Your retirement wealth is being ‘slashed’ by pension changes 13

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According to a report published by the University of Melboune and advisory company Willis Towers Watson, ‘middle Australia’ has lost all of the recent gains from strong investment markets because of a new assets test.

Samples from the 2010 HILDA surveys were used to determine how prepared Aussies aged between 25 and 64 were for retirement, assuming they all retired at 65 and lived until 90.

What was revealed was that changes to the assets test, which came in under the Abbott Government, left a large percentage of couples in an ‘uncomfortable’ position coming into retirement.

According to the Association of Superannuation Funds of Australia (ASFA), to retire comfortably you should be able to live on $58,128 a year (as at 2014), and prior to the changes 62 per cent of couples were able to do so.

Not now. Only 51 per cent of couples would have that benefit.

Dr Carsten Murawski from the University of Melbourne and the report’s author told The New Daily it was “concerning” that retiree wealth is effectively being “taken away” by the government.

“We would like to see the percentage of people who are on track to have adequate income increase over time, and the fact that these increases are now being taken away, if you like, by changes to the legislative framework, and particular to the aged pension, is concerning,” Dr Murawski says.

He says that instead of using super and other savings to prop up people’s retirement savings, the change of the age pension rules “basically just balances these increases, or takes them away”.

As a single retiree you are less affected by the changes.

However, retirees with medium-sized super balances are said to be the group most impacted by the changed assets test.

The Australian Institute of Superannuation Trustees (AIST) says that while many retirees will be unaware of the changes, it will “continue to advocate for a review of the taper rate so that the impact on middle Australia is less severe”.

The changes to the assets test were legislated by the Government with the support of the Greens. It says the change was made so that Aussies of low socio-economic standing could enjoy increases to their pension payment.

When it was announced in 2015, then social services minister Scott Morrison said more than 170,000 pensioners with “low and modest” levels of assets would see a $30 increase in their fortnightly pension payment from January 2017.

Do you feel you will be able to retire comfortably? What financial challenges do you face as you move into retirement? Are you concerned about having to live on a pension?

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  1. We’ve been “living”, (surviving), on the pension for years – don’t think it’s going to make a lot of difference to us!

    1 REPLY
  2. The pension is a safety net as social security for those who can’t make provision for their retirement during their working lives . No it wasn’t this way when first introduced but is now. The faster we get used to this and make sure we have enough super before we retire the better !

    2 REPLY
    • Quote: The faster we get used to this and make sure we have enough super before we retire the better ! Unquote.
      I agree Allison except the Government has just changed the Super rules so that very few of us WILL have enough Super when we retire. But wait there’s more; don’t worry because the Government will still allow Malcolm Turnbull to live in his $70 harbourside mansion tax free while everyone else can pay tax on their retirement savings! Yes it’s certainly an exciting time to be living in Australia Malcolm!

    • If I was 30 years younger I might agree with you, but being in my 70’s, retired 10 years ago, and now affected by the change to the taper rate, I think your comment is rather inappropriate. I grew up and worked when marriage was a reason for getting the sack if employed by banks or government, childbearing another reason for getting sacked, no parental leave in those days, no equal pay, no super schemes from most employers for females, and public opinion that working mothers were responsible for all the bad things that were happening in the community, such as teenage violence, the high divorce rate, and other such criminal offences.

  3. I wish I had that much to retire on! I live on about $27000 a year (just) but only because I share the rent on a house otherwise I’d be in a tent!!

  4. We are going to lose $10000 in pension because of the taper rate. Makes us wonder why we saved all we could afford to but into our retirement fund… The whole situation is very unfair.

  5. Why isn’t the Gov’t targeting business’s who don’t pay tax here like Google, IKEA, & Aldi, whose profits go straight overseas, if it needs more money?

    Why doesn’t the Gov’t hit the ‘fat cats’, including pollies, if it wants more money?

    Why does the Gov’r hit the group of people least able to live in their Retirement comfortably, ie Pensioners’?
    Superannuation hasn’t been running that long, so few people would have big Super money’ to live off. They still need old age Pension to make ‘ends meet’, as the cost of living is ever increasing, & the Pension doesn’t!

