Call for homes worth just $500,000 to be asset tested for the Age Pension.
Almost a quarter of YourLifeChoices members say the family home should be part of the Age Pension asset test, and 30 per cent believe houses worth at least $1 million should be counted.
In the recent Retirement Income and Financial Literacy survey, just 18 per cent of respondents said a home should be valued at $3 million or more before it was considered for assessment.
At the other end, almost 15 per cent of members felt a primary place of residence worth just $500,000 was fair game.
However, the overwhelming majority of members, 68 per cent, felt the family home should escape the asset test, no matter its value. And analysis of the data shows that those with the most to lose – Age Pensioners who own their home – were the ones most likely to not want their house included in a means test.
Close to three-quarters of those surveyed owned their home outright, while 12.5 per cent still had a mortgage, and just under 9.4 per cent were renters.
Of the 87 per cent of retirees in their own home, a third would downsize as a first option if their income became strained.
Last December, the Federal Government introduced measures that would, from 1 July, allow retirees to downsize from a large family home and deposit some of the proceeds of the sale into their superannuation, with generous tax concessions.
The proceeds could be a maximum of $300,000 per individual. There often are, however, consequences for those on an Age Pension, as the proceeds from such a sale may mean their entitlement is threatened.
As much as I respect our members, I have to take issue with the 15 per cent who said homes valued from $500,000 should be included in the means test for an Age Pension.
I would venture that most retirees live in homes worth at least $500,000, so on the reckoning of some, most pensioners would have their welfare entitlements reduced
I don’t think that is the slightest bit fair, unless you were to apply a sliding scale where if your house was worth $500,000 the impact of the asset test would be minimal, increasing exponentially.
Some of us, I am sure, would be quite comfortable with the notion of a householder sitting on a home valued at say $5 million being stripped of most of their Age Pension entitlements. It is not the taxpayer’s responsibility to fund a life of luxury for a retiree who can’t bear to move to a less expensive house.
But, the other problem with setting the bar too low is that it discriminates against people who live in the city where houses are obviously more expensive – and perhaps where even the cost of living is higher.
There is no reason I can see why a retired person of modest means living in a Sydney home worth say, around $700,000, should not be entitled to the same pension benefits as someone living on the outskirts of a regional town where property prices are much lower.
(Having said that, you might be hard pressed to find a $700,000 home close to the CBD given that the median price for a Sydney house is $1.17 million.)
But back to our city slickers. If they were to up stumps, sell and move to the country, they would likely have their Age Pension entitlements cut anyway, thanks to the income test that is also applied alongside the asset test
Whichever side of the fence you are on, any proposal to include a family home will be divisive, so hopefully if it ever arises, it will be sufficiently well-thought through to not disadvantage those who are already struggling. It is no fault of the individual that house prices have gone through the roof. That, in itself, should not be a reason to reduce pension benefits.
If you believe the family home should be means tested for the Age Pension, at what level should the threshold be set and why? Do you think people living in homes worth millions should be entitled to full pensions?