Australian pension system worsens on global index

Rejigged assets test has caused retirement income system to deteriorate: index.

Australian pension system worsens on global index

Australia’s retirement income system has dropped to fourth place out of 34 countries rated in this year’s Melbourne Mercer Global Pension Index (MMGPI).

It now rates as B-grade with an index value of 72.6 and is described as “a system that has a sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system”.

Last year, Australia’s pension system was third placed with a B-plus grade and a rating of 77.1.

According to the MMGPI report, Australia’s pension value “fell significantly, primarily due to a toughening of the assets test resulting in a reduction in the net replacement rate”.

Also contributing to the decline was the inclusion of the level of household debt in this year’s ratings.

To achieve A-grade status in the index, a system needs to rank above 80. The top pensions are classified as “first class and robust retirement income systems that deliver good benefits, are sustainable and have a high level of integrity”.

The top systems this year are Denmark (80.2) and the Netherlands (80.3), both A-graded, and B-graded Finland (74.5). Each of these nations has improved its standing since last year.

Argentina’s system is ranked the lowest with a value of just 39.2 on the index. Apart from South Africa (52.7) and Saudi Arabia (58.9), no African or Middle East countries are listed, and only a few Asian ones make it on the list.

While changes to Age Pension and superannuation rules in Australia may have led to the slight decline in Australia’s retirement system, it still beats those in New Zealand (68.5), the UK (62.5) and the US (58.8).

Author of the study and senior partner at Mercer Australia Dr David Knox says that the natural starting place to having a world class pension system is ensuring the right balance between adequacy and sustainability.

“It’s a challenge that policymakers are grappling with,” says Dr Knox. “For example, a system providing very generous benefits in the short term is unlikely to be sustainable, whereas a system that is sustainable over many years could be providing very modest benefits. The question is – what’s an appropriate trade-off?”

The report recommends the index value for the Australian system could be increased by:

  • moderating the assets test on the means-tested age pension to increase the net replacement rate for average income earners
  • raising the level of household savings and reducing the level of household debt
  • introducing a requirement that part of the retirement benefit must be taken as an income stream
  • increasing the labour force participation rate at older ages as life expectancies rise
  • introducing a mechanism to increase the pension age as life expectancy continues to increase.

Do you feel your retirement income has deteriorated since last year? To make the most of your money in retirement, first you need to know the rules. The RetirePlanner™ tool has all the information you need.

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    COMMENTS

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    Jim
    23rd Oct 2018
    10:18am
    Here we go again, it’s little wonder that we have older people especially pensioners feeling hard done by, I don’t mean to infer that some people arn’t struggling because obviously there are many people struggling for a variety reasons, but these articles do not compare apples with apples, the 3 top countries mention all contribute far more to their pensions before retirement, some contribute as much as 18% of their salary that goes directly towards their pension. The UK system which is ranked lower than Australia doesn’t take into account that many people who are on the pension in the UK don’t pay any rent and everyone in the UK is entitled to the state pension no matter how much they have in assets, but they also have to pay tax on any earnings, they also pay nothing for prescription medication, can access free glasses and some dental, most areas have free travel for pensioners, I am not sure who Mercer global are, I did notice that they are comparing more countries this year than last, who do they get their income from and do they have an agenda?
    maelcolium
    23rd Oct 2018
    11:29am
    Mercer are a global operator in financial planning so you would have to expect a level of bias in their reporting. These so called measures are just indices which are comparative measures between countries of preselected and common data and don't take everything into account. Therefore, they may not be indicative of the individual retirement positions and they exclude the outliers, some of which you mention that are enjoyed by other countries.

    In short, the numbers just indicate changes in ranking among the surveyed countries based on the measured data. Not much more than a statistical wet forefinger in the air.

    The 18% you mentioned is the gross amount paid into mostly overseas Government retirement schemes. If you included the Australian compulsory super deduction from everyones' wages, add the 1940's social pension contribution (now part of general taxation) and the addition of 7.5% in early 70's (also added to general taxation) then we are about line ball with those countries. It is a myth that Australians pay nothing for their public pensions and I calculate on the average wage, 10% of our taxation is paid into these latter two schemes. The result of the Keating/Hawke super scheme madness where we all had to forgo wage increases into a compulsory payment controlled by the private financial parasites has resulted in a hybrid system of retirement pensions which will be difficult to unwind. Once again the Government usurped the compulsory scheme by freezing increases, despite productivity gains, and so we have the current mess.

    The problem with the Australian system is that there are some very well off on the compulsory scheme. Some very well off on the public defined benefit scheme like our top bureaucrats and politicians (for life) and the plebs who have an average of less than $100K when they retire. Then there are those with less, no home ownership and struggling. It needs to be fixed so everyone has an equal income opportunity on retirement, including the politicians etc.
    Jim
    23rd Oct 2018
    12:00pm
    Well said and good explanation, I think the compulsory super was the best thing Hawke and Keating, although probably a bit late for my generation, although I have to admit to having a better retirement than I expected, you are correct I recall we gave up our pay rise and got 2.5% paid into super, I think it is up around the 9% mark now, so some improvement, I guess my main point is that a lot of these reports don’t compare apples with apples so it’s nigh on impossible to make an accurate judgement.
    TREBOR
    23rd Oct 2018
    12:48pm
    Compulsory super was good apart from the shemozle that it's been turned into with all this mix of industry and retail and the vast array of different schemes set up - always for the outstanding benefit of those setting them up, like politicians.

