Experts, members add their voice to retirement review

Ensure your concerns are heard in the Government’s retirement income review.

Experts, members add their voice to retirement review

YourLifeChoices has 230,000 very engaged members aged 50-plus. We have our finger on the pulse of retiree concerns. We know what is on your wishlist. We know what you find frustrating, confusing and just plain wrong. Your voice must be heard in the Government’s retirement income review.

In this very different edition of the Retirement Affordability Index, we have broken from tradition to present your views and those of the experts. We invited key spokespeople to tell us what they believe must be covered in the review in the areas of superannuation, the Age Pension, the home and decumulation.

What’s wrong with our retirement income system? Plenty, says Michael Rice, chief executive of actuarial firm Rice Warner, who pinpoints the changes that must be made. “While we have a great system for building people’s superannuation, we let them down in the retirement years,” he says, emphasising that integration of the key pillars – super, pension, the home and aged care – is paramount.

Turning up the heat on the superannuation front, Xavier O’Halloran, acting director of Super Consumers Australia, claims the flaws, gaps and inefficiencies in the system have been allowed to proliferate for too long and explains how to “tidy up the system” to benefit everyone.

Most older Australians will receive at least a part Age Pension, but too many find the system confronting and confusing. Economist Sean Corbett identifies the key areas of the pension that he believes should be changed – and how.

Matt Grudnoff, senior economist with The Australia Institute, believes there is ample government support for retirees, but says the funds are going to the wrong people.

Per Capita’s Emma Dawson and Myfan Jordan acknowledge that home ownership is a fundamental plank in Australia’s retirement income system, but say that pillar is crumbling.

Challenger’s chairman of retirement income Jeremy Cooper explains decumulation and how a lifetime income stream can deliver a confident retirement.

But first, here’s a snapshot of retirement in Australia. And what we know about retirees based on your responses in the 2019 Retirement Matters Survey (5100 responses) and the 2018 Retirement Income and Financial Literacy Survey (5064 responses).




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    COMMENTS

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    Farside
    20th Oct 2019
    9:11am
    so in summary your typical YLC member has less money than he/she believe they need, owns his/her own home and do not want the home included in the assets test ... quelle surprise. To borrow a phrase from Jack Lang ... always back the horse called self-interest. Next.
    TREBOR
    20th Oct 2019
    12:35pm
    Well - self-interest is the name of the game all over town... and it's stable mate greed is good is destroying this nation.
    Aviatorman
    20th Oct 2019
    11:48am
    When I opened (clicked on) the above article I thought it was going to explain what needs to be changed and why. But the only thing presented is pie charts and statistics. Maybe I should put forward my ideas on what should be changed... but will anyone take notice.?
    mogo51
    20th Oct 2019
    11:54am
    We havecto keep trying to get someone to do something.
    TREBOR
    20th Oct 2019
    12:37pm
    I'm always concerned when the views of highly-paid people who will never experience the pension or ever perhaps be SMSF-ers (since their 'super' aone and other manipulated income strands will be magnificent) are held up as the fount of all knowledge...
    TREBOR
    20th Oct 2019
    12:38pm
    That's like asking Peter Costello for a view on the plight of the older worker....
    mogo51
    20th Oct 2019
    11:53am
    That is a good summation of that 'survey', they have a captive audience!!!
    There needs to be a total overhaul of the sysyem and starting with politician's pension (another issue), totally independent and binding!
    Deeming rates, income allowance for pensioners increased. No effect on pensions till overall income meets minimum wage (supposed to be survival level).
    I do believe that family homes should be included with a sensible value consistent with average home values and some. If they weren't giving pension to those that don't need it, there would be more for those who genuinely do.
    Baz
    20th Oct 2019
    12:25pm
    I agree with you Aviatorman. Some time ago i sent an email to the YourLifeChoices with a simple recommendation for inclusion into the Governments considerations of their aged citizens retirement support and got no response. However I appreciate that with so many members that they cannot get back to everyone. My comment I thought was a win win for us and the Government and was simple - I am a self funded retiree but cannot get any assistance with use of public transport or registration of my vehicle. It does not cost the government anymore to give people like me a reduction in rail or bus tickets since they run the service anyway, and the roads are still built (using my taxes that i paid over many years). I there were discounts like this then my savings would last longer and therefore I could continue to be self funded for longer. I am sure that there must be many others that are in a similar position like me.
    TREBOR
    20th Oct 2019
    12:41pm
    Hmm - sounds like the same argument I put out here over chopping down the 'unemployed' to zero before they get assistance, thus forcing them - in this modern day 'employment' climate - to re-build time and time again.

