Should the assets test on the age pension include multi-million dollar family homes? 510



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Approximately 350,000 people in Australia have asset values of more than a million dollars and are claiming the aged pension due to the assets test that leaves the family home out of the pension calculation. And it is costing the country billions said a report from the national centre of social and economic modelling yesterday. It is money well spent, many here might say. But there are plenty of people prepared to say that this is just a “Government-funded inheritance subsidy scheme for the next generation” and it needs to change.

The issue is political dynamite, but seems like one that has to explode sooner or later. As 77 per cent of the over 65s, Australia’s pensioners are a powerful group, perhaps one of the most powerful in Australia, as the Abbott Government found out when they proposed changes to both the pension age and the health schemes affecting pensioners last year.

The aged pension costs Australia $42 billion per year and it is being said that the government could save more than $5 billion through changes to the way the wealthy family home is considered. Seniors groups COTA and National Seniors are both asking the government not to make a knee jerk reaction, but to consider a wide ranging review of pension and seniors related issues, looking at it holistically to understand how all of the issues affect those retired or approaching retirement. But today we want to hear what you think. Do you think the government should implement a test that excludes the asset rich, cash poor from the pension?

It is clear the government and the opposition are listening with the social services minister Scott Morrison moving to allay political fears this morning on talkback radio, categorically ruling out putting the family home in the assets test for the pension. But it is about to become a lot more heavily discussed.

The parliament will table the five-yearly intergenerational report after some delays in the next few weeks, which is destined to bring this subject to the fore and raise widespread debate about how the pension can be adjusted without losing the voters the Abbott Government so desperately need.

There is some talk that the Government might move to change the assets test one day, but only as a long ranging policy that would likely not affect this generation of pensioner. In a speech to the Centre for Independent Studies, Kelly O’Dwyer, Parliamentary secretary to the Treasurer was confident about what needs to happen.

“Leaving aside for the moment whether it’s the right thing to change the assets test, one of the key questions that advocates of change will need to address is how to be fair to those who decided to overcapitalise in their house over a number of years, possibly decades, precisely because of that exemption for the family home,” she said.

“The challenge for government is that it needs to take into account all of these different perspectives and will necessarily need to make compromises between them”.

According to the Financial Review, the last intergenerational report, released in 2010, estimated that by 2049-50, age-related pension payments would increase from 2.7 per cent of GDP to 3.9 per cent, This amounts to over $60 billion a year in today’s dollars.

The Grattan Institute reports from 2013 say that including some of the value of the home in the assets test would raise as much as $5 billion a year in revenues.

It also estimated that in 2011, among pensioner-age households with a million in net assets, about 80 per cent received welfare benefits. On average they received more than $200 a week.

The Audit Commission report presented to the Federal Government suggested that the pension asset and income tests should be combined and that there should be a valuation trigger applied to the value of a home of over $500k for singles and $750k for couples.

It is worth noting that 77% of Australians over the age of 65 receive income support. It is no wonder the Government sees the concern in changing such policy.

And whilst the Government searches for income, the people who rely on the income support system for a basic acceptable standard of living say that they are finding it harder to make ends meet.


Share your thoughts today… Should the Government be implementing an assets test on pensions?

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. No
    That is grossly unfair.
    It penalises those people who got off their bum and worked rather than collected Dole money.
    My house represents years and years of hard work and sacrifice.
    it is my ONE and ONLY bit of security and buffer from the outside world in retirement and old age.
    I worked hard and paid my taxes, lost thousands of superannuation dollars in the 2008 recession – they can bugger off.

    25 REPLY
    • Agree Alice. Basically the hard workers who have saved and got houses will be penalised. The ones who bludged can get what ever they like. Remember too it’s us hard workers who pay for the bludgers.

      1 REPLY
      • Not sure what the answer is to this, as I’m sure a lot of people have worked to get what they have, but they have also had luck on their side. Just because some of us don’t have a million dollar house, doesn’t mean we are bludgers. Your comments are very hurtful to a lot of people

    • This government only cares about big business and big profit. They lump all the rest of us as ‘leaners’ – putting aged pensioners in the same bracket as some second or third generation welfare bum.

    • Well said Alice! The government take take take and penalise all of us that have worked so hard and who have supported the country while we were doing that. Now they want to fleece us in our retirement? It never ends (I am disgusted)!!!!

      1 REPLY
      • just a thought why not take 9% off dole money and put into Super for the dole recipient

    • yes i agree, its the corrupt big business and govt spending that is doing this country in,,, too much immigration to withstand paying out dole and pensions too as there are no jobs for them, and us… they need a complete overhaul and get off there smug arses and get with the real deal….

    • Yes it should – reverse mortgage to fund their own lives is what should happen. The public should not be supporting the inheritance of the next generation..

    • No Joe. Many of these people with homes worth millions only do so because they live in Sydney or other capital cities. They most likely have no or very little super and possibly no savings or investments to live off. It is grossly unfair to target them because of the value of their homes. To make them sell up and move is also wrong. How about we target the very wealthy and close all the loopholes which have allowed them to accumulate wealth through various questionable means rather than good honest work?

