Poor David Leyonhjelm is worried. An estimated three hundred thousand Australians will soon be receiving less pension than before, following a tightening of the pension eligibility rules which came into effect on the 1st January 2017. Yet in his opinion the pension is still too generous! The government cannot afford it with oldies living longer (now in the mid-eighties, and in the next few decades most likely into the 90’s).
“Taking the pension shouldn’t be something you aspire to, it should be something you try to avoid because it signifies you’re in a low income group — in other words you’re poor, or close to poor,” he told the ABC.
His solution is simple. Stigmatize the aged as poor. Shame them so that they will be coerced into making more provision for their retirement. For starters the domestic house must be included in the asset test. With inflation, the home has far outstripped superannuation as a investment vehicle for retirement. No matter. This loophole must be closed!
Is it “sour grapes” to point out that the average pension allowance for those politicians retiring at the 2016 federal election was estimated at $211,400 per annum for the rest of their lives? Self-funded retirees cannot but feel envious that the pension income of politicians was largely unaffected by the global financial crisis of 2008 which wiped up to 40% from their lump sum savings.
80% of those coming to retirement now at 65.5 are still eligible for the pension or part-pension. But henceforth “oldies” will have to work for longer to tap into their savings. By 2023 the entitlement age will be 67, and 70 by 2053. Thereafter it will likely continue to rise by 77% of the aged expectancy at 65 thereafter. It is intended that superannuants will only be entitled to receive their savings 5 years before their year of pension entitlement.
Perhaps poor David can draw comfort from knowing that at least portion of the value of the principal place of residence will soon be included in the asset test. There will be other changes too that may please him.
The Age Pension could also be better targeted by introducing a simpler single comprehensive means test.The move to a comprehensive means test could apply from 2027-28, to new recipients of the Age Pension, to allow people sufficient time to adjust to the new arrangements.It would replace the current arrangement which is underpinned by dual income and assets tests. The existing assets test could be abolished and the income test extended by deeming income from a greater range of assets.
Lucky Senator David Leyonhjelm!