Insurance plan proposed to take care of ageing Aussies

Keating calls for levy on wages to fund living costs of the elderly.

Elderly to be looked after

Former prime minister Paul Keating has repeated his call for a “national family” to be established to take care of the financial needs of elderly Australians who run out of superannuation savings.

Mr Keating, who was the architect of the super scheme, said increased longevity would in future see many people in their 80s and 90s outliving their pension funds.

It is not the first time he has called for a “longevity levy” to finance the medical, accommodation and other living costs of the elderly.

In 2014, he said that a levy of two to three per cent of a person’s wages could go into a type of insurance scheme specifically to fund elderly people who could not afford their living expenses.

He made the call again this week at a superannuation forum organised by Visy Industries chief Anthony Pratt.

While most older Aussies with limited means qualify for the Age Pension, Mr Keating’s proposal would address the growing concern that in years to come, welfare for the booming elderly population would become unsustainable.

“We have no policy here in Australia for the 80 to 100 cohort,” Mr Keating said. “I don’t believe that it should be left to superannuation.

“I think it should be a national insurance scheme. Only the Commonwealth can insure across generations.”

While today’s pooled superannuation is worth more than $2.7 trillion, Mr Keating said the super guarantee of 9.5 per cent of wages was “inadequate” for people living beyond 85.

“It [superannuation] will only insure people until about age 83 to 85. After that, they’re on their own,” he said. “And of course the children of all of us are completely on their own after age 80, because they’ve got another 20 years to go.”

Under Mr Keating’s proposal, the insurance scheme would act as a safety net for those who needed enduring aged care services.

“And it's possible to do. It’s a classic insurance thing,” he said in 2014.

“It’s like the houses in the street: you pay your insurance, but only one house burns down. What happens? One person dies earlier, but their work and savings subsidise other people who last into their late 90s.”

Would you be happy for your wages to be levied to ensure all your costs were met in your latter years?

Are you worried your money won’t last? The RetirePlanner™ tool has all the information you need.

RELATED ARTICLES





    COMMENTS

    To make a comment, please register or login
    Old Geezer
    25th Oct 2018
    11:02am
    So they are going to abolish the pension for the elderly then.
    AutumnOz
    25th Oct 2018
    11:49am
    Sounds like it.
    Waiting to retire at 70
    25th Oct 2018
    12:39pm
    An effectively run 'whole of working life' Super Scheme will eliminate the need for it.

    By 2025 the annual expenditure is estimated to be $72 billion. And with changes made to it by the LNP we now will not be able to eliminate this welfare for more than another 50 years. If they had only left alone the original plans for the scheme we would have eliminated this $72 billion annual expenditure in about a 20 or so years. That would have been a great thing to pass onto my children and their children.
    TREBOR
    25th Oct 2018
    12:48pm
    Only if you replace it with the equivalent of The Trebor Scheme from which all benefit equally and can then accumulate savings at market price... which essentially means that Nationalised Super is the same as Pension anyway...

    Thinking caps everyone...

    In other words - we are now to forget a lifetime of contribution to the Social Security Fund stolen by government into plaything, consolidated revenue..... that simply didn't happen and The Guv'nah has no responsibility for its theft ..

    Always knew Keating was as cunning as the proverbial....

    Old politicians should just fade away and leave us all alone - they've done their share of harm and have reaped their own benefit for life out of it. It's hard enough getting any idea into the thick skulls of the current lot without listening to superannuated clowns...
    GeorgeM
    26th Oct 2018
    12:03am
    Tricky Keating did TOO MUCH HARM while he was in power for which we are all paying dearly on ongoing basis. Shutting down the Pension Fund (while still being funded from 7.5% taxes) was this moron's action, covered up by starting the Superannuation system which he now admits isn't adequate to replace the pension. He has forgotten - Super was always meant to be an add-on, not replacement of pension. This suggestion from him, as OG has noted, is another cover to scrap the pension. What a nasty a...hole who should have disappeared long ago, and not live on taxpayer's support for himself.

