies being told to suggest it will somehow improve things!)

    Needs-based welfare CANNOT EVER WORK, because people will always manipulate to appear needy or arrange their affairs so that they ARE needy when it is financially beneficial to do so.
    Farside
    12th Jun 2020
    8:31pm
    Youngagain, the pension HAS NOT been provided for in the same way as it is in other countries. There is no pension fund with amounts contributed by its members. Pensions are paid out of consolidated revenue as needed.

    Super concessions can and should be scaled back so they are not investment mechanisms for wealth accumulation. The intention of super is to provide a reasonable amount for retirement and reduce the burden on the national budget. The pension is there, as with all other welfare, as a safety net for those who need it – wowsers and rechabites need not apply.
    Youngagain
    14th Jun 2020
    10:16am
    Farside, the pension fund was created, then moved into general revenue. The money is still being collected. It just isn't tagged. That doesn't mean it doesn't exist.
    Super concession should be scaled back, but also it should be recognized that savings should not disadvantage people who still need help to achieve a living income. I repeat - needs-based welfare creates need and hardship. It can never work. Only those who are totally delusional and pursuing utopia support the concept.

    The notion that super should provide for retirement merely advantages those who can accumulate a lot of super and disadvantages those who cannot. We would be far better served with a universal pension system, the cost of which is shared equitably.

    And your use of terms like 'wowsers' and 'rechabites' is offensive, insulting and unjustified. The pension is NOT a safety net, because it is was, people who absolutely do not need it wouldn't get it. We have a discriminatory system that excludes some who are needy and includes many who are not. Some of us would like to see that fixed. Clearly, you would rather dish out insults to anyone who doesn't agree with your point of view.
    Farside
    14th Jun 2020
    1:17pm
    Youngagain, the NWF was never a contributory and fully-funded insurance program. Payments from the fund were not linked to contributions and from early on were paid from consolidated revenue with an accounting transfer taken each year. The 7.5% contribution is not being collected and the already long defunct fund was eventually consigned to history 35 years ago.

    Wowsers and rechabites are not insulting, I looked it up. I think they are descriptive and accurate in the context of being critical of "boozers and gamblers and holiday-makers and owners of luxury mansions":

    wowser - a puritanical or censorious person, in particular a teetotaller or person opposed to alcohol
    rechabite - member of Independent Order of Rechabites, a benefit society of teetotallers
    Youngagain
    14th Jun 2020
    10:05pm
    So who are you to claim that SFRs are wowsers, or that any individual is a teetotaller, much less 'puritanical'. I am certainly NOT. So your use of both words is WRONG. Therefore, it is insulting.
    Farside
    15th Jun 2020
    12:05am
    I never suggested SFRs are wowsers or teetotallers. There are many SFRs that will spend down their savings in the full knowledge there is a pension safety net for them and not dictating how others spend their money. Wowsers and teetotallers would be the people who are judgemental of those they believe to be "boozers and gamblers and holiday-makers and owners of luxury mansions". Not insulting.
    Youngagain
    15th Jun 2020
    8:07am
    You continue to deliberately evade the point, Farside. It's not about being a 'wowser'. It's about preserving NECESSARY savings for ESSENTIAL REQUIREMENTS in later life. Having saved knowing that there will be heavy costs coming in the future, a retiree should be entitled to preserve their savings to meet those costs and not be forced to gift their savings to the Government by forfeiting benefits they would receive if they hadn't saved. Likewise, it is wrong that a retiree is rewarded for dumping Mum in aged care at Government expense and tripping around the world, but deprived of a pension if they care for Mum themselves and delay their travel for a few years.

    It's not about judging anyone. It's about FACTS. You are the one judging. You are saying it's fine to punish someone for choosing to delay spending until later in their retirement years - that if they do that, they should not be allowed that spending. You are saying they must spend it early, or sink it into a luxury home, or else suffer deprivation - but if they spend it early or sink it into a luxury home they should get a reward. THAT'S JUDGEMENTAL.

    I am not judging anyone. I'm simply saying it's wrong that the system rewards early spenders and punishes people for delaying their spending until a time of need.

    The pension 'safety net' is not very safe for people who have high needs late in life. It isn't adequate to fund the lifestyle many would like to enjoy in their 80s or 90s. It's patently wrong to suggest that they should be denied that lifestyle, despite having saved to provide for it, just because a stinking unfair system - supported by unfair and judgemental people - is designed to force people to dispose of their savings early so everyone is equally poor later.