    I bring you The Trebor Scheme.
    GeorgeM
    23rd Oct 2018
    1:17pm
    Mercer's view should be less relevant to policy makers than those of the Pensioners here! After all, their recommendations clearly show their right-wing bias and their future wealth-creation objectives (such as from running income streams). Isn't meant to help us retirees!

    Universal Pension for all from Age 65 and Residency of say 15 years should be a BASIC.

    Also, keep Super out of any hands where Govt or such private companies can touch it by LAW - managed by an independent trustee run by the Members and appointed experts only. Presume Trebor scheme addresses this!
    TREBOR
    23rd Oct 2018
    10:04pm
    Indeed it does, George, though it's a bare bones scheme at this time... needs more ideas and input from good men and women. The idea was an elected annually body with mandatory representation from SFRs and prospective pensioners in the accumulation phase, and same in the retirement phase, running the show and all fees and costs coming out of profits, and not all this current nonsense of the worker getting salary etc cops a fee for doing the job as well....

    Unfortunately - with the needed addition of SFRs to the management mix - there is the risk that the 'big boys' will take over and control investment etc for their own and their mate's benefit - same as now, BTW. Therefore - like political representation - I must add that anyone over a certain net wealth cannot stand...

    For those with an eye to history - that is a total inversion of the way things were before the gradual intrusion of, firstly, universal male suffrage, and those universal male suffragettes (sic) then voting in Australia for women to have universal female suffrage...(funny that - eat me, you feminists). Since the male/female ratio was about 60:40 nobody can fairly say that came about because men were pussy whipped at home... it came about from a sense of fair play - something totally overlooked in feminist mythology.

    Anyway - the old way was that only persons over a certain net worth could vote - which naturally lead to voting to benefit themselves and their economic activities...

    THEREFORE - I have arrived at the position that only those BELOW a certain net worth can stand for elected office - since they are the ones most likely to have a grasp of the very real issues in a democracy - whereas the high net worthies are most likely to promote policies and legislation to promote their own ends and of their mates and cronies.

    History here shows that to be true... same with Britain...

    One of the things I constantly attack is 'business regulations' and 'company tax law' - since these are a hand down from the golden days of robber barons, who held the ONLY reins of voting power and thus set these in place.

    There is NOTHING in this day and age that says these basic flawed premises should not be altered to relate to the 21st Century. We've seen the spectre (and spectre it is with a bony hand of death) of companies wanting the vote because they are separate legal entities etc, same as any individual. In that case why do they have a preferential tax system and a preferential tax deduction system? We're all in the business of making money........ why is there any difference between the individual and a company when it comes to deductions and tax liability?

    Off the beat there - but someone has to say it.... and I won't always be here to do it.
    GeorgeM
    23rd Oct 2018
    11:29pm
    OK, Work-In-Progress, as those in power are not listening, nor do we have a suitable party yet to strongly push for change. Remember, there was supposed to be a Review when they changed the Assets Test.......

    Hence, Step 1 remains - Get rid of the Liberal, Labor & Greens current seat-warmers, if they don't promise to fight for Universal Pension (people need to write to them). Then, we may get a discussion going with these so-called Representatives, including consideration of sensible alternatives / schemes.
    Kali-G
    23rd Oct 2018
    10:33am
    OUR GOVERNMENT CARES MORE FOR FOREIGN COUNTRIES THAN US AUSSIES! 8 AND HALF BILLION DOLLARS EVERY YEAR! SHAME! SHAME !
    Pass the Ductape
    23rd Oct 2018
    10:40am
    You only need to look at history! The poorest among us (read, slave) has always footed the bill in one way or another for the richer amongst us. Just a different spin on things today is all.
    tisme
    23rd Oct 2018
    10:43am
    I fear the future so much I feel sick and depression through the floor. life is a struggle now as a carer of my autie daughter renting a house we cant afford with disability etc expenses. we are really only one step away from the streets. I and carers like me have cared for so many for so long this is how the government says thanks for the multi millions u have saved us.
    TREBOR
    23rd Oct 2018
    11:50am
    Be not dismayed - this depression is normal - normal on a social battlefield.....

    It is quite disgraceful that carers are often left with nothing... not even a social life... but that's the choice we make. Short of a major overhaul I see no alternative for those who are caring for someone in your position... not easy.
    KB
    23rd Oct 2018
    12:44pm
    tisme I feel for you. Hopefully there will be a change in government next year. My mother was a carer for a daughter with down syndrome until she was no longer able to take care of her. I ended up caring for both. It sounds like you need counselling. There are organizations that offer cheaper housing but you need to put your name fown..
    Rae
    23rd Oct 2018
    1:56pm
    It sounds like you need help time to perhaps move to more affordable accommodation and get a budget under control. It's not possible to live easily on a carer pension and a disability pension but it can be achieved.

    My dad moved to Blackwall near Why roy and found a two bedroom unit for $280 a week. He was able to stretch the aged pension out and even save. If you're paying hundreds for rent then something has to change.

    Go see the Salvation Army counsellors and make some plans to turn the bad around and help the depression. It's a black dog alright but it can be subdued with help.
    TREBOR
    23rd Oct 2018
    10:11pm
    Good one, Rae.... Woy Woy? Why pick on roy...he'll be along shortly, I'm positive...

    Yes - a move is sometimes a great help and Woy Woy isn't that far from Sydney etc... families don't visit that much anyway and they can easily do that if they want to.

