Up to one million older Australians to have their income slashed

Font Size:

Up to one million older Australians will have their retirement incomes slashed as Australia’s second largest bank scrapped its first-half dividend payments.

Westpac told shareholders on Tuesday it would press pause on dividends until at least November to account for lower profit margins and a forecast rise in bad debts.

Despite the bank enjoying $1.32 billion in unaudited cash earnings over the past quarter, the bank has decided to err on the safe side and suspend payouts due to the unpredictability of COVID-19 outbreaks and their impact.

“We have maintained our strong balance sheet and increased provisions for bad debts to support our prudent approach to managing impairments,” said Westpac chief Peter King, adding that the bank’s priority was “to remain strong so we can continue supporting customers through this challenging period”.

The announcement follows Westpac’s decision to  cut itsinterim dividend in May.

Last week, CommBank cut its final dividend from $2.31 to 98 cents, in what was described as a show of strength at how well the bank is weathering the pandemic.

CommBank chief Matt Comyn said the payout “represents a cautious approach to capital management and dividends as we head into a period of economic uncertainty”.

“We are fortunate insofar that we entered this in a very strong position,” he told The Australian Financial Review.

“We feel like we’ve never had a stronger balance sheet … and we feel like we’re well placed for a range of economic scenarios.”

ANZ has announced in its trading update that it would pay an interim dividend of 25 cents per share, fully franked.

ANZ is also playing a cautious hand as it copes with losses from deferred home loans, debt repayment holidays and the related uncertainty from lockdowns.

Still, the bank remains cautiously optimistic about its latest results.

“You only need to look at the reintroduction of community lockdowns in Victoria and Auckland to realise we all still have a way to go before this virus is behind us,” said ANZ chief executive Shayne Elliott.

So while it is not bad news from all big banks, Westpac’s move will slash the incomes for around one million retirees who rely on bank dividends as a main source of income.

National Seniors Australia chief advocate Ian Henschke said the federal government now more than ever needed to review the interest rate on the Pension Loans Scheme.

“There are people at this point in time [due to pandemic-related losses] who would be needing to draw on money when they have little to no other source,” he told The New Daily.

“Self-funded retirees carry a lot of the risk and they’ve been forced into investments such as the sharemarket by the high deeming rates because they simply can’t get the return from savings accounts and term deposits.”

Mr Henschke also said this was the perfect case for a universal pension payment to be considered, as such a system would provide more assurance for older people during economic downturns.

As for retirees with SMSFs, Centaur Financial Services director Hugh Robertson said this downturn would deliver a harsh lesson for retirees who most relied on dividend payouts, especially those without diversified portfolios.

“Retirees were [tolerating] the volatility of these unsustainable payouts on the basis they were getting such a good yield, when they should have been pursuing a yield and capital approach,” said Mr Robertson.

“It’s really one of the canary in the coal mines when you say a retiree needs more of a structure to generate income so they can better control their outcomes and be less exposed to risks from announcements like Westpac’s.”

And for those heavily invested in property, it could get even worse for retirees, with falls of up to 12 per cent in property values still a “reasonable assumption”.

Considering the financial performance of the banks so closely tied to the property market, this could negatively affect retiree incomes even further, said Mr Robertson.

And with two major banks slashing their savings rates even further, Australians young and old with significant savings will experience lower interest returns, according to the latest Canstar data.

CommBank cut its introductory rate on its NetBank Saver account by 0.05 per cent and slashed the bonus rate on its GoalSaver account by 0.05 per cent for balances of $50,000 or more.

NAB also cut its savings rate on term deposits by between 0.05 per cent and 0.15 per cent.

This means that around 50 per cent of savings accounts and 80 per cent of term deposits now have a total savings rate of less than 1 per cent – particularly bad news for retirees who have already been hit by reduced incomes.

“The income from a ‘low-risk’ term deposit cannot meet their cost of living, sending their capital on a downward spiral,” Martin Currie investment team stated.

“This is a dire situation.”

However, there is still hope, says Canstar editor-at-large Effie Zahos.

“Banks are seeing their margins squeezed, some banks aren’t paying dividends and others are trying to offer higher rates in a low rate environment,” she said.

“Anyone with a savings goal or those wanting to stash away emergency funds need to be prepared to play leapfrog and jump around to chase the better rates.”