    He didn't ever have the b.lls to suggest Universal Pension instead, did he? Still doesn't have the brains either to understand that he stuffed up this country more than anyone else.
    Rae
    26th Oct 2018
    5:48pm
    George it was Fraser who took off with the pension fund. Just after they stopped Whitlam buying the mines, gas fields and building a gas pipeline and uranium industry so we would be well off like Qatar and Saudis and Norway.

    25th Oct 2018
    11:12am
    That is the way the Swiss AHV (old age and survivors insurance) works. Everybody pays in all their working lives and so does the employer. If you survive past 65 you get a pension for life and if you die before 65 you paid in all your life for the pension of others. There is no payout for the children like our super is here and you have no access to it before 65 years of age (females 64). Also no hardship clauses. Supplementary benefits are available for needy people. They check your expenditure and if you spent your money on cruises and the high life then it's tough cheese.
    Anonymous
    29th Oct 2018
    9:56am
    Fair enough, as long as you get to keep and use your savings as you wish. We have to provide for those who genuinely cannot provide for themselves, and everyone should contribute to doing so, but our system of rewarding manipulation and over-spending and punishing responsible living is never going to work.

    Superannuation is all very well, but at current rates it's never going to be enough for the majority, and there will always be many who cannot accumulate a decent balance due to illness, disability, low wages, unemployment, etc. It is stupid to suggest that a super scheme like the one we currently have can replace aged pensions. It was never meant to, and it cannot.
    Patriot
    29th Oct 2018
    6:36pm
    If you look through government hansard - so have we!
    Except it was (mis)managed by government and Sqandered away so the "kiddy of money" there once was was transferred to consolidated revenue, they NEVER cancelled the OAP contribution!
    SO, OAP is an entitlement - NOT welfare!!!!!
    Anonymous
    30th Oct 2018
    8:02am
    Absolutely, Patriot. But unfortunately the government can call it whatever it likes and over a relatively short time, people forget. Younger folk were never aware of the levy and show very little interest, since their main concern is the raising of the pension age and the threats that there will be no OAP at all by the time they retire.
    Patriot
    30th Oct 2018
    8:32am
    OGR - Agreed. On top of that, the Aussie Politicians are in the process of "Conquer & Divide" by suggesting that we are the cause of a major burden on these young ones by forcing them to "Carry Us". NOT SO!!!
    NO - We paid for our own OAP, Schooled & Educated them via OUR taxes and they are now using the infrastructure OUR taxes paid for in the first place!!!
    .
    Little do they understand that when, the whole financial system collapses some day soon, all their Super money will be confiscated by the Banksters and they ALSO are claimed to have not contributed to their retirement!?!?
    .
    Education is the only way - but - we have allowed the Australian Commonwealth Constitution 1901 to be removed from the School Curriculum and so agreed with the pollies that our kids should NOT be able to read & understand the most important book in Ausatralian history!
    .
    We can correct all this but MUST cause an enormous resistance as a collective unit. This will happen and the sooner the better. The "Hand Coughs" are just about on!!!
    Anonymous
    31st Oct 2018
    6:44am
    'Conquer and Divide' is working a treat, Patriot. I suspect white, Christian, non-immigrant, straight-sexed, self-funded retirees are the most hated group of people in Australia at present, and certainly being targeted for the total destruction of their lifestyle - with the full endorsement and support of most pensioners.
    maelcolium
    25th Oct 2018
    11:30am
    Paul Keating is the architect of the current system which is nothing short of a national disaster, enriching the already well off while leaving those struggling to survive. The whole bloody system should be nationalised as it was nothing but neoliberal ideology forced on us by the ALP. And now this parasite living off his generous defined benefit scheme has the audacity to propose some more tinkering around the edges. Don't think so!
    Turnbull was right. Ex politicians need to keep out of politics - oh wait, is that a soiree to the Pacific Forum Malcolm? Roll out Madam La Guillotine!
    Anonymous
    25th Oct 2018
    12:06pm
    I disagree maelcolium, Keating's legislation on compulsory super was a great step forward for those people whose choice of career excluded them from those areas where super was a part of their working conditions. It needs time for the scheme to be fully operational as people who are retiring now have only had the benefit for the last 26 years and a lot of that was under the initial 3% compulsory super. Keating's plan was to provide 15% super and if this is achieved then all workers should have a comfortable retirement.