    And yes, you ARE insulting. You continue to imply that there is some inherent character flaw in someone who wants to preserve their hard-won savings to pay for something they believe they will need a decade or two from now - that it's selfish or unreasonable to not be willing to blow all your savings early in retirement and live your last years in penury.

    I suspect you would think it unacceptable to declare that a 25-year-old should be double-taxed if they don't spend all their wages, but put some aside for a house deposit or their children's education? It's exactly the same thing. You want to take from people who choose to put a little aside for later, and deny them the opportunity to save for what they will need or want down the track.
    Farside
    15th Jun 2020
    6:04pm
    Youngagain, you really have trouble seeing beyond your perceptions of the world. I could not care less whether you want to preserve money for spending in the years ahead, that is your choice. Try not to be envious of others.

    I have no issue with retirees spending down their savings if they choose, they cannot take it with them. I have no trouble with 25 year olds saving for a home deposit or children's education, do you? Is this another one of your judgements upon how people spend their money?
    Youngagain
    18th Jun 2020
    8:13pm
    Farside, there must be something seriously wrong with your comprehension.

    I have no problem seeing anything. YOU clearly don't comprehend that retirees CANNOT preserve money for spending in the years ahead. The system doesn't allow it. The system that YOU keep arguing in favour of.

    I'm not envious of anyone. I'm disgusted and appalled that some people are ignorant and selfish enough to speak in support of a system that denies people freedom to plan their spending according to their personal needs and preferences.

    I am not the one judging how people spend their money. Supporters of the current system are presuming to judge savers and decide they have no rights and should suffer unfairly. Supporters of the current system are denying people the right to choose how to spend and insisting that only those who spend earlier in life should be indulged in retirement.

    I don't care what you care about - but I care that I am not ALLOWED to preserve money for spending in the years ahead. It's NOT my choice. It's the choice of people who support the current unfair system to deny me that choice.
    skinner
    10th Jun 2020
    8:31pm
    Older & Wiser, my wife & I were advised not to get independent in retirement as there were no benefits to be gained from Centrelink. I'd told the couple of my wish to be self reliant in retirement & I'm glad I followed their advice as I get a gov pension to supplement my super, Along with all the little reductions in bills etc!
    skinner
    10th Jun 2020
    8:31pm
    Older & Wiser, my wife & I were advised not to get independent in retirement as there were no benefits to be gained from Centrelink. I'd told the couple of my wish to be self reliant in retirement & I'm glad I followed their advice as I get a gov pension to supplement my super, Along with all the little reductions in bills etc!
    skinner
    10th Jun 2020
    8:31pm
    Older & Wiser, my wife & I were advised not to get independent in retirement as there were no benefits to be gained from Centrelink. I'd told the couple of my wish to be self reliant in retirement & I'm glad I followed their advice as I get a gov pension to supplement my super, Along with all the little reductions in bills etc!
    skinner
    10th Jun 2020
    8:31pm
    Older & Wiser, my wife & I were advised not to get independent in retirement as there were no benefits to be gained from Centrelink. I'd told the couple of my wish to be self reliant in retirement & I'm glad I followed their advice as I get a gov pension to supplement my super, Along with all the little reductions in bills etc!
    dabi56
    10th Jun 2020
    8:45pm
    Just about to sign off on this subject tonight. What I can see is that there are two schools of thought. Those who see the Old Age Pension as welfare and those that see it as a right. I think as I said in my first post earlier today that everyone should get the old age pension but it and all other monies should be taxable including superannuation. Totally fair I think.
    Anonymous
    17th Jun 2020
    11:21am
    Old age pension is welfare and that's a fact. It is only paid to those who have no other means of support. That's welfare.
    Franky
    11th Jun 2020
    9:56am
    There is something very wrong with our system where people get penalized if they earn lots, pay lots of taxes and save lots. The age pension should be a universal right of everyone who has worked and paid taxes all their lives. The more they saved the better off they should be. Most developed countries have universal age pension - this would also save lots on administration for the public service - but then that means less non productive jobs!
    dabi56
    11th Jun 2020
    10:17am
    I totally agree with you Franky. Right now Savers are punished . The ultra low interest rates savers get on their money plus the uncertain share market has highlighted the problem with our current old age income and asset tested pension system.
    cupoftea
    11th Jun 2020
    10:35am
    I am 65 at the end of this month so next month I will buy a brand new car $50000,and a Campervan $100000, a scooter to hang on the back of the van for shopping $4000, ah I might buy another house in a country town $400000 I will keep the one in the city for when I visit it's hard being single off coarse I am only spending this money to help the country it is nothing to do with the aged pension
    Farside
    11th Jun 2020
    3:08pm
    you should be very comfortable in retirement, what sort of scooter - two wheel or mobility?
    Anonymous
    17th Jun 2020
    11:20am
    Only $100,000 on a campervan? Last time I priced the one I want it was awful lot more than that.
    Youngagain
    17th Jun 2020
    11:47am
    You must want a very lavish campervan, RW. You can buy an extremely luxurious fully equipped motorhome for considerably less than $100,000.