    • Alice why hit at people on the Dole a bit of critical thinking would help can you tell me where there is a few jobs I know some people who would love a job.

    • Pamela Pearce Ogle, Alice Springs is where you will find work without question.
      Most people have a job with in days of arriving, many within hours ~ and that is the honest truth
      Good luck

    • go read Mari-Ann Mconnell’s comments.she is Liberal voter who thinks all pensioners are parasites!! With that attitude long do you think it will be before this is implemented if they get another term? that fact that it is even being mentioned must mean it was under consideration

    • I know many over 50’s who worked all their lives Alice and have lost their jobs in the last 12 months..they can’t get work

    • Yes, I know of people too Bindy Jones, but there IS work where I live in Alice Springs NT.
      If you can’t find a job here, then you really aren’t trying very hard.

    • I am not in the NT Alice and I agree with the rest of your post so I hit like, these are qualified tradesmen and women who have lost their jobs and there is no work here ..some have children still in school..I feel so sorry for them

    • I know people who retired, collected their Super, and then started work again and are collecting Super number two.
      They are in their 60s, sometimes 70s and none of it is Dole money.

    • Qualified trades people are like gold here Bindy Jones ~ most have more work than they can poke a stick at.

    • tell them to jump in their car, catch a plane or thumb a lift (though hitch hiking is not recommended) – sometimes I wait ages for a plumber, tiler, mechanic or elecrtrician.
      a lot of them do bush work and they aren’t in town.

    • Alice Child , I can’t handle heat , so I could never live in NT , and I only have my home as asset , so it isn’t about looking for work , it’s about working all your life to better yourself and live comfortable , paying your taxes all those years , then not having to be penalised because of it 🙁

    • Yes, I agree Lorraine Monshing, but some people raised the work question, saying they couldn’t find work and I am trying to help them do so.
      If they want to work, there is work here.
      The NT is a great place to live and work.

    • Agree with everyone, someone who works hard for 30 /40 years accumulates some comforts, is penalized while those that use the system and Go for the hand outs get more and more. No incentive to do well, other than personal pride. And it doesn’t seem to matter which leaches are in the seat of government.

    • There won’t be anything left for the next generation to inherit, for the costs of entering any Aged care facilities are skyrocketing! Presently, one needs to pay $150K as “bond/entry” fee to get into residence, then a monthly accommodation charge of at least $2K! Even being put on a “waiting list” doesn’t secure a placing on a “first come, first serve basis”, as assessment needs to be carried out, & vacancy is in limited number. If a couple needs placement, that’s a “per person charge”, if only 1 member of a couple needs placement, the other member needs a place to live in! Why do some people think that owning a million $ home falls under a “millionaire”status? When put on the market, the million $ home value might be less, for the “buyer” dictates the price knowing full well, the pensioner needs the money for Aged Care placement! We have researched in preparation for the inevitable. Why not target ALL our politicians on the federal level, working less hours, with their generous allowances & benefits, along with their overly generous retirement packages, plus, savings & investments mostly in TRUST accounts?!

      1 REPLY
      • In the last seven years we have had to find old age housing for my mum and both of my in laws (all at different stages). We haven’t had to go on any ‘waiting’ list nor apply any ‘bond’ even though my mother and father in law owned their own home. It depends on what type of aged care facility you are after. There are pension funded homes and ‘private’ funded homes so the choice is yours.

    • Sorry, Lorriane Moshing I forgot to write ~RE HEAT ~ ALL houses and work places are air conditioned here. even the housing commission ones.
      Shops and schools are air conditioned.
      Our brief winter however is freezing lol
      Minus 7 is the record 🙂

    • Your house is only worth millions if you sell it. If you live in it in retirement it’s not an asset it’s security and shouldn’t be classed as an asset.

  2. No. There has to be some benefit for contributing a life of hard work that has resulted in a comfortable retirement. Definitely you should not be penalised for being a contributing citizen. It’s time the government rewarded a life well lived instead of making excuses for those who chose not to plan ahead

  3. What about their rule that your property can’t be on more than 2 acres I think it is or you can’t get the pension?

    3 REPLY
    • I am not sure that is correct, someone here will know but how do farmers get on? I have a friend that is on a 20 acre property that gets the pension

    • Yvonne I still haven’t found out but I rang my friend they are on 20 acres of undeveloped bush land out in the that may be the reason they get the pension

  4. No way we have worked hard for what we have. And gone with out to do it I have worked till I was 69 and like you all paid my taxes.

  5. Not if it is their place of residence, def not! But if they get an income from it then yes !

    6 REPLY
    • Why ??? If I don’t live in the family home . I should not get a pension . ?
      It is still something you worked hard for, it is yours , you paid for it while supporting the rest of the country also . Why should you be penalized ?

    • To Carolyn Brown if you don’t live in it then you are earning an income from it so therefore you would be mean tested just like anyone else earning even a menial income. You have probably worked hard but so have others where their cards just didn’t fall as well as yours did !

  6. It is a user pays system and who ever has contributed is entitled to collect. You can not persecute the people who have worked hard. Dont become like N.Z. and give every thing to the dead beats who have never contributed to any thing in their whole llives and then hold their hands out and DEMAND more.

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