    The ex and I are fortunate to be looking to UPsizing - for the benefit of her grand-children ultimately - from this central hub to a coastal location. I figure that even if the big cities property prices slow or fall even - coastal country property will continue to rise due to demand for retirees selling up there and moving....

    Moves galore over the past three years... from property way down south to coastal hub, then to oceanfront.... oh, well... it's a tough life... but not without its costs. As carer I was cleaning up the floor last night after a failed dash to the toilet..... never a good sign...
    Rae
    24th Oct 2018
    8:20am
    We moved to Woy Woy when I was in year 11. It's great area with good doctors, a hospital, good shopping and plenty of help for those needing Social Security.

    Lots of lovely beaches and all sorts of crafts, arts, clubs, support groups. And there is a rail line.

    Coastal property tends to have better temperatures as well TREBOR so you don't need a as much electricity or fuel for long country drives to services.

    The key point is to change something when you are in a rut you can't afford. Without change nothing can be fixed or made worse. It just grinds on with no hope and that causes depression.
    TREBOR
    24th Oct 2018
    12:35pm
    Yes - the temperature difference between here and the projected move-to is about 6-7 degrees cooler... with a sea breeze - and currently we are only a few km inland.

    Can't move to a unit since disabilities preclude that.... oh, well...
    Mad as Hell
    23rd Oct 2018
    10:54am
    As a part pensioner I feel hard done by with the changes to the 2017 Pensioner Assets Test. The LNP and Greens stole pensioners entitlements.
    thommo
    23rd Oct 2018
    11:42am
    I agree with you MAD AS HELL..This treacherous LNP (especially Abbott and Morrison) govt made solemn promises during the 2013 election not to change the assets test, but then changed it in the 2015 Budget, on the pretence to help fix the budget bottom line. What a load of BS that was.
    Many part age pensioners had their retirement plans stuffed up because of this government, and they won't every forgive or forget the LNP for this act of bastardry and betrayal..
    Australia is a rich country and can afford to pay pensioners a decent, fair and respectable age pension, but no, they treat pensioners like lepers..
    This is one reason why the LNP almost the 2016 election, but the age pensioners will ensure they trounce this govt at the coming Federal election.
    Govts had better realise that age pensioners and retirees are gaining political force, and need to be reckoned with...
    Goodbye and good riddance to the LNP at the next election.
    TREBOR
    23rd Oct 2018
    11:53am
    The riches are too unevenly spread, thommo..... and deserving ain't got nothin' to do with it... the LNP has operated with no conscience in its huge sellout of this nation, the Greens are no better and will leap on the back of anything to get as much power as possible like white ants, and until Labor divests itself of this never-ending 'minorities' nonsense AND The Big Sellout too,and starts to look at governing for all equally and for this nation first, it will never be a real power in the land, but only in its own minds.

    The only hope lies with the proles - and these proles are mighty restless these days...

    New party required NOW!
    GeorgeM
    23rd Oct 2018
    1:20pm
    Yes, all must join in to THROW OUT these robbers. Labor also refused to reverse it, so they must go to! Waiting for that New Party to show it's head!

    In the meantime vote LAST all current MPs from Liberals, Greens and Labor.
    Rae
    23rd Oct 2018
    1:59pm
    LNP, ALP and Greens ganged up to do this and should not be forgiven.

    I'm annoyed too as I did what they made me, paid all my taxes and still got slammed when I should have at least got the concession card to help stop paying full costs for everything like a full time worker.

    Vote in lots of Independents or a new Party perhaps.
    TREBOR
    23rd Oct 2018
    10:14pm
    I will never forget or forgive - this started for me back when I made an application for Veteran benefits and was shafted by disappearing medical records... and did the merde fly then... both ways.... and with sniping on the side from a now totally discredited organisation of wannabe's....

    I will not forgive that or what has happened since.
    Rae
    24th Oct 2018
    8:22am
    Yes TREBOR betrayals never sit well.
    Jim
    23rd Oct 2018
    11:23am
    So the old chestnut the rich are getting richer and the poor are getting poorer, it’s propaganda for people to rise up against the government of the day and largely is a myth.
    I would ask people to look back at their own history, I know from my own background, I was born in the North east of England at the end of WW2, we were still on rations until 1951, our playground was the bombed out houses of our neighbours, if we were lucky we had one decent meal a day, some days I used to hang out outside the works to see if any of the men coming out had any sandwiches left, I wasn’t the only one, I don’t recall anyone complaining, probably because we were all in the same boat, as we got wealthier and were moved to newer areas, where we didn’t have to fight the rats that infested our homes, in the early 60s we had our first holiday which became a regular thing every 3/4 years. I moved to Australia in 67 it was a fantastic place, I felt like I was a millionaire, I got married in 68 and bought a 2 bedroom fibre home with toilet outside, the mortgage took up most of our wages, mind you I was one of the first to be buying my own home, our home was furnished with mostly second hand stuff or stuff donated by family, unheard of nowadays, everything has to be new and the latest trend, which I think is great. I know that my comment might seem long winded, I am just trying to show that things have got better for the majority of people, and yes I acknowledge that many people struggle in today’s world, I just find that the politics of envy practised by many is as much a part of the problem as anything else, and causes more psychological problems than the financial problems, things have progressively improved for the majority of people.
    TREBOR
    23rd Oct 2018
    12:00pm
    Thank you for your anecdotes Jim, the ex reads many tales of England in the past and some are horrorshows. This alleged prosperous nation today, however, is not functioning any better than the outdoor dunny... and has become a conduit for the national wealth to go to a few global pirates and/or to be funneled to mates and cronies via insider deals, privatisation disguised as theft, and advanced notice of billion dollar policies coming in.