    It’s a very unfair deal to Aussies’ who’ve paid Taxes all their lives, AND very, very un-Australian!

    Turnbull’s a multi-millionaire, & the rest of the pollies’ are wealthy! Think of ALL the benefits THEY get on Retirering, eg Gold Travel Passes for Life, a H U G E Pension, for life!

    It’s well & truly becoming a land of the Pensioner ‘have NOT’s’…………….

  6. Fortunately my wife and I planned for our retirement not expecting govt assistance and are self funded. I can’t imagine how anyone can live on a government pension.

  7. We had to pay for our parents retirement ,many of the women of this Generation never worked and were elegeable for the pension aged 60 ,now its our turn there is no money .The Government have known for 50 years about the numbers of people that are Baby boomers that would need to receive money but did nothing to plan for this . We had to pay mortgage rates of 17% and if on an average wage could not save extra money for retirement In my case with some inheritance money giving us total assets of around 800k , the new rules mean a part pension is now going to be diminished to almost nothing .We never took expensive holidays overseas or squandered money on fast living ,so feel cheated .The Gillard government increased the age from 65 to 66.5 which means my husband has to support me from his savings ,so much for Misogeny .The Government should concentrate on funding retirees pensions through ensuring that the Global corporations -the ones who are taking all the jobs overseas should pay their fair share of Tax ,expecting people to continue working when employers obviously discriminate in favour of people aged under 50 is unrealistic.I was made redundant aged 60 but can’t get a New Start allowance as we have to much assets ,it all makes you wonder why anyone would want to get Married as you are discriminated against , maybe when Gay and Lesbians are given that privilege the Government will be able to cut payments to them too.

  8. We had to pay for our parents retirement ,many of the women of this Generation never worked and were elegeable for the pension aged 60 ,now its our turn there is no money .The Government have known for 50 years about the numbers of people that are Baby boomers that would need to receive money but did nothing to plan for this . We had to pay mortgage rates of 17% and if on an average wage could not save extra money for retirement In my case with some inheritance money giving us total assets of around 800k , the new rules mean a part pension is now going to be diminished to almost nothing .We never took expensive holidays overseas or squandered money on fast living ,so feel cheated .The Gillard government increased the age from 65 to 66.5 which means my husband has to support me from his savings ,so much for Misogeny .The Government should concentrate on funding retirees pensions through ensuring that the Global corporations -the ones who are taking all the jobs overseas should pay their fair share of Tax ,expecting people to continue working when employers obviously discriminate in favour of people aged under 50 is unrealistic.I was made redundant aged 60 but can’t get a New Start allowance as we have to much assets ,it all makes you wonder why anyone would want to get Married as you are discriminated against , maybe when Gay and Lesbians are given that privilege the Government will be able to cut payments to them too.

  9. Do the new laws about the illegibility for a pension apply to the clowns who passed this law, or is it only for the others and not for the idiots who once sat in the parliament.

  10. Why isn’t the Gov’t targeting business’s who don’t pay tax here like Google, IKEA, & Aldi, whose profits go straight overseas, if it needs more money?

    Why doesn’t the Gov’t hit the ‘fat cats’, including pollies, if it wants more money?

    Why does the Gov’r hit the group of people least able to live in their Retirement comfortably, ie Pensioners’?
    Superannuation hasn’t been running that long, so few people would have big Super money’ to live off. They still need old age Pension to make ‘ends meet’, as the cost of living is ever increasing, & the Pension doesn’t!

    It’s a very unfair deal to Aussies’ who’ve paid Taxes all their lives, AND very, very un-Australian!

    Turnbull’s a multi-millionaire, & the rest of the pollies’ are wealthy! Think of ALL the benefits THEY get on Retirering, eg Gold Travel Passes for Life, a H U G E Pension, for life!

    It’s well & truly becoming a land of the Pensioner ‘have NOT’s’…………….

    REPLY

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