    As regards Keating's latest musings, it appears to be a good idea but doesn't give enough detail. Who will stump up the 3%? Will it be the employer or the employee? If it is to be the employer then that will be an extra 3% on top of the current figure. It could work if the expected increase of super to 15% was reduced to 12% and the difference placed in a fund to cover the medical expenses of those who cannot afford them. There will also be the issue of those covered by private health insurance, will they be allowed to access the fund or will they be excluded. The thought bubble has merit but much more detail is needed before it can proceed.
    Waiting to retire at 70
    25th Oct 2018
    12:17pm
    Check the facts about this scheme before apportioning blame incorrectly.

    FACT: When introduced the Superannuation Guarantee started quite low with a view of increasing it gradually over time to 15%.

    FACT: When it reached 9.5% that wonderful Treasurer Joe "poor people don't drive far" Hockey froze it until 2021.

    FACT: That freeze was extended to 2025/2026 by the 'born to rule' LNP.

    FACT: So as the CPI increases between 2014 and 2025/2026 the value of SG contributions goes backwards. This will see Australians paying the Old Age pension until some time in the decade beginning in 2070.

    FACT: Under the original scheme these publicly funded pensions would have essentially been eliminated in the period for 2035 to 2040.

    FACT: Have politicians had their SG frozen. No of cause not. Theirs is running at around 18% or so.

    FACT: Interestingly enough that same Treasurer, upon taking up his "jobs for the boys" as Australian Ambassador to Washington (at a salary in excess of $350,00 + expenses, including baby sitting fees) was also entitled to receive HALF of his parliamentary pension (in excess of $150,00) because he was over 50. Can any other person do that?

    FACT: He was also the Treasurer who said to "get a good job" if you want to buy a house. Yet he lived in his wife's investment property in Canberra when he was there along with 2 or 3 other politicians - I think Brendon Nelson was living in the garage. His $270 a day Canberra allowance, along with contributions from his 'house mates', went to pay off his wife's negatively geared investment property which was sold more than $1.5m when he took off on for further plundering of our hard earned taxes in Washington.

    So before making incorrect statements about the "current system" please just check your facts. Google it please
    Anonymous
    29th Oct 2018
    10:18am
    "FACT: Under the original scheme these publicly funded pensions would have essentially been eliminated in the period for 2035 to 2040."

    Really, waiting to retire. The moron who believes that needs a brain transplant. What about those on low wages? What about those who have periods of unemployment, disability, illness, trauma or crisis that entitles them to draw on their super early (there are provisions to allow that in certain dire circumstances.)

    If we EVER eliminate public pensions, we will have extreme poverty in some areas.

    However, public pensions were fully funded by a 7.5% tax levy and there's should be tons of money to keep paying them - if Fraser and his mob hadn't stolen it all.

    I think you are the one who needs to check your facts, waiting to retire. I note you got the Shorten franking credit policy hopelessly wrong too! You are believing political propaganda. Not everything published on the web is true you know!
    Anonymous
    29th Oct 2018
    10:20am
    PS. Check with a retirement calculator. Even couples with over $850,000 are likely to run out of money by 80 or 90. Many will have continuing high expenses after that.
    mr.auspicious
    25th Oct 2018
    11:43am
    Labor's proposal to disallow the refund of franking credits to the self managed
    superannuation sector will hasten the depletion of retirement savings.

    If the former treasurer, and prime minister is sincerely concerned for the welfare of ALL
    retirees, he should have a quiet word with the opposition leader and treasury spokesman,
    the message being to cease and desist from policies that will discriminate against self
    funded retirees.
    Waiting to retire at 70
    25th Oct 2018
    12:30pm
    Please stop listening to Andrew Bolt and Tony "who'll rid me of this meddle-sum priest" Abbott.

    Get hold of the draft policy. Read it. IT ONLY APPLIES TO SMSF WHERE INDIVIDUAL HAVE A BALANCE IN EXCESS OF $1.6M. Personally, I think that's fair.