    (Monty Python time)... You lucky bastard! Regular jailer's pet, you are... sandwiches bummed from workers? Ohhh.. what I'd give for a sandwich bummed from a worker!

    Actually, Jim, my upbringing wasn't much different, except it was here... politics of envy, BTW, works (as usual and as Thatcher missed the point) both ways - those who imagine themselves the 'better' class always think that anyone who gets pension etc is getting something for nothing... not on facts, that...
    Cowboy Jim
    23rd Oct 2018
    12:43pm
    Yeah Jim, I came here 3 years after you. At that time the Vietnam war took the shine off the place a bit as a lot of people were on strike and go slows. But we made do with the second hand stuff you mentioned and I could do the night shift and then walk home at 2 in the morning in Melbourne. Today you'd be considered a candidate for the loony bin but in the 70s you had to work first before getting a vehicle - no credit card and the mortgage took most of the dough we earned. From memory 8.75% from a bank.
    Rae
    23rd Oct 2018
    2:04pm
    Yes it has gotten better but there is still a lot of inequality and unfair legislation. Ignoring it won't sort it out.

    The data doesn't lie and the share of productivity and profit going to workers is declining. Labourer's time is being discounted. At some point that has to turn around.

    A workforce on zero hour contracts and no idea how many hours they'll get from week to week is no way to run employment policy.
    Bren
    23rd Oct 2018
    11:36am
    It seems the reason we have a slightly lower ranking this year is because they are including household debt in the calculation, for the first time.
    I wonder what our ranking would have been in previous years had household debt been included ?
    Let's compare apples with apples eh.
    TREBOR
    23rd Oct 2018
    11:46am
    Yes... next question.......
    Cowboy Jim
    23rd Oct 2018
    12:21pm
    Very hard to make comparison: in my old place in Europe everyone from age 18 pays in a certain amount of wages, the employers a few per cent more, let's say 10 and 14% so people on a high salary pay in more than the low paid. At age 65 everyone with 45 years work history and paying in gets the age pension, currently $A3400 per month. Millionaires get it too and pay tax on it. Most of them also paid in a few hundred thousand over their life time. But here comes the crunch - when one dies there is no more pay outs. He who lives longest gets all the benefits, the guy who dies at 64 paid in all his life for zilch. That is the reason the pension can be sustained and even then longevity of the population has hit them and they are talking about raising the GST from 8 to 10% (alternative would be lowering the pay out or a longer wait time like here.
    Rae
    23rd Oct 2018
    2:08pm
    I don't understand why it's okay to pay 10% on purchases but horrible to contemplate paying 0.05% on money except that the really wealthy would finally pay something and not be able to claim it back from their Corporation.
    TREBOR
    24th Oct 2018
    12:36pm
    That's the one, Rae - on the other strand for today.... this 0.05% - is that a cash transfer tax?

    Are there figures on how much it would recoup.. the idea has gone the rounds for years now...?
    Rae
    24th Oct 2018
    2:17pm
    No TREBOR but if you look up UN Transaction Tax there are figures and information. I gather the UN seem to believe it the only solution to Corporate Feudalism, tax havens and cyber space industries, even the coming of robots.

    Then you get the conspirators theorists upset and the traders and speculators who would obviously lose money.
    TREBOR
    25th Oct 2018
    12:51am
    The moment you mentioned UN I was running scared.... this needs a close look at...

    We had a transaction tax here once....

    Not sure the UN has any real place in determining the best solution for tax havens and offshore bandits etc... they are often too driven by ideology for my liking....

    These issues of offshore global corporations and tax havens were addressed at a conference of 73 nations in Paris last year - haven't heard a peep since...... and I'm looking for solutions to the perpetual rape of national economies via offshore businesses and fraternal loans and tax havens.

    Can't find a UN - there is an EU one....an old scheme ...

    https://theconversation.com/the-eus-adopting-a-financial-transactions-tax-so-why-dont-the-rest-of-us-3533

    https://www.reuters.com/article/us-france-tax-currencies/60-states-to-lobby-u-n-for-currency-transaction-tax-idUSTRE6806F220100901

    That second was for 'development aid' for poor nations... i.e a gift to the poor nations - not quite the same as saving the national economy.... and it was in 2010.

    I was looking for the conference that addressed the issues of globalisation and tax havening and their impact on national economies - held in Paris last year.... no record..........

    Somebody bring me a conspiracy theorist..... I need to sort this out rationally and sanely......
    Charlie
    23rd Oct 2018
    12:48pm
    The sky is falling The sky is falling
    Rae
    23rd Oct 2018
    2:09pm
    No but a lot of retirees are taking the money and making off with it. This is upsetting the Funds and the Government as those lucky new retirees can adapt to get a part or full pension unlike those stuffed around by Hockey and Abbott.
    TREBOR
    23rd Oct 2018
    10:16pm
    Yep - and the changes keep hurting some, like Rainey.... this has to stop somewhere.
    KSS
    23rd Oct 2018
    12:48pm
    But still number 4 and above the UK, the country so often dragged out to show that everyone can have a State pension and argue for it to be activated here.