    Cupoftea, why don't I believe your last phrase?
    Farside
    17th Jun 2020
    3:59pm
    RW, you might be confusing motorhomes and campervans. Plenty of nomads spending close to $200K on the homes on wheels. Only last year two of my NQ based inlaws took delivery of motorhomes costing $170K-ish without being lavish. There are vans going for more than $100K, but those costing a lot more are mostly motorhomes.

    Youngagain, you need to go to the next Caravan and Camping Show ... extreme lavish goes well over $300K if you have the license. There is a long wait list of boomers wantng to shell out their savings on their next adventure; cupoftea will have plenty of company on the road. Many nomads on YLC?

    FYI, Carsales has 600+ for sale atm https://www.caravancampingsales.com.au/items/motorhomes-campers-category/motorhome-subcategory/over-100000/?sort=%7ePrice
    Youngagain
    18th Jun 2020
    8:08pm
    Farside, I'm well aware of the price range of homes on wheels. I repeat, however that you can buy a very luxurious motor home for less than $100,000. And yes, I know I could buy much more lavish, but that doesn't change the fact that you CAN buy a very luxurious campervan for less than $100,000.
    GrayComputing
    11th Jun 2020
    10:45am
    VOTE FOR NO ASSET TEST FOR PENSIONS EVER AGAIN.

    Bombard this Government's MPs and PM with social media.
    And vote them out at the next election.
    Farside
    11th Jun 2020
    3:13pm
    if the assets test is removed for pensions, then it should also be removed from eligibility criteria for all other government allowances and payments e.g. jobseeker (Newstart)
    Youngagain
    11th Jun 2020
    8:42pm
    With the possible exception of Newstart/Jobseeker, I agree, Farside. Saving to secure one's own future should NOT exclude people from aid that is granted to spendthrifts. Responsible living should not be punished.
    Farside
    11th Jun 2020
    10:06pm
    There are plenty of older unemployed who were moved off Disability pension onto Newstart/Jobseeker and I know at least two given exemption from obligations because of their disability. You make a sweeping statement to assert the majority on Newstart are spendthrifts when it is a fraction of the pension, and something like a third on Newstart are represented by over 50s. I think you have a strange perception of reality Youngagain.
    Youngagain
    12th Jun 2020
    8:26am
    Farside, please stop putting words I never said in my mouth. I NEVER said ANYTHING remotely like 'the majority on Newstart are spenthrifts'. And I am well aware of and very sympathetic to the over '50s on Newstart. I was one of them for a time. I know how tough and unfair it is.

    The reason I said 'with the possible exception of Newstart' is that I believe we need a way to identify rorters who make substantial income from investments and have no desire to work, and any bludgers who enjoyed a nice inheritance or are supported generously by family (and I know a few in that category). I don't think anyone over 50 with a history of working and paying tax should be on Newstart. We should create a special benefit for people in that category that recognizes the reality of their situation.

    It's you who has a strange perception of reality, Farside. It is a FACT that the majority of the current generation of retirees had every opportunity to buy a home and save a reasonable for retirement. Not all - for sure. But the vast majority. It is a FACT that a large portion of the population spends freely, and a large portion of today's retired pensioners COULD have saved a great deal more but chose to live it up, knowing they could rely on a pension in retirement. It is a FACT that the current pension system encourages over-spending or manipulation and punishes those who do save to be self-sufficient and declare their savings honestly. It is a FACT that those who are assets tested suffer an effective 8% deeming rate on their savings. It is a FACT that earning more than minimal income after pension age is harshly punished. It is a FACT that people are denied any freedom of choice of how they time their spending in retirement. It is a FACT that those who try to retain savings to meet needs in later life end up having to GIFT their savings to the taxpayer and getting no fair benefit from them. It is a FACT that those who choose to spend freely and retire on a full pension get about $1 mil handout from the taxpayer, while those who save better are bullied, abused, insulted and deprived.

