The proposed changes to the pension put forward by the Liberal Budget last month are expected to be passed in the senate later this year. With support from The Greens and the Labor Party, it would seem that all sides of politics are in support of them.
The changes proposed to disqualify couples with more than $823,000 in assets (excluding the family home) from the pension. The current threshold is $1.15 million. Social Services Minister Scott Morrison said that people affected by the changes would be able to maintain their current payment levels by drawing down “less than 1.84% on their additional assets”.
However, during a Senate estimates hearing last night, a Social Services Department Advisor Andrew Whitecross said that doing this could leave pensioners worse off.
According to The New Daily he said, “The commentary has tended to suggest that would be an obvious thing to do”.
“But that’s not really the case, because they would actually be denying themselves resources which they could be using to support themselves in their retirement, and as a result they’d have a lower standard of living”. he continued.
Essentially, trying to keep pension eligibility by selling off personal assets would mean that pensioners risk facing a much lower standard of living – often an unnecessary part of retirement.
One of the key motivators for retaining some assets while receiving the pension is to ensure inherited wealth for future generations. However, is that really worth having a lower standard of living for?
Tell us today, would you rather receive a pension or live on your own wealth in retirement? Is having wealth to pass down to your children important to you or would you rather ensure you have a comfortable standard of living? Share your thoughts in the comments below…
The proposed changes to the pension in 2015 include:
- The asset tests are tightened. The assets-free threshold increased (to qualify for full pension) from $202,000 to $250,000 for single home owners and from $286,500 to $375,000 for couple home owners.
- Asset taper rates are changed from $1.50 to $3 per fortnight.
- The threshold for pensioners who do not own their home will increase to $200,000.
- The maximum value of assets to quality for a part pension will reduce. The part pension will not be available to around 80,000 people after they reduce the asset threshold (excluding home ownership) from $1.15 million to $820,000 for couples and from $775,000 to $550,000 for singles.
- Those who qualify for the part-pension under the new rules with “modest” assets will receive a small increase to the pension.
- Pension increases will remain aligned with indexation and not inflation.