    Forcing any retiree to wind down assets to zero before getting assistance is just postponing a future debt that could potentially be allayed in advance with a little help now....
    veepee
    20th Oct 2019
    1:40pm
    Trebor I'd suggest you do a bit of research. Retirees do not have to wind their assets down to zero to get help. Check out the asset limits and you will find that there is an assets limit for couples of approx $380,500 before pension starts to reduce and $583,500 at which they no longer qualify for assistance. For a single benefits start to reduce at $253,750 and the maximum assets they can have before losing the pension and benefits altogether is $456,750. These figures do not take into account the value of their home, if they own one,, regardless of if its value.
    TREBOR
    20th Oct 2019
    8:27pm
    No, veepee - but adding all their assets to the assets and income test and then finding various ways to reduce their pension is one sure-fire way of forcing them to wind down assets before getting their Pension Rights...

    You've missed the argument about assets accumulated from honest taxpaying toil being essentially taxed a second time at retirement time in the assets test ... even though bought and paid for out of earned and tax-paid money... then when they are sold on they again incur a tax via reduction in pension... let's call it the centrelink tax for convenience...

    Apparently only those on Pension are subject to this kind of steady progression towards being treated the same as the unemployed are so brutally treated these days...

    Now about the issue in my comment - about those being thrown on the scrap-heap being forced to re-build over and over again - and not only in assets, home etc, but in super, since the costs never stop when a person is unemployed.

    Short sighted thinking by a government totally out of touch with realities.... it's called kicking the can down the road for someone else to pick up...

    I've done my homework... you don't need a Weatherman to know which way the wind blows with this lot ... but since you're new, you can be given a little leeway...
    Aviatorman
    20th Oct 2019
    12:47pm
    Thanks mogo51. Regarding the home being treated as an asset, I don't believe its logical. Whether you live in a tent or a mansion, that's sacred. Its what you strived for in your working life. Otherwise you either have your (part) pension severely reduced or wiped completely. If you sell up, where do you downsize to.? Besides, any political party that introduced it may be committing suicide. Personally, I live in a fibro box with a view. Don't wish to move.
    veepee
    20th Oct 2019
    1:17pm
    Don't agree. Most people with their own homes, and many without, worked hard for what they have. The value of houses has increased disproportionately in cities compared with the regions. A large number of city dwellers having well over a million dollars locked up in their house value ( and sometimes much more) due more to good luck than good management may still receive the pension or part thereof. Conversely a person who has worked as hard if not harder, lives in the regions, has a house valued at $400,000 but has superannuation or other assets which preclude them from receiving a pension is not a fair system. I will guarantee that those opposed to asset testing the family home are in the former category.
    TREBOR
    20th Oct 2019
    8:32pm
    You can't eat a house, newbie veepee..... and it's nobody's fault that property values have gone up.... not home owner's anyway...

    They don't have money locked up in a house - they live in a house bought and paid for - and you are now going down the road of forcing them to either sell off their home or wind down assets in lieu of income, by saying the house should be included in the highly mythical assets test...

    In the event that, say, someone with pension sells off their home and 'down-sizes' to the bush or wherever, and retains money in the bank from the sale, their pension is reduced accordingly....

    And hard work ain't got nothing to do with it... and it's your own affair what region you choose to live in.... and if you have super income that precludes pension via income test - so be it...