Are you surprised by Westpac’s move to scrap dividend payments? What are you doing to mitigate any loss of income?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

RELATED LINKS

The last thing companies should be doing right now is paying dividends

The pandemic has exposed flaws in how companies operated pre-COVID-19.

If you love dividends, you should know this

InvestSMART warns: don't put a high yield too far up your list of wants.

The case for dividends if interest rates remain low

While retirees tend to prefer ‘safe options' for their nest eggs, higher yields through dividends

Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

Contact:
LinkedIn
Email

115 Comments

Total Comments: 115
  1. 0
    0

    Are these retirees the ones who voted fOR Morrison and the LNP so they wouldn’t lose their franking credits. If so, they deserve what they don’t get.

    • 0
      0

      I’d say they’re the very ones. Remember the Wilson Asset Management travelling roadshows and all the visceral outbursts against Labor around election time? Well chummies, what goes around comes around, as you’re about to find out. Still, look on the bright side; you might qualify for the dreaded, avoid at all costs part-aged pension. Enjoy.

    • 0
      0

      Nasty, nasty. These were the retirees who had to choose between the negatives of electing the LNP and that absolute certainty of losing 30% of their income – which, in many cases, was already less than the OAP and had already been slashed by tens of thousands. Do you seriously think things would have been different under Labor? Sure. They would have fixed the virus on day one! They lobbied for the Royal Commission that slashed bank profits, so I doubt they would have done anything to protect retirees from this loss. But keep dreaming, and keep expecting sympathy when pensions don’t increase. You deserve hardship, being so mean and nasty to retirees who are actually contributing to keeping the cost of the OAP lower and therefore helping keep the pension system strong.

    • 0
      0

      thommo. You have just just shown the intellectual brilliance of a Labor supporter with that ridiculous comment. Well done.

    • 0
      0

      So Scomo was responsible for Covid-19. Never get in the way of a left winger putting the boot in.

    • 0
      0

      Retirees with all their portfolio in Australian Shares purely to live off the Franking credits were told to diversify. No one could have predicted a pandemic, but a recession was always on the cards. If you didn’t heed the warnings, you can’t complain now.

    • 0
      0

      I am one of the Morrison self funded retirees and I am perfectly fine – always fine tuning my investments – had a big hit on paper 4 month ago but rising stock markets around the world have recovered most of it – so super. looking fine – share investment OK so all good.

      More old lefties and they wonder why they lose most of the time!!!

    • 0
      0

      I think it’s rather harsh to have a go at people for ‘not heeding warnings’. Those who are not well educated can hardly be expected to become financial gurus in old age just because mean governments deprive them of pension income as punishment for saving. I think many have good cause to complain, because there just isn’t enough support and help for people who haven’t had the privilege of a financial education. Options are very limited now. Term deposit rates are a joke. Just what are people supposed to do if they aren’t expert in picking the right investments? I used a financial adviser for a while, but he was charging thousands and getting it wrong more often than right.

      My solution is to spend up big and go on the pension, but really the government should be discouraging that and offering some realistic solutions for the battling self-funded.

    • 0
      0

      Funny you should mention that.

      Many self funded retirees have changed their bank shares into fully franked bank hybrids. They not only now enjoy higher dividends but get more franking credits as well.

      You must think self funded retirees are stupid to make that sort of comment. They didn’t get to be self funded by not being proactive to market conditions.

    • 0
      0

      Why should the Government offer SFR some solutions? They can’t be held to account if companies aren’t paying dividends. At the moment, there are more pressing matters. As a SFR myself, I don’t expect the Government to bail me out when my investments drop. Fortunately, there is access to a pension in Australia if needed. Youngagain, you really would have to spend up big to qualify for a full pension.

    • 0
      0

      Even the Reserve Bank was warning of likely recession with the continuing weak economy so plenty of time to consider investment asset allocations. Sometimes we lose in the short term.

      To be fair, a pandemic has been anticipated for years, so we cannot really say we were surprised. More are expected in the years ahead with increased mingling of people and nature, along with thawing of the permafrost, releasing novel viruses and bacteria into the environment. Next time we will be less complacent and have a heightened awareness.