    Clearly enough is never enough.
    Jim
    23rd Oct 2018
    2:13pm
    As I have commented earlier they are not comparing apples with apples, in the UK there seems to be many benefits that we don’t get here, but as I understand it their pension is much lower than ours, so who ends up better off, I don’t know, some one has just commented that somewhere in Europe they get $3400 a month, I have never seen those sorts of figures unless there is a private pension involved, I know in the UK many people also get a private pension so that would put their pension way above ours, and they have to pay tax on their pension and they may not get some of the other benefits that state only pensioners get, I don’t have any information on how the pensions work in these other countries so am not sure how you can accurately compare them, here in Australia we can also boost our income in retirement depending on how good or if we even had super was.
    Old Geezer
    23rd Oct 2018
    2:13pm
    Enough would never be enough for those on welfare.
    Cowboy Jim
    23rd Oct 2018
    4:05pm
    I said that Jim - my mother lives in Zurich and that is what she gets a month, it is of course what she has to live on, no freebies, public transport; all they give you is the money and you have to do the rest, health insurance is compulsory and there is no free Medicare. That is one of the reasons I mentioned we just cannot compare pensions from one place to another. There is also no social housing unless you are on skid row and then you are under supervision.
    Jim
    23rd Oct 2018
    7:21pm
    Yes I can believe the amount, I think they have a similar situation in Germany, I think quite often it is the case that not all benefits and payments are taken into consideration, you need to look at cost of living as well as other things that effect your retirement, I had a short holiday travelling in Switzerland a couple of years back, my first impression it was quite expensive, but you can’t always judge a place in a short visit, you would have a better idea how good the pension is than these other so called experts, the only real way to judge other countries is to see how the locals live.
    Cowboy Jim
    23rd Oct 2018
    8:25pm
    Jim - when I came here to live I had to pay CHF5.50 for an Aussie dollar and now when I go back to see family I can only get CHF0.70 for an Aussie dollar. That is the reason you might find the place expensive - I do as well, but I still know where to shop and go for a drink. Never go to a place with a Union Jack or Stars and Stripes flag outside the premises. They speak English alright in there but the prices are double.
    TREBOR
    25th Oct 2018
    12:52am
    Enough would never be enough for those who can tax dodge to their heart's content...
    Old Geezer
    26th Oct 2018
    4:05pm
    Trebor I am surprised you know anyone like that.
    Anonymous
    27th Oct 2018
    6:27pm
    That's only most of the well-off, OG. All bashing pensioners and screaming that they are greedy, but then we have to suffer these greedy whingers complaining that $300,000 and EIGHT investment properties isn't enough for them. Bet the whinger was claiming negative gearing tax concessions too.

    It's not the pensioners and battlers for whom enough is never enough, OG. It's the whinging well-to-do who are never satisfied. Just look at the politicians - rorting expense accounts constantly and justifying their obscene retirement benefits, but very quick to steal from battlers.
    floss
    23rd Oct 2018
    12:50pm
    All done under a Liberal Government well done.
    GeorgeM
    23rd Oct 2018
    1:24pm
    With Labor refusing to reverse it! Also, remember Labor introduced the Assets Test (under Keating) and increased Pension Age to 67.

    Only sensible option now is to throw out Liberals, Labor and Greens - if all retirees join in and put such current MPs last in preferences, we would get a strong message to Canberra, and establish the Retirees as a strong force.
    Anonymous
    23rd Oct 2018
    10:02pm
    And Labor is now threatening to totally demolish SFRs by making them pay up to 30% tax on income that should not be taxed. And today a senior in the local ALP's member office openly admitted that they KNOW their franking credit proposal is not economically viable - much less ''fair''. It's solely a political move, and they don't care about the consequences as long as it wins votes - which it will from all those who swallow their lies about the objective.

    They are well aware that it will drive tens of thousands of SFRs onto pensions. They are well aware that it will reduce investment in Australian companies, impacting on growth and unemployment. But their supporters are pensioners and low income earners, and the story they are telling appeals to pensioners and low income earners. And pushing more folk onto pensions will increase their support base.

    I confirmed with a senior in the Greens that this is the objective, and the Greens are fully aware of it, but support it never the less.

    The speaker today admitted that there is NO PROBLEM with franking credit refunds. The problem is that some wealthy folk manage to dodge income tax and appear to have no taxable income, so they get franking credit refunds. But the problem isn't the refunds. It's that they manipulate to pretend they have no income. Fix that problem and the franking credit problem goes away. But take the franking credits and the tax rort still continues, but millions of battlers suffer.
    TREBOR
    23rd Oct 2018
    10:20pm
    Yes, Rainey - I did say the tax deduction coverage needed to be reviewed... of course I was rubbished when I said that, as an example, some can cop $200k p.a for personal spending and still play no tax and thus cop DI full refund...

    It's a system built for the rich, not for those struggling to keep up. I don't begrudge you a single cent.... and continue to be astounded that Colonel C'Link doesn't come to the party with a top-up for those with very low real incomes.

    Something very wrong there, and the annual calculation is not hard to do...

    OG - it's not welfare..... why do I have to keep reminding you of reality?
    Anonymous
    24th Oct 2018
    8:05am
    Although I do agree with a universal age pension, Trebor, I don't think Colonel C'link should provide the solution in this situation. I think a healthy economy should be the goal, with strong investment returns from secure investment options. And that won't be accomplished by removing DI credits for people with no taxable income. In fact, those with no taxable income should have a superior entitlement to DI refunds, since they shouldn't pay any tax if they have no taxable income.

