Calls have mounted for an urgent review into an amendment to the age pension that will, according to new research, strip many Australian couples of their hard-earned retirement wealth.
After the release of “really quite disturbing” statistics earlier this week, a spokeswoman for the nation’s foremost lobby for seniors joined growing calls for the government to review its “mistake”, warning that many couples will be “astounded” by its harmful impact.
“It’s going to hit people for six,” National Seniors chief advocate Sarah Saunders told The New Daily. “Now that we’re going closer to that 2017 deadline, people are starting to realise what it’s actually going to mean for them.”
Ms Saunders said the impact of the policy was so “wrong” it must surely have been made in error.
“We want a review because we think the levels are wrong. I think someone’s made a mistake,” she said.
“They need to adjust them because the result is that people who have saved will be living off, in this low interest rate environment, less than someone who is on the full age pension, so that can’t be right. You can’t penalise people for saving for their retirement.”
From 1 January 2017, the asset threshold will increase from $286,500 to $375,000 for homeowners. But once a couple exceeds that threshold, the couple will lose $3 a fortnight for every $1000 of assets over the threshold, up from the current taper rate of $1.50.
National Seniors would be “very happy” if the government, at the very least, shifted the taper rate from $3 down to a more manageable $2, Ms Saunders said.
The new asset test
Many other concerned groups have called for reform. Labor shadow social services minister Jenny Macklin told The New Daily on Wednesday that the changes should be reviewed.
“Labor opposed these changes because we understood that they would adversely impact people’s retirement incomes,” Ms Macklin said.
“We believe a review of the changes is needed, to examine whether the pension assets test is interacting effectively with the superannuation system, so together they can provide an adequate income for Australians in retirement.”
The Australian Institute of Superannuation Trustees (AIST) has also called for a review, and Industry Super Australia says the new assets test should be reversed.
The new test was legislated in 2015 with the help of the Greens.
Greens senator Rachel Siewert told The New Daily that the party stands by the changes, and will not be pushing for a review “at this stage”.
“The changes to the pension asset test mean more Australians who don’t have the advantage of a healthy super or assets balance are able to access a full or part pension. Before the changes, the pensions asset test allowed couples with as much as $1.1 million dollars in assets on top of the family home to qualify for a part pension,” Senator Siewert said.
“Thanks to the changes, where people are living more modestly, we understand that in the first instance 50,000 people will move onto the full pension. This redistribution of how the pension is delivered, where people with high assets as well as a family home have reduced support so people with less get an increase, is supported by Council of the Ageing, Uniting Care and ACOSS. They are positive changes.”
A spokesperson for Treasurer Scott Morrison, who as social services minister introduced the changes to Parliament in 2015, said the new assets test “will make the pension system fairer, better targeted and sustainable into the future”.
“More than 90 per cent of pensioners will either be better off, or have no change to their pension under the measure. There will be no change to the existing assets test exemption for the family home and the changes include an increase in the assets test free areas that will provide additional assistance to about 170,000 part rate pensioners with modest assets,” the spokesperson said.
“Only people with significant levels of assets other than their home will have their pension reduced. The change recognises that they have greater capacity to support themselves.”
* The New Daily is owned by industry super funds.