The Productivity Commission claims that by including the family home in the Age Pension assets test, it would save the Federal Government up to $6 billion a year.
The report Housing Decisions of Older Australians states that around 360,000 pensioners would lose their entitlements if the family home were included in the assets test.
However, Federal Treasurer Scott Morrison has confirmed that the Government will not include the family home in the Age Pension assets test.
“The Government’s policy on this issue is well-known,” Mr Morrison said in Parliament on Tuesday. “There is no change to the Government’s policy.”
Around three in every four Age Pensioners own their home. In fact, older Australians hold around $926 billion worth of home equity. According to the report, this is an untapped source of retirement income.
The report claims that including the family home in the pension assets test may make Australia’s tax system fairer. It also states that retirees, especially those who are asset rich and cash poor, could live a better quality of life in retirement if they were to draw on the equity of their assets instead of claiming a pension.
The Commission believes that “there is a strong case on equity grounds for setting limits on the value of the principal residence that is exempt from the Age Pension means test” but acknowledged that it couldn’t happen in the immediate future.
And, according to Mr Morrison, the Government wasn’t considering means testing the family home before and it won’t be now.
“The idea that this Government would put the family home in the assets test for the pension is just not under consideration,” Mr Morrison said earlier this year. “Under no plan is there any idea to include the family home in the asset test.”
How do you feel about Mr Morrison’s stance on this issue? Is this good news for pensioners? How do you think it will bode for retirement income sustainability in the future?