Plans to reduce access to pensions for wealthy Australians

Retired Australian couples who own their home and have assets up to $1.1 million currently qualify for a part pension, but this could be set to change with the scale-back welcomed by crossbench senator Nick Xenophon.

According to the ABC, Social Services Minister Scott Morrison said yesterday that he was considering the proposal to tighten the assets test, as more and more Australians hit retirement age.

“I think that is the way through to cut the Gordian knot in terms of this impasse on pensions,” Senator Xenophon told ABC News. “If you’ve got several hundred thousand dollars in the bank, it’s not unreasonable to draw on some of that for the purpose of your retirement”. Do you agree?

Last year’s budget plan to lock pension increases to the rate of inflation instead of average male earnings was blocked by the Senate, so this could be an alternative solution to raise Government revenue. To pass the idea in the Senate, six of the eight crossbench senators need to be on board, if Labor and the Green oppose it.

Scott Morrison said yesterday that he still wants a modest, incremental change to the pension system.

The Australian Council of Social Services recommends tightening the age pension assets test by reducing the assets test-free area for home owners to $100,000 for singles and $150,000 for couples and increasing the taper rate for both home owners and non-home owners from $1.50 per $1,000 of additional assets to $2 per $1,000, so that the cut-out point for the part pension for couples is reduced from $1.1 million in assets, besides the family home, to $794,250 in assets besides the family home.

So, what do you think? Do you think there needs to be a tighter asset test? Tell us below.