    The ONLY valid solution is to stop people manipulating to appear to have no taxable income when their income is actually high.

    The first step is to stop the message that people should pay as little tax as possible and start promoting the idea that to have a healthy and happy society, everyone must pay their way, and those who don't are CRIMINALS - regardless of whether their conduct might be technically legal or not. They are despicable animals who should be cast out of decent society. And those who endorse, support or approve tax minimisation should be thrown out with them. If we could convey the message that paying your way fairly is honourable and beneficial to EVERYONE (because you never know when you or your loved ones might need social support - and we all need strong infrastructure to grow the economy), we might make some progress toward a healthy economy and a healthy society.

    Increasing dependence is not an answer to anything, but that's the ALP's goal - because increased dependence means increased control and increased voting support.

    The LNP buys voter support by indulging the greed of the rich. The ALP buys it by indulging the entitlement mentality of the poor. Until we end this contest of indulgence, there's no hope.
    TREBOR
    25th Oct 2018
    1:02am
    Agree in theory on the dependence - but when there is no real alternative - where is the solution?

    On another forum I operate on daily, one contributor says everyone should just go out and set up their own business..... if everyone did there'd be no business due to no employees and too much competition ... we need to restore a balance here...and find work for all who want it and can do it and develop a genuine future infrastructure for this nation...

    At the moment there is no solid underpinning to our economy, which IS a banana republic economy, exporting ores and beef and with near zero industry to support it.... banana republicanism only sustains those in the business and those at the top - not the nation as a whole....

    Amazing how that so closely parallels our current crisis... (and crisis it is)... though in this case here and now, those at the top are not even here, so there is no 'trickledown' in their employing banana pickers (that's all they do) and then servants at home and then buying here and thus creating employment for shopkeepers and staff etc.... no car dealers that they buy from here.... no services that they use here.... no restaurants they eat at here..... no opera performances they attend here.....

    All is lost national economic revenue leading to economic activity nationally ... which generates jobs and tax.... it's all in Offshoria and untouchable under the current rules...

    We need an entry for capital and an exit capital tax........ Lock the Gates!
    Anonymous
    26th Oct 2018
    7:30am
    I have no issue with someone being dependant if there is no alterative, Trebor. What I take issue with is CREATING dependence by stupid government policies that punish endeavour and responsible living and reward being irresponsible. And our system richly rewards the irresponsible.
    travelman
    23rd Oct 2018
    1:21pm
    Our Aged Pension has not had a 'real" increase in 9 years; the current indexing is not working simply because it has not been adjusted in line with the increases of the cost of living. We have a Federal Government that is completely out of touch with the economics of this country. No matter what angle one views this government every angle shows incompetence and stupidity. Decent pensions, wages and full employment are the only ways to get this country on its feet economically and the evidence that not happening is readily seen in the national debt and deficit that has been growing since the Coalition came into power. The only answer to our economical woes is to remove this Government and put into power the only other party available, Labour, to govern our nation as it should be. The only other party, the 'Greens', are not experienced enough to deal with this awful mess we now find ourselves in. But there also, has to something else in place to ensure that a Labour government will achieve what is needed - it is US - the people of this nation. For years the people have abdicated their right and responsibility to work with a government and hold them accountable across the whole of their time in office. We have been politically inactive, even lazy and more concerned in our selfish desires. It is time for us to 'stand up' and be counted. The young, those who are eligible to vote but do not - I say this - if you want to have a better life, a job and a future then you must MAKE YOUR VOTE. It is not good enough to say, 'why vote, nothing is going to change'. Why should pensioners give up their years to go back to work and keep you doing nothing to help yourselves. If that is how some youth behave, for myself, the answer is mandatory military service for two years for both male and female unemployed. It would break the cycle of ineptness, create self worth and pride. A regular good income and after two years the promise of good jobs and future. Nothing in this country will change and improve until we get involved - all of us. Our new Prime Minister, Scott Morrison, has already demonstrated that he is just a repetition of the other two Incompetents that preceded him. He will be known as the shortest-term prime minister in recent history.
    MICK
    23rd Oct 2018
    2:09pm
    Compared to other first world countries Australia makes it really tough to get a pension unless you are destitute and is also nibbling away at the edges to knock as many off as possible. The assets test is not realistic in this day and age but the bastards currently in power seem to think giving very wealthy people large tax cuts as well as trying to give them company tax cuts (failed) is a fair and reasonable policy.
    I might have though giving retirees a better standard of living would have encourage business as retirees spend. They do not save. So the economy would benefit. Oh yes.....have to give rich supporters tax cuts. And paying off the national debt? Yes of course, that is left for struggling wage and salary earners + retirees to repay. What can I say.
    Old Geezer
    23rd Oct 2018
    2:12pm
    Mick anyone in Australia today can get the OAP no matter what they have if they want it. It is full of loop holes most of which one can drive a mack truck through.
    MICK
    23rd Oct 2018
    3:13pm
    Actually no. The assets test is pretty clear cut and it is very low. That is the problem.
    This was pushed through the floor on THIS GOVERMENT'S watch. The irony which upsets many Australians is that it was ok to screw retirees and then hand the top end of town a big tax cut.
    Old Geezer
    23rd Oct 2018
    3:15pm
    Actually yes MIck. All it takes is a bit of planning before one retires.
    MICK
    23rd Oct 2018
    4:39pm
    How do you plan away assets OG?
    Rae
    23rd Oct 2018
    4:45pm
    People also bought annuities and took defined benefit pensions with no way to change it under the existing rules. These should have been grandfathered. I doubt recent retirees made the same choices. Locking in an annuity would be crazy now with the Sovereign risk the LNP has created.
    Cowboy Jim
    23rd Oct 2018
    4:48pm
    Planning assets away is very easy Mick, my schoolmates in Europe have been doing that forever, hand over your assets to your offspring before you die and everything is sweet, in Europe because of death duty and here because of asset testing for the pension. If every thing is done legally all good and well; you would have to change the law to stop that and that would possibly difficult since our pollies are never asset tested.
    Old Geezer
    23rd Oct 2018
    5:08pm
    Mick a friend and his wife gambled away $10,000 for about 2 years before they applied for the OAP. Their grandkids no longer have mortgages.
    Old Geezer
    23rd Oct 2018
    5:09pm
    Cowboy Jim many are doing just that now too. What use the money to you when you get just as much on the OAP?
    MICK
    23rd Oct 2018
    10:26pm
    OG - I see your point but sounds like a very risky lie of convenience. Try that one on with $200,000, not that you could take that amount of money out of any bank in this country.
    TREBOR
    23rd Oct 2018
    10:29pm
    Of course... the Trebor Scheme allows a basic pension contribution for all, even the unemployed*, and the opportunity to top up to a specified level - after which your savings are just that - savings and treated as such.

