Budget changes not so rosy 183



View Profile

A new study shows more retirees than first thought will lose out under pension changes announced in the Federal Budget.

According to a study commissioned by the superannuation industry, 40 per cent of older Australians will be stripped of the part pension by 2055, under changes to the assets test. Those who retire soon could miss out on $5500 a year.

The Government claimed its changes would increase payments for 170,000 retirees, cut the part-pension for 235,000 others and stop payments to a further 91,000 who currently get the part-pension.

However, the new study commissioned by Industry Super Australia shows the savings build over time by cutting the payment of the part-pension to more Australians. While only 13 per cent of retirees lose in the first years of the policy, this increases to 19 per cent by 2025 and 40 per cent by 2055.

According to The Australian, a single man aged 45 who is earning $82,000 today would lose about $7700 a year from the ­tighter assets test in retirement — or about $192,000 over his retirement. A single woman aged 25 who is earning about $31,000 today would lose $2800 a year in retirement, or about $80,000 throughout her retirement.

The research shows the tighter eligibility test trims the payments to the wealthier retirees at first but then extends to ordinary workers over time. A decade from now, some of the biggest savings will come from those who are earning average salaries today.

A couple in their late 40’s on ­average incomes would lose $5500 each per year once they ­retire in about 2035, the study suggests. That would cut their pension payments by $117,000 each over the full course of their retirement — an indication of the extra super they might need to cope with the budget changes.

National Seniors Australia chief Michael O’Neill told ABC’s Radio National the pension changes could hit retirees with mid level assets, particularly women, and they could dampen incentive for retirees to save.

“By mid level I mean single folks, particularly ladies who retire with $500,000 or thereabouts, by the time you invest that part that is capable of being invested, the returns from that is pushing people back to income levels less than the pension,” he said.

“It’s destroying the incentive for people to put money aside across their lifetime to provide for their own [retirement income]”.

Seniors groups have also warned the Government it can’t hit pensioners and ignore superannuation tax breaks and they’ve called on all political parties to leave the retirement incomes of Australians out of a politicised debate.

What do you think? How are you feeling after this latest research which shows more retirees could be worse off under changes to the assets test?

Rebecca Wilson

Rebecca Wilson is the founder and publisher of Starts at Sixty. The daughter of two baby boomers, she has built the online community for over 60s by listening carefully to the issues and seeking out answers, insights and information for over 60s throughout Australia. Rebecca is an experienced marketer, a trained journalist and has a degree in politics. A mother of 3, she passionately facilitates and leads our over 60s community, bringing the community opinions, needs and interests to the fore and making Starts at Sixty a fun place to be.

  1. [email protected]!

  2. This government were going to grab the few dollars older Australians have one way or the other… Hockey and Abbott and their cronies have it good in life and have little comprehension or don’t really care about those citizens living in Australia, who have worked hard in their lives and are now being penalised. I want a fat cat politician pension with free everything ….. You vote Liberal this is what you get! Lorraine S

    5 REPLY
    • Your right Valerie Murray it makes no difference WHO is in government the average person is the easiest to extract money from

    • They only want tax on interest of over $75,000@ 15% to earn that much interest you need to have over 1-5 million in your super account, to have that much in your super you would have had to have salary sacrifice which charge 15% tax, so you pay 15% in and 15% on the interest and it’s on onlydollars over 75,000 so 15+15 = 30% tax on your earnings so you are still infront if you hadn’t sacrificed your earnings salary sacrifice is just one big tax fiddle

  3. Time to forn a ‘grey power’ party. With so many baby boomers and others now retiring with time to use their experience and so much knowledge to make a difference. We certainly have the numbers.

    1 REPLY
  4. The page to this does not exist, so don’t you think this is a little strange!!! Does to me.

    10 REPLY
  5. Tired of constantly being the targetted ones to ‘fix’ budgets. Having worked and paid taxes since 14, (and still paying) I resent this.

    2 REPLY
    • Not this Govts fault, Previous Govt bought in 60,000 illegals , none work, have numerous wives & kids, I am 75 ,not complaining, i get by, don’t want for necessities, have to save for luxuries, BUT did work cleaning after I retired.

    • Same here Nola…and Dawn I think those people have been coming here for way longer than the previous government was in power.

Leave a Reply

Your email address will not be published. Required fields are marked *