    • 0
      0

      The issue isn’t awareness, Farside. It’s viable options and information about those options. I can’t find much of anything that returns a decent rate now, and I don’t think it’s reasonable that people should suddenly have to become investment gurus in their old age in order to achieve a living income. I don’t expect the government to ‘bail out’ anyone, but they SHOULD be fair in the allocation of resources to ensure that older folk can achieve a living income in hard times. After all, they don’t mind paying pensions to people who are really quite wealthy.

    • 0
      0

      Willie, I am not stupid and I don’t think SFRs are stupid, but people get to where they are by diverse means, and plenty will have achieved an assets level that forces them to self-fund retirement without ‘responding to market conditions’. Assuming makes an ass out of you and me. Instead of insulting me, maybe stop and think that you don’t necessarily know all the self-funded retirees, much less how they attained their status.

    • 0
      0

      BTW. Willie. Not all retirees want the much increased risk of bank hybrids.

    • 0
      0

      We cannot always have what we want no matter how hard we wish – que sera sera. If SFRs do not have the investment expertise to manage their investments then they should pay for a manager.

    • 0
      0

      Don’t blame the LNP for this recession, or have you forgotten that the Labor party under Hawke & Keating were in power when we had the last recession.

    • 0
      0

      Farside, that is really a dopey comment. Firstly, few SFRs who lack the expertise to manage their investments could afford the outrageous charges managers levy. And secondly, I have yet to meet anyone who knows of a manager who can manage any better than a minimally competent SFR, and certainly none give any guarantee. They demand to be paid even when they lose your money!! It’s ‘all care no responsibility’ and often not much care either. Most have vested interests and advise according to what benefits them.

    • 0
      0

      first off Youngagain, your near broke SFRs need to understand if they want guaranteed then they should be prepared to accept the return that goes with that level of risk. Secondly your statement that there are no advisors more knowledgeable than a minimally competent SFR is beyond ridiculous. I have no concerns for SFRs without the understanding to manage investments and unwilling to pay for advice living with the consequences of their choices.

    • 0
      0

      Youngagain – You don’t have to be a financial guru to know shares are a risky business, that goes with the dividends too. More risk, the (hopefully) more return, but obviously that’s not guaranteed.

    • 0
      0

      Bank shars are a lot riskier than bank hybrids. Hybrids are still paying lots more interest than deposits and shares too. They also rank higher than shares shoukd the bank go broke too.

  2. 0
    0

    WTF does no dividend payment from WBC got to do with your comment? We have such fools in the commentary world! No dividend = no F/Cr. And, this is Government fault.

  3. 0
    0

    WTF does no dividend payment from WBC got to do with your comment? We have such fools in the commentary world! No dividend = no F/Cr. And, this is Government fault.

  4. 0
    0

    It will be interesting to see if the banks still pay out multi million dollar bonuses to their CEO’s.

  5. 0
    0

    This results in the Self-funded retiree receiving no income (from Westpac) yet holding shares whose value might keep him/her from receiving any government assistance (pension) which could make him/her worse off than someone on the Old Age Pension.
    So they live below the poverty line or somehow, find a job.
    Yeh right. That’s how we treat those who worked hard to try and fund their own retirement.

    • 0
      0

      So be it, enjoy your self funded retirement and stop complaining, you still have the shares, sell em

    • 0
      0

      This is part of the covid conspiracy to get all on the old age pension…..Morrison and Corman plan

    • 0
      0

      It they have enough shares that have provided sufficient income to live on then cash out some shares. This is a capitalist society which gives the opportunity to earn big money but with that comes risk and risk has now arrived.
      Don’t forget the taxation benefits, franking credits etc that allowed these large savings to be accumulated.

    • 0
      0

      No problems, always wanted to get the age pension, and I planned for it. never been a proud “I am my own Man’ type of person. Part pensioner is the best way to be, have a little extra for health insurance etc which we could not afford on purely an age pension.

    • 0
      0

      Kram, these nasty remarks by people who didn’t have the sense to save and don’t have the sense to comprehend reality are to be ignored. The poor fools don’t understand that share values have also fallen along with dividends, and if shares are sold, there’s then no income at all. But yes, sell your shares and spend the money and then claim the OAP. And when the government cuts the OAP because there are half-a-million former SFRs putting their hands out, watch these poor fools scream and squirm. Their lack of respect and basic comprehension is disgusting.

    • 0
      0

      Thats quite a blow out

    • 0
      0

      I am not sure whether it is a load of comments from financial idiots or just the usual left wing whingers who will even blame the LNP government for the weather as they haven’t yet got over their loss in the last election.

