Advertisement

Pain and gain from pension changes

May 07, 2015

The Federal Government has been warned there will be some political pain to wear from its latest proposed changes to the aged pension.

But the lobby group representing older Australians reckons plans to change the assets test thresholds and the tapering rate for the pension is a much better proposal than fiddling with indexation.

“They’ve hit it a lot more right than they were before,” COTA Australia chief executive Ian Yates told AAP on Thursday.

Plans to change the pension indexation rate, announced in last year’s budget, have been dumped.

Instead, more than 170,000 pensioners are expected to get about $30 a fortnight more under new arrangements that will start from January 2017.

But more than 235,000 will get less than they receive now and more than 91,000 people will lose the pension completely.

“Certainly there will be political pain for the government in terms of the fact there’s a significant number of part-pensioners getting less,” Yates said.

“The government’s message is that it wants people to live off their assets.”

That means relying on superannuation and other assets that receive favourable tax treatment.

Social Services Minister Scott Morrison says nine out of 10 pensioners will either get more money or see no change to their payments.

“We’re helping those with more modest assets,” he told the Nine Network.

Couples who own their home and have additional assets worth less than $451,500 will be better off.

Couples who don’t own property and hold assets worth up to $699,000 will also win from the changes.

The tapering rate will double from $1.50 to $3 per $1000 of assets held above the threshold, reversing a change the Howard government made in 2007.

The changes are expected to save the government $2.4 billion over four years.

Retirees who lose the pension will still be able to access the Commonwealth Seniors Health Card that gives them concessions on medicines and bulk-billing.

Morrison expects the Greens will support the changes, ensuring their passage through parliament.

COTA continues to push the government for an independent review of all retirement incomes, pension and superannuation, and how they interact with the tax system and other policies.

Yates hopes having such a comprehensive discussion out of the media spotlight would lead to bipartisan proposals for changes.

“This country actually needs 20 to 30 years of stable retirement incomes, not election-by-election footballs,” he said.

Local News Matters
Advertisement
Copyright © 2024 InDaily.
All rights reserved.