    People with in excess of $1.6m in super should be paying taxes on earnings, including franking credits, on that proportion above $1.6m. No tax on $1.6m, only tax on amounts over $1.6m.

    Given the average annual earnings on Super until 30th Sept this year stood at 9.2%. That's $147,000 on average. But don't be fooled by the tyranny of averages.
    Old Geezer
    25th Oct 2018
    12:46pm
    Waiting to retire at 70. You have the Liberal policy that limited the amount you could have in super tax free to $1.6 million.

    Labor's proposed policy on the non refund of dividends is an unfair policy that does not touch the wealthy at all.
    TREBOR
    25th Oct 2018
    12:53pm
    All I can see from the comments here about DI is that it is currently a free handout.... something it should never be, since someone has to pay tax on income earned. Either your or the company pay tax - you can't both not pay it.
    Old Geezer
    25th Oct 2018
    2:03pm
    The company pays the tax just like my employer does. If I don't make enough income to pay tax then I get it all back. It is as simple as that.
    TREBOR
    25th Oct 2018
    2:32pm
    That's what I've been telling you all along, OG - that's why Rainey would not suffer with a change. ... however - the tax the company pays is not ITS company tax.. it is tax paid to the ATO against your dividend tax.

    Paying DI tax to the ATO on behalf of a shareholder is no different from paying income tax to the ATO on behalf of an employee, and it must be included in gross income of the shareholder.

    The problem - as Rainey said - is the technical nature of some not paying tax while enjoying heaps... which demands a full review of deductions allowed in many cases. Those 'rules' were set up at a time when only fat cats had a vote and to benefit fat cats - that is long overdue for overhaul.

    Shorten's concept was to not pay to those with a technical zero tax while enjoying heaps - but he didn't sell it very well and it is pretty unmanageable without a full review of tax deductions and cash manipulation methods.
    Anonymous
    29th Oct 2018
    10:13am
    Shorten didn't ''not sell' his concept, Trebor. His concept is WRONG. 100% WRONG. He wants to overtax those who have low incomes and keep refunding to higher income earners. He is lying about the intention, because quite clearly he is attacking low-income SFR retirees, and he knows it, and he's admitted it, and his minions are saying ''but it's okay because it doesn't affect a large number of people''. No, only about 500,000! And by my calculations it could potentially take up to $75 billion out of Australian companies - money that funds growth and employment. And over time it could add $14 billion to the aged pension bill. But in the short term, it saves... what does he claim? $6 billion or so>? Anyone who thinks that's good economics needs a brain transplant urgently!

    No, No, No... waiting to retire. You've got it ALL WRONG. Shorten never said one word about people with more than $1.6 million in super. What he said is that the wealthy who pay tax, the high income earners, and anyone on a pension as at March 2017 (no matter how well off) can keep their franking credits. Pensioners can continue to get refunds. Struggling self-funded retirees with WAY LESS than $1.6 million will lose up to 30% of their income, and no matter how poor they may be in the future - when their savings run out - they CAN NEVER EVER EVER GET FRANKING CREDIT REFUNDS AGAIN. That's his policy. And anyone who supports it needs a brain transplant - along with him.
    AutumnOz
    25th Oct 2018
    11:49am
    We did have a scheme where 7.5% of wages was paid into a fund to later be drawn as a pension. Gov't nicked that and now apparently Mr. Keating wants people to pay insurance in case they live long than 80 years. Possibly just another scheme for the gov't to nick the money for some other use.
    TREBOR
    25th Oct 2018
    12:54pm
    Yes - always keep an eye on that kind... they can change the rules with the blink of a penstroke... and oddly enough, it's always to suit their latest hare-brained idea.
    GeorgeM
    26th Oct 2018
    12:15am
    Yes, that 7.5% should be enough Insurance to give Universal Pension to all. Super was always meant to be a top-up, the so-called (unqualified) architect has forgotten. This guy always had thought bubbles - rather dangerous ones always - after all he was unqualified for the job.
    TREBOR
    26th Oct 2018
    3:30pm
    Grand Theft Canberra - now Keating would have us all believe it never happened... that the moment it went into consolidated revenue it simply ceased to exist... some here have tried the same line.
    Triss
    25th Oct 2018
    11:53am
    Well running out of money for his latter years won’t be a problem for him.
    TREBOR
    25th Oct 2018
    12:55pm
    Ages and ages of Entitlement, Triss...
    KSS
    25th Oct 2018
    12:28pm
    “We have no policy here in Australia for the 80 to 100 cohort,” Mr Keating said. “I don’t believe that it should be left to superannuation."