      Their comments are ranging from the plain silly to the bizarre.

    • 0
      0

      Sceptic – could not agree more with your comments

    • 0
      0

      Many self funded retirees are receiving more in dividends and franking credits from WBC as they changed to bank hybrids.

    • 0
      0

      Keep sucking that lemon Panos.

    • 0
      0

      Kram says “So they live below the poverty line or somehow, find a job.” … or sell WBC.

    • 0
      0

      Am I not lucky I just love lemonade !!!

    • 0
      0

      Farside, selling shares at half what you paid for them is precisely what every financial adviser, economist AND politician advises AGAINST, because it crystalizes your losses and ensures you can’t recover – ever. Holding on offers some hope of recovery. It boggles the mind how so many people just jump at the stupid short-term solutions that hurt everyone in the longer term. But that’s what greed and envy do. They make you cling to dumb ideas and avoid the sensible reforms that would benefit everyone.

      I am not stupid. I know I can sell shares and spend the money. I didn’t get where I am by being a dunce. I installed solar and LED lights many years ago. I grow whatever food I can grow. I sew and cook to save money. I am not particularly educated in investing, and I shouldn’t have to be to enloy the lifestyle I worked and saved to achieve. Nor should I be compelled to sell shares merely to attain a living income when others, many of whom are much wealthier than me and most of whom could easily have attained my level if they had chosen to, are supported by the taxpayer. I don’t need or want advice from the ‘holier than though’ know-alls on this forum who seem to want to dictate how others should live – and I suspect Kram feels the same way.

      If we all acknowledged the reality that the current system has huge flaws and is patently unfair, and rallied together to demand reform, we could both avoid upsetting others and potentially drive some – probably slow – progress in the right direction. Empathy is a worthy quality.

    • 0
      0

      Youngagain, advisers also recommend to hold up to three years of investment allocation in cash and liquids so they do not have to sell long term holdings. But if investors did not foresee a need for cash and need it, then selling is one of those options; that or living below the poverty line or somehow, finding a job as Kram said. Who is dictating how others should live? SFRs are imbued with free will to make their investment allocations and enjoy the benefits that come with exercising it. Good luck with the manifesto.

    • 0
      0

      Mariner, I exist on the Single DSP, which pays the same as the Age Pension (with Rent Assistance). I pay for my Private Health Insurance Extras policy which gives me glasses, chiropractic, dental and many other benefits.

      I don’t drink alcohol, smoke or gamble, which apparently saves me heaps.

      I also don’t have any savings or financial investments, so you must be doing pretty well just to have them.

    • 0
      0

      Kram – You said, “So they live below the poverty line or somehow, find a job.”

      Mmmm……NO, you draw down on your assets.

      Shares are a risk, that’s why you get that return in the good times, when the times aren’t as good you don’t get those returns.

    • 0
      0

      SuziJ _ I am not complaining, yes I do have a few savings, thus part pension. But they get less every year. I do drink, go to clubs, eat out but like you, I do not gamble. Admire people with no vices but I still like my few drinks (mostly cask wine).

  6. 0
    0

    What goes around comes around, karma

    • 0
      0

      And it will come to you, too, Panos. Just wait.

    • 0
      0

      Panos, do you have to be so nasty to those who worked hard and went without in order to save the Government (and the Australian taxpayer) upwards of a million dollars (in pension entitlements) over a 30 year retirement.

      Karma will be all those SFR’s receiving the pension and the Government then reducing everyone’s pension because they can’t afford it.

    • 0
      0

      I think you will find that the all important SFR are the most bemoaning in that they will have to sell some assets to apparently survive….

      The OAP here have been described as poor fools screaming and squirming and having a disgusting lack of respect for the SFR.

    • 0
      0

      You and Thommo fit that description of pensioners precisely, I’m sorry to say, Panos.

    • 0
      0

      Youngagain, the crux of your argument seems to be that the poorer SFR’s exist in such huge numbers that if they are forced on to the Pension, they will cause the pension to drop.

      I see no figures to justify such an illogical conclusion, – when the govt extended the pension age by two years, the pension money saved by not paying a very much larger group than poorer SFR’s did not cause the pension to rise 1 cent more than normal, indeed seeing that 7% of all wages since 1946 (or whenever it was) have been paid for pensions, there is much more money paid by all of us into pensions than could ever be spent.