    It is a FACT that the system is bad for the country and grossly unfair and needs to be changed. And it is a FACT that anyone who saved marginally over the assets threshold and isn't an investment guru would be better off having a big spend-up, because they will be far better off with half their assets. And that is STUPID. And anyone who endorses such an idiotic system is supporting unfairness and overall economic harm.

    It is a FACT that we should all STOP thinking about our own situation and UNITE to demand that the system be overhauled to be fair to everyone and economically beneficial overall - which means, at the very least, abolishing all assets tests except as they apply to younger Newstart recipients, and even they should be given a period of grace before any test applies.
    Farside
    12th Jun 2020
    8:40pm
    Youngagain, it is a FACT that you seem to do a lot of thinking about your own situation and projecting your judgements upon those that do not share your penchant for penury. A subsistence economy is not good for everyone, Pol Pot tried the agrarian utopia and it did not work.
    Youngagain
    14th Jun 2020
    9:30am
    There you go again, Farside. CHANGING my words and making ASS-UPTIONS. I don't live in penury and I don't promote a subsistence economy. Absolutely THE OPPOSITE. I promote fair dealing with people who plan their spending responsibly so that they can enjoy the income they deserve in old age and not be reduced to hardship in their later years because of unfairness. If the system was changed as I suggest it should be, we would have far greater spending capacity among the lower and middle classes and just a little less saving capacity at the wealthy end. The system you seem to lobby for merely reduces the middle to poor and reduces spending capacity across the board (because the rich who benefit don't spend more because they already have more than enough).

    And I am not thinking about my own situation. I am thinking about the national economy. Being unfair to people who plan their spending and choose to delay indulgence to later life is NOT good for the nation.
    Youngagain
    12th Jun 2020
    4:59pm
    Helping a friend in distress, I just uncovered yet another gross unfairness in our retirement funding system. The government insists self-funded retirees must use their capital to top up an inadequate income, BUT my friend's bank told her she could not declare her superannuation pension as income in a credit card application if she was eating into capital, but had to prove that the balance of the fund is not reducing as a result of pension drawings. If on a government pension, she could get a credit card declaring the pension as income, but as a self-funded retiree who is not rich enough to live entirely on the income to the fund, they will not give her a credit card. This is a retired homeowner who is fiscally responsible and has too much in assets to get a pension, but suffers discrimination because of an unfair system.
    MacI
    14th Jun 2020
    11:01am
    I'm curious as to why your friend would want a credit card. Ultimately credit has to be paid back. If it's for convenience wouldn't a debit card provide the convenience of a credit card. Just wondering.
    Youngagain
    14th Jun 2020
    12:27pm
    No, Macl. A credit card is much more beneficial because for $95 a year fee, the cardholder gets free travel insurance, extended warranty on all goods purchased, free insurance on purchases, purchase protection, concierge services, and reward points that add up to a nice bonus at Christmas - just for buying on the credit card. And sure, they pay it back. In full, every month, interest free.
    Anonymous
    17th Jun 2020
    11:18am
    I have six credit cards myself all for different reasons. I also have a bad credit score because I simply have 6 credit cards. Looks to me like a credit score is based on what access you have to debt and has nothing to do with your financial position what so ever. I now just laugh when I see high credit scores as they mean that person hasn't got access to debt so it not a good risk at all.
    Youngagain
    17th Jun 2020
    11:44am
    Yes, RW. The credit assessment system is stupid. If you have a $25,000 credit card limit, never mind that the balance at the end of any given period has never been more than $0, you are deemed to owe $25,000. People are being refused loans or having the loan offer amount reduced because they 'owe' on a credit card, when in fact they don't and they never have. It's thoroughly stupid. But then, it's because some irresponsible folk will get their loan then go out and spend the total limit on the credit card and then claim hardship. We are all disadvantaged by a system designed to protect the stupid and irresponsible. Everything in our society today is geared to look after the stupid and irresponsible, and the responsible folk suffer greatly as a consequence.


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