    We already have a policy: its called the aged pension and medicare!
    TREBOR
    25th Oct 2018
    12:55pm
    Hear, hear - always knew Keating was a rat underneath the smarmy talk of 'the people', 'the workers', etc.
    TREBOR
    25th Oct 2018
    1:14pm
    Visiting professor at one of my old almer matas... UNSW ...only time I've ever set eyes on him was at the airport when I spotted this lovely blonde lady walking next to this dreeb.... oops - that dreeb was the ex-PM... we security guys didn't have as much to do in those days other than review the female talent walking past...

    T he Good Old Days...
    etty44
    25th Oct 2018
    12:41pm
    Can I ask a question please? If a self funded retiree manages to fund themselves until, say 85, then runs out of super and funds, can they then go on the Pension for the remainder of their lives?
    Old Geezer
    25th Oct 2018
    12:46pm
    Yes.
    TREBOR
    25th Oct 2018
    1:14pm
    Why not?
    Anonymous
    25th Oct 2018
    3:53pm
    Just run out of funds a little earlier than that as I am not too sure I make it to 85 and beyond, etty44. Not everybody has to wait and exhaust all their funds, You can still have money in the bank and get the full pension. People seem to forget that.
    etty44
    25th Oct 2018
    4:51pm
    thanks for the info all.
    Anonymous
    30th Oct 2018
    8:00am
    My worry is how long there will continue to be an OAP adequate to live on. Everyone says no government would dare to abolish it, but they ARE gradually chipping away at it. I recently read an article by a leading economist who listed all the changes to retiree income support over the past century, explaining that there is a carefully-constructed plan to chip away until the OAP is no longer. There is never much objection to small changes - even when they take $12,000 a year from some people (as long as it's only a small number and the government can lie and claim they were all wealthy folk!) Now the ALP wants to take another maybe $8K or $10K away from those same people, reducing their incomes to well below the OAP in many cases. When they destroy the incentive to save for retirement and force hundreds of thousands more onto pensions, they surely HAVE to then cut the amount pensioners receive?
    TREBOR
    25th Oct 2018
    12:44pm
    "Keating Confesses To Lack Of Indexation In Super To Match Inflation and Runaway Costs Of Living!"

    Politicians exempt with indexed 'pension'.

    (Headline in the Trebor times...)
    sunny
    25th Oct 2018
    1:32pm
    In Finland, everyone pays into a retirement kitty, regardless of what work they do. when reaching 65, absolutely everything is free of charge, travelling, healthcare, nursing homes if needed. Obviously food, alcohol, entertainment, holidays, clothing and such are exempt. If you die before that, it's a shame, but like any insurance, the kitty is always there for the others. Cuts out any snobbery of a pension v super. It gives you an opportunity to better yourself through life to reap the extras in retirement.
    Old Geezer
    25th Oct 2018
    2:04pm
    That's why I have so little in super and why I will take it out before they can et hold of it as well.
    Anonymous
    25th Oct 2018
    4:04pm
    Ditto in Switzerland, sunny - apart from the freebies you mentioned after 65, but then the pension is $A3400 a month and you have to look after the extras.
    If you have super on the side you are that much better off - it does not cancel the pension out like here.
    Anonymous
    29th Oct 2018
    10:03am
    And that's how it SHOULD be. We should all be contributing to caring for our aged at a modest but reasonable level, and allowed to keep what we earn and save to enhance our own living standard. It's common sense.
    Rae
    25th Oct 2018
    2:10pm
    No. Every time this bloke opens hs mouth I lose money. Go away Keating.
    TREBOR
    25th Oct 2018
    2:36pm
    ROFL.... I remember the recession we had to have and the 18% mortgage rates .. I didn't eat sometimes to hold on to that mortgage.. just shows what early training in deprivation teaches you... I can go for days without eating, just like when I was a kid... and I can even handle little water as well as an Arab...
    Anonymous
    25th Oct 2018
    3:58pm
    TREBOR - most of us remember that episode, mortgage rates of 17% and we came thru it, just wonder sometimes when it happens again with our house prices these days, might even be possible to up-size then as my place is common garden variety, i.e. cannot get any lower than it is. Big places come down in price much more speedily.
    Rae
    25th Oct 2018
    5:20pm
    I lost what would have been a $400 a week income addition thanks to 23% loans as I was farming and had to sell the holiday house at a huge discount when the bank called the loan.
    Keating destroyed a lot of farming families and small business owners.