      The Govt. of course nabbed that for their own usage, – sports rorts, etc. but that is no justification, – The Pensions Act has to my knowledge never been repealed, whatever the mumblings of politicians hope to assert, so there is no justification for your argument at all, none.
      I can only hope that you are somehow ignorant of that fact, therefore not deliberately lying to us..
      To me, it seems that the SFR’s who are earning less than the pension would be far better off to cash out their investments and spend the money on upgrading their house to live more cheaply, – put an adequate Solar system with Battery back-up on their rooves, buy all LED lights, get an energy efficient fridge, Hot water system, Rain water tank, etc, – then they will probably be eligible for at least a part pension, and reduced living costs.
      Why not? – is it pride? why should any of us think that being an SFR is better than anyone else? – are the Super rich who own so much of our planet and are destroying it better than anyone else? – no, they are worse than almost everybody, – blind, selfish and stupid, – no, we all know about Pride, it comes before a fall.

    • 0
      0

      which Act are you thinking of Lookfar, the Invalid and Old-age Pensions Act 1946?

    • 0
      0

      Good points you are making, Lookfar. The problem with the pension act long ago was that it was swamped with our new entitlements. In the early days there were no pension payments to pregnant teenage girls, parental leave, medicare safety nets. The endless dole was yet to come, in those days one had to make an effort to get a job (i.e a young person could not refuse a fruit pickers job just because he/she felt it was not fitting for an Australian to do that work). There are more people on some sort of entitlement today than just the OAP as it was then called.
      I suppose if you intend to shovel all your wealth together for the next generation you will have to be a SFR – but then again, as you suggested, you could upgrade your living quarters, change into a million dollar house and leave that to your offspring. Since we have no inheritance tax that would be the way to proceed. Could be looked at for million dollar houses in future. What is the difference in us living in a small unit and have all nickles counted for pension purposes but you can sit on $3 million as long as it is bricks and mortar and you get the full whack of pension.

    • 0
      0

      Lookfar, I’m sure many – if not most – SFRs have long ago installed solar and LED lights and water tanks and bought energy-efficient appliances, and done many other things to cut living costs. (I sure did!) They are self-funded because they are intelligent enough to know how to conserve money. But no, it’s not pride stopping them going to Centrelink. In many cases its a desire to continue to avoid constant intrusion into their private affairs and the threat that they might inadvertantly exceed some ridiculous limit and fail to report it. Many SFRs are very happy to be able to avoid dealing with the Centrelink monster. In other cases its simply that their savings were earmarked for future needs and they resent not being able to preserve them to meet those needs because the greedy government insists they use their savings to reduce the imposition on taxpayers. Meanwhile people with far greater wealth and/or far greater capacity to self-fund sit back and take handouts and high income earners take massive tax concessions because the system is so stuffed up.

      Why do you always have to put people down for merely wanting to use their savings for the purpose they were designated? Can’t you show a little respect and empathy instead?

    • 0
      0

      BTW. Farside, it’s a rather silly argument to suggest that because pensions didn’t go up when money was ostentibly saved by raising the qualifying age, they can’t go down when costs are imposed by more people putting their hands out How ridiculous can you get? What government was ever going to pass on savings in the form of an increased pension? But both major parties and the Greens have demonstrated that they would be very quick, given any excuse, however pathetic – to reduce pensions – if they thought they could get away with it.

    • 0
      0

      what are you blathering about Youngagain? I simply asked Lookfar what Pensions Act was being referred to in his/her comment. Pretty succinct question for such a misdirected response.

    • 0
      0

      My apologies, Farside. I meant to address that comment to Lookfar. It was a response to Lookfar’s comment.

  7. 0
    0

    As I see it, we have a listed company which has made a decision in the best interest of the company which, as an aside, affects shareholders. Shareholders are those people or entities which have made a conscious decision to invest their funds to obtain a return on their investment with no guarantee that there will be an investment. In other words, any investment in the stock market carries no guarantees and is a gamble.

    I find it interesting that this article somehow believes that investments in the stock market are a direct result of high deeming rates. Why is it that a bad decision by an investor can be caused by the government? There are people out there who have lost their jobs and are doing it a lot tougher than retirees who are taking a hit on a listed company’s decision and, it must be stressed, that those same investors have capital they can use if they need to whereas some of those people who have lost their income may not have any back-up funds in reserve.

