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Why more than 300,000 pensioners won’t vote Liberal

Why more than 300,000 pensioners won’t vote Liberal

(Ed. note to reader Don don’t read. This mess was hatched by Abbott and Hockey.)

Morning Mail stood alone when it sounded the alarm on the proposed move on pensioner assets in 2015. All the pensioner advocacy groups went missing instead of doing what they were supposed to do for their members—fight the bastard government. MM was the lone drummer until today, a year after the axe dropped, the news is bad for those who saved for their retirement. Read here what MM reported in June 2015. And here in October 2016. Nobody cared then, nobody listened, but just wait until the next election when the pain will be worse. The image herein was used in 2016.

It has been a year since stricter asset tests for the age pension came into force — overshadowed by a flurry of changes to super­annuation that hit mid-year. But the longer-term financial impact on those affected is now becoming more apparent.
The Self-Managed Superannuation Fund Association threw a spotlight on the issue yesterday.

Source: News Corp

Age pension and superannuation changes hit home

In a statement, chief executive John Maroney said it was now apparent that the changes to the means test taper rates and thresholds have had “significantly adverse and presumably unintended consequences”.
He said the steeper taper rate that took effect from January 1 last year is now actively discouraging middle-income wage earners from saving to be self-sufficient in retirement.
Maroney argues that the changes have created a “black hole” for people directly affected by the changes that makes them worse off in terms of income — encouraging them to spend up (or cut back on their savings) to reduce their assets to qualify for the pension. He cites the example of a home-owning couple who have a superannuation balance of between $500,000 and $800,000.
For couples in this situation, he says the taper rate (the rate at which higher assets reduce entitle­ment for the pension) is the equivalent of about 7.8 per cent a year. With today’s low interest rates, this is well above the amount that a retiree could expect to be receiving from their investment or time deposit.
(Under the steeper taper rate that came into effect in January last year, retirees lose $3 of age pension a fortnight for every $1000 above a certain assets threshold, compared to losing only $1.50 of age pension for every $1000 over the threshold before January 2017.)
The couple in question is better off spending their money, reducing their assets to enable them to qualify for the pension, or shifting their assets from financial assets into non-financial assets such as the family home and getting as much of the pension as they can.
The pension may not be much, but for those who are eligible, it is a worry-free government guaranteed amount that a retiree can ­depend on rather than an investment, where returns can be vulnerable to market swings as well as administration costs, or cash in the bank or time deposits, which don’t pay much these days.
(A three-month bank time deposit pays about 2 per cent, rising to 2.7 per cent for 24 months.)
And as any retired person knows, there are many more benefits to keeping the pension than just the pension itself.
The SMSF Association agrees that some means test is necessary for the sustainability of the age pension (there has to be a cut-off somewhere), but argues that the current situation is “not appropriately integrated with the broader retirement system”.
Maroney says the government should scrap the assets test and move to a more appropriate, simpler way of integrating superannuation and the age pension.
He supports the idea suggested in the Ken Henry-led Australia Future Tax System Review that has a single means test that ­applies a deemed income rate to financial and non-financial assets.
While it is not likely to happen in this government’s term (the government has indicated it has no stomach for further changes to the pension or super system within the lifetime of this parliament at least), it does raise a longer-term debate about fairness.
The SMSF Association’s comments yesterday follow the very vocal comments made for some time by the Melbourne-based Save Our Super group that was set up in response to the sweeping superannuation changes announced in the 2016 budget.
Online publication Super­Guide has been working with Save Our Super to highlight what it calls the regressive impact of the stricter assets tests. The group argues that there is a “savings trap” as a result of last year’s asset test changes that particularly hits ­people with assets of more than $400,000 and below $1 million.
In an article published on the Save our Super website (saveoursuper.org.au) in November, writer Trish Power argues that a single person who owns their own home would be better off in terms of total retirement income having $300,000 in super than by having $400,000, $500,000 or even $600,000 in super. Power points out that a home-owning single person is hardest hit when they hold $550,000 in super. At this level they receive less total income (super pension plus age pension payments) than a single person who has $300,000 in super.
Power argues that the January 2017 changes “ambushed more than 300,000 retirees who could do little to mitigate their circumstances” and “threw into disarray the retirement plans of many hundreds of thousands of Australians within five years of retirement”.
Save Our Super, which describes the situation as Retirementgate, has engaged in a letter-writing debate over the issue with federal Assistant Treasurer Michael Sukkar that can be read on their website.
Sukkar challenges the assumptions in the Save Our Super paper, arguing that it is not the role of the age pension to support retirees with a higher level of assets to maintain their capital base.
He argues that the steeper taper rate was introduced to encourage people to draw down their private savings more rapidly.
Whether it is a “black hole” or a “savings trap”, those hit by the 2017 changes should by now have at least assessed if they can re-­arrange their affairs to minimise the adverse impact of the changes.
There is no appetite for more radical changes to super in the short term, but the SMSF Association comments yesterday could revive the debate over the fairness of the current super and pension situation.

{ 16 comments… add one }
  • Don 10/01/2018, 6:58 am

    Thanks for the advice – will not read the article – such a thoughtful Ed.

    • Winston 10/01/2018, 7:41 am

      Hey Don, I don’t know about the patience of MM editors, but mine is short with you carping from the side lines. You offer no cogent comment regarding the issue. Most on this blog appreciate the work MM does to bring us news. If their work offends you so much why don’t you go away to where you will be happy, if happiness for you is possible. I doubt you will be missed one bit. MM has a happy family, try to fit.

      • luk1955 10/01/2018, 8:06 am

        Not that you ever saw this news in the mainstream media. Only here on MM. MM does a great job of bringing such important issues to our attention. Better than 5 minutes on the news about a cat being rescued from a tree.