    You cannot have it all...
    TREBOR
    20th Oct 2019
    8:32pm
    Sell the house and buy a tent - be an instant cash millionaire...
    Macheke
    21st Oct 2019
    8:16am
    I agree with veepee. People with the same amount of assets should be treated equally. You do not have to sell home and move out. There are loans or equity release schemes to access the value of your home without having to sell. I would add one further thing and that is for those with valuable homes that would disqualify them for pension to get the pension but have the government recover the payments when the home is sold on death. As a society we should be assisting those who need it and not those who don’t. We also need to move away from the entitlement mentality. Those who can support themselves should. It is our taxes being spent it’s not “the government’s”. I accept that we are taxed to help those less fortunate but the more that is spent on those who don’t really need it the less there is for health care etc. We need to design systems to make sure there is an incentive to work and save more. There is a limit to the availability of money we as a national need to make sure it’s spent wisely.
    MimTas
    20th Oct 2019
    12:50pm
    You are absolutely right. I was a single parent for 18 years and always salary sacrificed into super. At 60, still single, I could see I would never be able to beCome totally self funded in retirement and worked out that I am better off keeping a super balance around $300,000, achieved by downsizing as well. I still work part time and there is no incentive to have a total income above about $35,000 because of all the costs: taxes, Medicare levy that kick in. I do work more than that but only clear $8 an hour after that! It’s crazy that a basic vehicle, simple furniture, and a working balance for $3000 left in a bank account are all considered working assets. You need a mathematical Mind and to do a lot of research to really understand the system. The Centrelink FIS officers are very helpful. A visit is well worthwhile
    If you take all your financial information along!
    veepee
    20th Oct 2019
    1:25pm
    Good on you Mim, and you have done what many others could do and downsized to attain a degree of independence. Those who have accumulated wealth on the back of soaring property prices and are unwilling to use any of the equity in their house to fund themselves because they have 'worked hard all their lives' infuriate me. Clearly they have not worked as hard or been as thrifty as you have.

    The Financial Services Officers are great. We consulted one who had been a financial planner and wasn't afraid to help us maximise our benefits.
    Aviatorman
    20th Oct 2019
    3:12pm
    Infuriation, frustration or jealousy.? doesn't matter. What is achieved by kicking people out of their city dwellings.? Nothing for 'you' personally. Saves the Govt money to spend on what.? Do other countries ' means test' their citizens.? Should every retiree receive the same amount in retirement.? Probably not as the real needy would get less.
    New subject; I just had my part pension reduced by some $150 thru no fault of my own. The Govt means testing of your shares (twice a year) meant, in my case because of the jump in value a reduction in pension. The shares were bought for their dividends, so, if sold, the dividends are reduced and in any case what to do with sale money.? Buy a new car.. still an asset... stick it in the bank, no way.. no interest now. Its really a crazy system (Isn't it). Now if shares ARE sold... then fair enough, the Govt get their cut thru CGT (capital gains tax) but if not sold you are penalised for a somewhat 'artificial' value which can vary all over the place. I think the Govt should reassess the thinking behind this and PUBLISH the result for public comments.
    TREBOR
    20th Oct 2019
    8:38pm
    Nice to have the opportunity to 'salary sacrifice' - not everyone had that, and not everyone had even a nice salaried job or even job continuity to secure super ...

    Past gf of mine was a single mother, and paid off her house in Sydney while working part-time casual and raising three kids. She has not much super and a home now very pricey... so what? We take her pension away from her and let her starve? Make her sell the house, take a huge hit in pension, and go rent somewhere? Move to the bush? She's Maltese and her family all live within a couple of mile radius....