    Enough of this fat cats hoarding a few lazy mill in super so that on retirement they cop a hug payment tax free..... and the current rorts of preferential super schemes for some (you know who)... how is that 'equal treatment' as required in a democracy governed by the Rule of Law?

    **During periods of unemployment, sickness, disability short term etc or DSP, the basic 'super/social security contribution' goes into the account in that person's name... at a set rate that equals sufficient to provide a 'pension' to live on in retirement. The Guv puts that in when you are down and out for some reason.

    Next question:- When a short-term down and outer gets back on his/her feet...... is the contribution amount to be varied to make up for shortfall from their own earnings? Difficult question.... when economic activity/buying is a necessity for taxation and such....

    It's a complex issue with many questions, this setting up a system... same as setting up a new party...

    Do you make it an autocracy to prevent takeover as Pauline tried to do, and then fall foul of people not being members but supporters? Is that truly democratic, and where does democracy start and end? Or do we throw the doors wide and allow the vipers in with the good people, so the vipers can vote the goodies out and take over the show, as also happened with The Redhead Mark I? It's a hard call...
    Greg
    23rd Oct 2018
    11:17pm
    OG - Just more BS from you. You said "Mick anyone in Australia today can get the OAP no matter what they have if they want it."

    Giving it away or spending it before retirement is not a case of "no matter what they have", the assets are gone so they DON'T HAVE IT anymore.

    You make out that people can have in their possession assets which won't be taken into account for the OAP - why keep this crap up, you say things that aren't true, make up stories and just appear to live in some fantasy world. Just go away would you.
    Anonymous
    24th Oct 2018
    6:50am
    Trebor, you obviously are not keeping up with legal reform, which means your opinions are becoming increasingly irrelevant. I used to admire you for your sensible comments - but NOBODY has ''a few lazy million'' in tax-free super accounts paying pensions anymore because the LNP put a $1.6 million cap on super in pension accounts. Now, I think that's too high, especially since while a couple is disadvantaged under pension and assets test rules, they are treated as two individuals under this rule - and particularly since increases from income are not counted. But still, the fact remains that at the moment - with the rule only recently introduced, NOBODY has ''a few lazy millions''. They don't even have $2 million. So try to keep up if you are going to continue to cry the poor man's ''give me give me give me'' tune and demand savers be targeted and plunged into hardship.

    Greg, sadly there are ways to ''have your cake and eat it too''. People are gifting money to kids 5 years before claiming a pension, on the condition that the kids pay their bills for the rest of their life. They are buying multi-million dollar homes. They are hiding assets. There are plenty of rorts available. Unfortunately, in our society, honest and diligent folk who do what's good for the country are considered fair game to rob and abuse. No wonder the economy is going down the gurgler when the behaviour that makes a healthy economy is punished and both obscene greed and reliance on the taxpayer purse are applauded and rewarded!

    Mick is right. The assets test is too low - particularly for younger retiree couples who might need to support two people through up to 30 years of retirement. Morons make the rules and morons support them and vote them back into power. The only trouble is that we are all forced to be morons because we don't have any valid choices.
    Old Geezer
    24th Oct 2018
    11:55am
    Greg I can tell you lots of ways to get rid of yo assets but still have them. That couple gambled away close to $2 million and even went to a course for people with gambling addictions to make it look legit. They made a point of being on CTV every place they went into to gamble too.

    I just love the one where a couple buys to most expensive one they can leaving them enough o get full OAP. When they run out of money they just downsize. One couple have told me they have already done it 4 time and still have a house worth over $3 million. What better way to keep and continue to grow your wealth at the expense of the taxpayer.

    I know of another couple who bought racehorse but the racehorse died. They still have their wealth stored in their families homes.
    TREBOR
    24th Oct 2018
    12:29pm
    Rainey - thee are people who easily pull a mill annually tax-free in super meaning they have a lot more put away on concession - possibly they salted away a lot before the rules were tightened...