    • Biking Voter 10/01/2018, 11:01 am

      Time to get back on your medication, you pathetic little troll.

    • Bwana Neusi 10/01/2018, 12:27 pm

      Don the classic leftist troll! “Will not read the article..” That way Don avoids any argument that is contrary to his bigoted leftist views.
      “We won’t go there…”
      “I can’t agree with you, even though I haven’t heard your argument…”
      “That’s my opinion…end of discussion…”

      I could go on, but you get the drift. Ostrich head in the sand syndrome.

  • Lorraine 10/01/2018, 7:02 am

    self funded retirees wear the brunt. they paid the taxes when they worked and the Government now wants their savings as well. what’s new. it is a Liberal Government that is stealing those savings. When Labor kills the golden goose all retirees will be pensioners

    • Lorraine 10/01/2018, 7:14 am

      That’s Malcolm Turnbull’s reasoning, Labor will be worst

      • Penguinite 10/01/2018, 7:56 am

        If Malcontent is relying on a rejection of the short-won to win the next election just goes to show how silly and inane he is! Wouldn’t he get a shock if Bill got tapped and resigned immediately prior to the vote. Labor has done it before!

    • Bwana Neusi 10/01/2018, 12:30 pm

      Shorten will take the next bite of the middle class low hanging fruit. Then they (read Liberal or Labor) will come for the family home.

  • GTD 10/01/2018, 7:45 am

    The ‘ feral gummint ‘ never stop putting their grubby hands into the pockets of pensioners that worked hard all their lives.
    They keep importing never ever to work refugees that will never pay tax.

  • The Beak 10/01/2018, 7:51 am

    Don, this is what you wrote in December:
    “just wonder who is running this site – articles flow like a torrent against the PM – am pretty much sick of it and all the Lieber supporters who contribute making us think they are Liberals – get behind the PM and give us a chance at the next election – if Turnbull is deposed nothing will change and he will sit on the cross bench – it was a bad choice but with no alternative, stick with it – unless you want Shortonbrains for PM – this site used to be a good source of information – not any more, it just drags you down.”

    I have contacted MM to ask about your compatibility with the group. I hope you move on.

    • luk1955 10/01/2018, 8:08 am

      Don, the politics of big business interfering with the government is what drags down everyone. It’s clear that large companies are telling the government what to do.

  • luk1955 10/01/2018, 8:04 am

    Would it be surprising if these changes made by A and H were fostered by the super industry that hates self managed super funds because it deprives large company ceos of their lucrative bonuses? And of course we know how pollies love to take bribes to get certain legislation passed.

    But that couldn’t be because all large companies operate with ethics so high that they give the Bible a run for honesty, and politicians always act in behalf of the people. (Sarcasm)

  • Ibbit 10/01/2018, 10:10 am

    Did any government ever do something policy-wise that is not directly contradicted either by another policy or in practical application? We would be better of with half the bureaucracy we have and no politicians as we are more than capable of living our lives without interference and direction. If we were wise Australians we would not cast a vote for any politician next election and let us see what the pollies with trough shaped noses would make of that.

  • Botswana O'Hooligan 10/01/2018, 1:40 pm

    Ever since TA and Hockey started fiddling with matters financial some of us have protested by email to them, thru the pages of various newspapers to no avail. One solution to the whole nine yards of this monumental stuff up could be a universal pension for all as is the case in NZ, the UK, France, and Russia, but with the caveat of an indexed pension based on the amount of tax paid during a working life. That would do a couple of things, the greatest one would force dole bludgers to rethink their work attitude for their retirement loot would depend on tax paid, the almost 4% of our population might suddenly find that they aren’t all that disabled after all, and those living in the back of beyond in Gunya’s might suddenly get the urge to come into civilisation, send their kids to school, and earn a quid. When you get old and are living on an income not much better monetarily than those on a pension and in reality worse off because pensioners attract other benefits, rego, electricity, rates, medicines, etc. you ask yourself, “why did I work hard for 61 years and pay over two and a half million in tax when at the end of a working life I get bugger all back?” My 2.5 million in tax is nothing at all compared to the amount others pay in tax and yet we are silent. Of course people (pensioners) deserve a pension if they did their bit and most of them have done that and more, so why try and introduce an eligibility index on their homes. The basis of my argument is that the old war service home my folks lived in cost bugger all but when my mother died it was worth just on a million bucks and apparently fetched more than that, I don’t know exactly how much because I wasn’t a beneficiary of her estate. There has to be perhaps thousands and more in that situation so who would the government select to value the home in question, the government itself, the local bank manager, the local real estate office, or the council, scoundrels all and not to be trusted with anything anywhere. The very real problem we face in this country is one of socialism and over the past forty or so years has silently crept up on us all and we don’t realise it. Thank you Gough for starting the ball rolling, thank you Malcolm for allowing the dregs of the Lebanon in, and thank you Kevin and Julia for the others who wouldn’t work in a bloody iron lung and will bludge on us forever.

  • Don 10/01/2018, 5:06 pm

    I should change my name to Simon from Lord of the Flies – if you have not read the book, read it – pretty much reflects the spear throwing approach of some contributors. One even wants to finish me off, just as happened to Simon.

    I thought the least I could do when I received a special mention was to thank the Ed.

    What a bleak day it would have been for contributors had I not been polite to Mr Ed.

    For all to have identical responses from some very thought provoking articles would seem to be pretty much a waste of space. I am happy to provide the words to “kumbuya”.

    I will keep checking the website, waiting for articles that reveal what a seriously bad PM Shortonbrains would be for our country. In the meantime it seems I have it pretty right – TA supporters (just like me) contributing.

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