    Stop trying to cast things as black and white - they are never that way and YOU only know your situation....
    ray from Bondi
    20th Oct 2019
    2:12pm
    there is one thing for sure when the liberal government changes things it will be in the Orwellian fashion of All Cheer Big Brother he has increased the pension from $400 to $200 all hail big brother.
    libsareliars
    21st Oct 2019
    12:23pm
    Spot on Ray, the LNP need to be kicked out.
    Karl Marx
    20th Oct 2019
    3:19pm
    The only & I mean ONLY solution is to bring in a universal pension for everyone over 65 & everyone earning any income from investment, work etc pays tax the same as everyone else. No more tax free earnings above the tax threshold etc. No more asset, deeming or income tests required so billions saved from the current centrelink bill. No robodebt to worry about in 2, 5 or 10 years time, 99.9% rort free. Only the ATO to worry about when you submit your returns like everyone else.
    If you still have hardship then centrelink can issue rent assist, power allowance etc
    Keep the system simple, K I S S
    Even politicians should come under this same pension system which will do away with their current rorts & perks.
    mogo51
    20th Oct 2019
    3:34pm
    Like that idea, sounds logical. Ooops sorry Aussie Govts don't do logical.
    Aviatorman
    20th Oct 2019
    4:58pm
    Ah .. interesting thought KM. Wonder what the bean counters would say about this one.?
    GeorgeM
    20th Oct 2019
    8:32pm
    Absolutely the right way to go, Karl Marx - we have a fully broken, complex, costly and destructive (to pensioners health) Age Pension system, and the best solution now is to push for Universal Age Pension for all with NO tests other than Age (65 yrs) and Residency (say 15 yrs) paid by the ATO with no need for Centrelink to be involved except for hardship cases for those who don't qualify. So many positives as you have also noted, and can only boost the economy.

    I believe there was a YLC survey which had found over 80% of the responders agreed with Universal Age Pension, so I am a little surprised that is not included in one of the findings.
    TREBOR
    20th Oct 2019
    8:41pm
    As many times, as long as the rules on actual income over and above, including 'gifts' and such, are taken into account, and that means that extra income from all strands, including super, would be taxed as income... and that also includes the use of the company helicopter etc that you still get, or the 'loan' of a lazy million to spend at the races ....

    ANYTHING you get from your company after you 'leave' it is an income bonus.... anything and everything...
    Macheke
    21st Oct 2019
    7:40am
    I agree with a Karl Marx but add a further step. The age pension is then taxed as a separate item with superannuation balances and the net value of the home after the mortgage having a deemed income. The ATO already has super balances and presumably value of home can be got from council. Mortgage could be provided by banks etc into etax. Those with valuable homes and or super would have net zero age pension those in the middle have part. The pension could be adjusted in advance to avoid government paying out money in advance only to get it back later and avoid person having large tax bill. Most of the staff in Centrelink could be redeployed to looking after the aged.
    Aviatorman
    21st Oct 2019
    10:26am
    Re- Macheke comments... I think your heading into " complex territory " again.. Karl's final comment... KISS... keep it simple.!!!
    libsareliars
    21st Oct 2019
    12:24pm
    Great ideas Karl Marx
    Vince
    20th Oct 2019
    5:40pm
    I think all australians are entitled to an age pension ,if you have contributed to the country through work & taxes all your life then it is clear that all Australians should receive the age pension. An age pension with add ons is now worth in excess of 1 million dollars,it is hard to justify that some people can have this gift an others can't. I think it is now time for all retirees are given this free gift . It is hard to argue that this gift is given to people who have lived here for a few years. How do we make the system fairer to says self funded retiree or even encourage retirees to be self funded?
    Aviatorman
    20th Oct 2019
    5:55pm
    " worth in excess of 1 million" .. How calculated Vince.?
    TREBOR
    20th Oct 2019
    8:41pm
    I'm all ears.....
    Captain
    21st Oct 2019
    6:33pm
    Currently the single pensioners is $826.20 per fortnight and the couples pension is $1245.60 per fortnight. Multiply that by an estimated 30 years of retirement and you get 644,000 for a single and $971,000 for a couple. No indexation for the 30 years.

    However as with all averages, how many people will live those 30 years in retirement? Also remember that people who retire in 2020 will have had 30 years of superannuation so some will have more than the asset list therefore no pension and many will have reduced pensions thus saving the Govt paying out on pensions.

    The cost of pensions that are supposed to blow out by many billions per year is a result of Govt's asking the questions they know the answer to. Their question was based on how many people would retire between "year x and year x +" and not to include the percentage that would likely die in that time period.
    Susanne
    21st Oct 2019
    10:55am
    Europe even x comonist countries when you reach certain age you will receive pension If the person stugling they get extra rent allowance Owning your home in Australia you still have to pay Council,Levy,Water electricity and go on and on
    Hairy
    21st Oct 2019
    1:17pm
    The nazi mongrels at it again , they all of them need to be exterminated NOW .