    That's precisely why the rules were changed, because only those with a heap of discretionary could do that, and that was clearly not the idea when compulsory super cam in... hence the need for regulation.
    TREBOR
    24th Oct 2018
    12:31pm
    The way this is run, OG - with the assets test etc, you can't blame people for putting their money into deadstock so as to have no income. A racehorse? I suppose doing that is a 'business venture'.... hmmm... I could probably afford a stable of racing ferrets ....

    The entire system is flawed as it currently stands.
    TREBOR
    24th Oct 2018
    12:39pm
    The limit of $1.6m was not made retrospective and those asked to pay up... they were left alone. I, and others, view this as a quite deliberate fault in the system as set up - for the purpose of providing yet another loop-hole for the mates with money.
    Old Geezer
    24th Oct 2018
    2:31pm
    If you have more than $1.6 million in super you can only have $1.6 million in the pension phase. The rest is in the accumulation phase paying 15% tax.

    Only thing different now is that people who had more than $1.6 million had the choice of putting it back in the accumulation phase or taking it out. You can't now put in more than $1.6 million (or whatever the figure is now as it is adjusted for inflation).
    Anonymous
    24th Oct 2018
    8:01pm
    OG is right, Trebor. Everyone is impacted by the legislation no matter when they retired or how much they had. Everyone with more than $1.6 mil in pension phase HAD to put it back to accumulation. They then DO pay tax, though at the concessional 15% rate (which is not nearly enough in my view for someone with that much wealth).

    The flaw is that tax-free income isn't capped, and it should be. Also, low income should qualify retirees for pension benefits even if they do have assets, ESPECIALLY if they are younger retirees or have extensive health issues that imply heavy future costs.

    This is one of the HUGE flaws in Shorten's idiotic policy. Those who have more than $1.6 mil will still keep their franking credits - offset against the 15% tax. It's only those with less who will suffer.
    TREBOR
    25th Oct 2018
    1:12am
    Then that is the problem, Rainey - how and why is it only paying 15% in an accumulation phase which it can never reach, since the limit has already been reached?

    What a gutless change in reality, and so typical of this and other governments here.

    Nowhere else are savings given a tax rate of 15% - you pay full tax on any capital earned... in reality that's not too much to ask, since current super in the retirement phase is not included as taxable income, and thus an individual would need to be getting a lot of extra on top of what they already get from $1.6m in a fund to actually pay tax.

    With the tax free threshold and seniors benefit they would not pay anything until they reached around $35k. If their $1.6 is producing only 5% (ha, ha) they are already getting $80k - and then any extra earnings as interest from savings would be on top... but the $80k is not taxable.......and at present they could be receiving $110k or so without any effort and paying tax on earnings from saving above that at the going rate....

    If you look at the tax scales that's not a serious burden on those who had a big balance over $1.6m accumulated already at a tax concession rate....

    It has to be balanced out somewhere...
    TREBOR
    25th Oct 2018
    1:17am
    From what you've told us Rainey, you are not in that position but are struggling on around pension but with added costs for being an SFR, so that would not affect you in any way.

    If you are way below the tax threshold for added income you have zero problem...... it is the fat cats who've exploited this system that need to be brought to pay tax.... and if they accumulated over $1.6m on concessional tax rates -they should pay it back...

    As I said - the whole thing is a mess.... and only major changes starting from Day One will change that....
    Anonymous
    25th Oct 2018
    3:18pm
    I couldn't agree more, Trebor. My point is that the ALP policy on franking credits can only make things much worse. It will cripple honest battlers who have low incomes, force people onto pensions, take money that funds growth and employment out of Australian companies, and take NOT ONE CENT from the wealthy or high income earners. Yes, it might just take a few bob from those with more than $1.6 million in super, but a much more sensible approach would be, as you say, to reform the tax system to put strict limits on the tax concessions available for investment in super once a reasonable balance is reached.

    I'm not wealthy, Trebor, but I currently don't struggle too much because despite being way over retirement age, I still work part-time and am lucky to be on a heathy hourly rate. I'm very fortunate that I have a flexible-hours job that is rewarding and not physically strenuous. How long I can continue is questionable, but hopefully for a few years yet. I enjoy my work. I'm aware that I'm very lucky to be in this position, but I still think it unfair that I have to work to replace pension income despite being far worse off than most of my pensioner friends. And I think it stupid to make laws that encourage manipulation to take more from the public purse and punish those who do what's good for the nation's economy.

    The problem is that the whole thing IS a mess, but neither LNP nor ALP or Greens have any desire whatever to fix it. And their advisers certainly don't want a system that is fair and equitable and economically sustainable. They have only their own selfish interests at heart. Sad, but true!

    25th Oct 2018
    8:12am
    We're fast becoming a third-world country because of the incompetent nincompoop Lieberals running the show.
    Pass the Ductape
    25th Oct 2018
    12:37pm
    Yes it's true we seem to be floundering in some kind of political wilderness at present Knows-a-lot - but would you expect any different with the other major party?

    The problem as I see it, is there are far too many green voters and independents who among them, only have an ability to confuse the issue when it comes to good government!

    The sooner the voters get the message that until only one party or another gets a true majority in both houses, our wish for a good government is not going to happen.
    Anonymous
    25th Oct 2018
    3:06pm
    No, Ductape. The major parties are the problem. BOTH major parties. We need independents and minors. We need to STOP the majors getting their self-interested legislation passed. We need to break their stranglehold on the nation. Neither party is capable of good government - nor do I believe most party politicians even WANT to be part of ''good government''. It's about serving vested interests and having the power to do so.