    • 0
      0

      Just so and could it be those banks are covering their backs because they were paying employees through JobKeeper and to now pay dividends will blow the whistle on their activity.

    • 0
      0

      Correct, Horace Cope. We should be showing empathy for those who have lost their jobs. And also for struggling retirees. But there’s a clear lack of it here. Lots of nasty folk among those not hurt by these events.

  8. 0
    0

    Deeming Rates should be lowered why is no one talking about this.

    • 0
      0

      They have been lowered. But the assets test was made harsher, despite it being harder and harder to achieve any return on investment.

    • 0
      0

      Yeah Youngagain I know they went from 3% to 2.25% but they should come down again .
      And I agree with one of your previous comments about a Lot of Nasty people on here.

    • 0
      0

      dabi56, the effective deeming rate for an asset tested retiree is well in excess of 7.5%. I think that should be reduced before worrying about a 2.25% rate for income tested pensioners.

  9. 0
    0

    The writing was on the wall re banks long ago. If you are still with the major 4 the only person to blame is yourself.

  10. 0
    0

    Just more reason for a universal pension for ALL over 65. Savings to government are enormous & 99.999% rort free. Then you pay tax on ALL income generated. No tax free super earning etc that mainly support those that are well off. Start writing to every politician demanding a universal pension & demand a full breakdown of any explanation against such a pension.

    • 0
      0

      Karl, agree with you totally. I have discussed this with our Federal Member (who BTW is currently being investigated for branch stacking).

      Watch the pensioners moan about us current SFR’s possibly receiving a full pension.

    • 0
      0

      Agree Karl Marx. And also flatten the superannuation tax concession so everyone gets the same benefit, instead of the concession loading the coffers of the wealthy.

      Yes Captain. The moaners would come out in force. They just can’t stand to think someone else might be a little better off than they are, and they don’t have the intellect to understand reality. Happily, though, it’s not ‘pensioners’. It’s a handful of pensioners only who have no appreciation of the fact that they are being supported by taxpayers, much less of the fact that SFRs are helping the Federal Budget and thus making pensions more affordable. Sadly, that handful makes a lot of noise.

    • 0
      0

      A couple of years ago the population over 65 was about 3.8 million. Pensioners, both full and part, were at about 2.5 million. There’s no way there’ll be a universal pension paid. I’d like to see where you think the savings to government will be enormous. Some calculations would be interesting to look at.

    • 0
      0

      A number of studies have investigated a universal pension, Skiing, the latest one from Monash University and most seem to agree that a universal pension would work well.

    • 0
      0

      Skiing. How much do you think it costs Centrelink to process pensions, not just new applications but the upkeep of a very complex & broken system that no one has an answer for. Centrelink would then be for child support, disability, unemployment benefits. Gone would the the highly expensive, over complicate pension monitoring & processing. People whinge about pension rorting, that would be 99.99% gone as well
      Also, as all pensioners will have to pay tax at the normal rates of current tax payers on all income earned whether it be from working, investments or whatever. Gone will be the zero tax benefit on super earnings or any other earnings. The government will reap more tax from the wealthy that pay no or bugger all tax now. Just sit down & think about it. Not rocket science but just a system that keeps it simple without more complications being add year in year out.
      The government won’t loose & will most likely reap more income through the tax department. Will keep it fair & just.
      It’s not that we can’t feed the poor it’s just we can never satisfy the rich.

    • 0
      0

      Fully agree Karl Marx, a Universal pension gives everybody the pension, and all those who earn more than it, pay tax appropriately.
      The current SFR’s who earn more than the pension will have to pay more tax, but will get the whole pension, same as everybody else, and if they want to gamble, ie with shares, pokies or whatever, they will always have the full pension to fall back on if everything else goes flop.

    • 0
      0

      Ok, staffing levels for 2019/2020 at 27,325 and administrative budget of $8.07billion. So you’d drop some staff and an amount of salary and super etc. If you want to pay everyone a full pension at presumably the full single rate because so many bitch about being assessed as a couple, then that’s about 3.8million at $25,851 pa. Total about $98.23billion. Most pensioners don’t pay tax at the moment and that won’t change as there income won’t be high enough. I wouldn’t hold my breath waiting for a universal pension.