    So he cost me around $15000 a year now after costs.

    The 89 to 92 banking crisis was horrible for anyone in debt.
    TREBOR
    25th Oct 2018
    10:10pm
    Yes - these magic decisions and policies never impact on them...
    GeorgeM
    26th Oct 2018
    12:18am
    Absolutely, Rae, can't understand what we all did wrong to deserve this donkey who doesn't go away.
    Rae
    26th Oct 2018
    5:57pm
    I know what I did wrong George. I trusted bankers and believed the Government cared about the people. Not any more.
    Patriot
    26th Oct 2018
    8:26am
    Any Chance the matter related below could have anything to do with it?????

    THE PLOT AGAINST AMERICA

    "Enemies within and without"
    "Enemies, foreign and domestic"
    Colonel Edward Mandell House is attributed with giving a very detailed outline of the plans to be implemented to enslave the American people. He stated, in a private meeting with Woodrow Wilson (President 1913 - 1921),



    "Very soon, every American will be required to register their biological property [that's you and your children] in a national system designed to keep track of the people and that will operate under the ancient system of pledging. By such methodology, we can compel people to submit to our agenda, which will affect our security as a charge back for our fiat paper currency. Every American will be forced to register or suffer NOT being able to work and earn a living. They will be our chattels [property] and we will hold the security interest over them forever, by operation of the law-merchant under the scheme of secured transactions.

    Americans, by unknowingly or unwittingly delivering the bills of lading [Birth Certificate] to us will be rendered bankrupt and insolvent, secured by their pledges. They will be stripped of their rights and given a commercial value designed to make us a profit and they will be none the wiser, for not one man in a million could ever figure our plans and, if by accident one or two should figure it out, we have in our arsenal plausible deniability. After all, this is the only logical way to fund government, by floating liens and debts to the registrants in the form of benefits and privileges. This will inevitably reap us huge profits beyond our wildest expectations and leave every American a contributor to this fraud, which we will call “Social Insurance.”[Social Security} Without realizing it, every American will unknowingly be our servant, however begrudgingly. The people will become helpless and without any hope for their redemption and we will employ the high office [presidency] of our dummy corporation [US] to foment this plot against America." -- Colonel Edward Mandell House
    Anonymous
    29th Oct 2018
    10:00am
    Wow! Where did you dig that up Patriot! Fascinating, but scary. Of course America did introduce a social security registration system, to which every American must sign up if they want to work and earn a living. Was that the first step in the plan, I wonder?
    Old Geezer
    29th Oct 2018
    11:14am
    That's not near as scary as the system they will soon have in China.
    Patriot
    29th Oct 2018
    6:29pm
    OG -
    That's what Western propaganda wants us to believe anyway!

    OGR - not far off completion in Australia now!

    29th Oct 2018
    2:09pm
    Is this an admission that his fancy tax avoidance scheme for the well off wasn't the solution it was purported to be?

    Maybe the 'insurance' could be funded and assisted by restoring fair taxation of super - giving the lower paid a bit of a tax break instead of loading the coffers of high income earners with obscene tax concessions.
    auzie3136
    30th Oct 2018
    5:13pm
    I remember the Levee it was always on your payslip when you used to get paid real cash and not paid into your bank account like today. The Government then took millions out of Super and transferred it into Consolidated Revenue and never replaced it. I think it was around that time that the Government started putting off people working for them and offering them early retirement...