    • 0
      0

      Neither will I Skiing. Every politician I have received a reply from regarding a Universal pension will not support it because it’s not party policy. Bunch of dicks all of them. Follow party policy like sheep & don’t have the balls to try & change policy.

    • 0
      0

      Skiing, a universal pension is highly affordable if the whole dreadful retirement funding system were overhauled. The big problem in our Federal budget is not the cost of pensions. It’s the cost of massive superannuation tax concessions to very high income earners. All that is required to fund a universal pension is to change the superannuation tax concession to 15% discount on a member’s highest marginal rate for everyone and billions would be available to fund extra pensions to people who SHOULD be receiving them now, in a fair world.

      The low income taxpayer is currently being compelled to try to part-fund his/her retirement with virtually no help from the taxpayer because their 15% tax on super contributions and earnings puts them on a tax rate no lower (or maybe even higher) than they would pay if they received that money in wages. Conversely, taxpayers are funding 30% tax concessions to high income earners on both their contributions and their fund earnings, and then giving them tax free income in retirement. That is costing mega billions, and it’s only benefiting high income earners. This system enables high income earners to enjoy a very lavish tax-payer-funded retirement, and low income earners to ‘enjoy’ a struggle to get by on a government pension, while giving those who accrue moderate savings NOTHING at all and forcing them to fund their own retirement 100%, despite vast numbers not having the means to do so.

      The cost of superannuation tax concessions is higher than the total cost of the aged pension system, and is rising at a much faster rate than the cost of the OAP. So if you add savings from reducing Centrelink staff and overheads to the potential savings from superannuation tax reform, you have a very healthy chunk of funds available to pay more pensions.

      You are wrong about the tax potential from a universal pension. Many pensioners SHOULD pay tax now and would if the system were properly reformed, and almost all of those who would gain from the introduction of a universal pension would pay tax. A properly structured Universal Pension system would tax superannuation income (which is currently not taxed) and all investment income, AND the income from the pension itself. It would operate as a tax system should, exempting income below a specified threshold (no matter what the source) and taxing ALL income over that threshold – instead of, as at present, taxing income based on where it came from. The franking credit dispute would end because only those with incomes below the threshold would receive franking credits without paying tax, whereas now many rich people get credits without paying tax merely because their income is derived from superannuation.

      Additionally, a universal pension would remove the incentive for manipulation and cheating and encourage people to save for their retirement, thus enabling far more people to achieve a level of income in retirement that made them liable to pay some tax, and at the same time reducing the burden on the state for health care and aged care because more people would have funds to pay for that care themselves.

    • 0
      0

      Skiing and Karl Marx, I agree that a universal pension isn’t likely any time soon, but it’s not because it’s not both affordable and beneficial to the nation. It’s because of GREED. Plain and simple. The high paid are getting all the benefit of the current system.

    • 0
      0

      Very well put Youngagain.

    • 0
      0

      Youngagain, Bravo.

Load More Comments

FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

Finance

Do life insurance payouts affect the Age Pension?

Geoff's death policy pays out to his children, not his wife. How does this affect the pension? Q. GeoffMy wife...

Fitness

Grip strength linked to mental disorders

Mental disorders such as anxiety and depression can increase physical health risks and are a leading cause of disability. Globally,...

Finance

Tobacco and childcare drive cost of living increase

The Consumer Price Index (CPI) rose 0.9 per cent in the December quarter. According to the Australian Bureau of Statistics...

Age Pension

Retirement system ‘uncertain for almost all retirees’

Australia, a nation of almost four million retirees, has one of the world's best retirement systems. The 2020 Mercer CFA...

Finance

The big question: How much do I need to retire?

Life expectancies continue to rise, and with that comes a host of challenges. For governments, there's the increasing cost to...

Finance

Understanding the true cost of retirement

The Australian government spends billions on boosting retirement incomes. The two biggest costs, the Age Pension and superannuation tax concessions,...

Age Pension

Adequacy of retiree nest eggs

YourLifeChoices conducts several surveys each year to gauge the financial, physical and mental health of our 260,000 members. The aim...

Age Pension

Age Pension payments in 2021 – what you need to know

World heavyweight boxing champion, Olympian, ordained minister and successful entrepreneur George Foreman returned to the ring at the age of...

LOADING MORE ARTICLE...