Retired, Equity a plenty, Living off the pension.

Myself I think something like the assets isn't included if the house is 2 or 3x the median house price for the city and if it does make the bench mark it is the excess part used (e.g. 500k = 1.5M not included but house is worth 2M so 500k goes into their calculations).

I don't think we should make people draw the equity out of their own home to get welfare, these people worked hard, paid taxes, paid rates and everything else and now they have to draw down their house just to live compared to someone who never invested into their future. We are rewarding the wrong behavior... If you go down the path of you need to draw down your own funds to live then there should be no pension for anyone, otherwise how will you encourage people to invest in their future?

Remember these people played by the rules that were around at their time and now you want to change the goal posts when they are less flexible to accommodate. My grandmother lives at home (her house is worth maybe 350k) and she is fighting fit, she doesn't want to move as she knows where everything is, where to get her bread from, where to get her coffee from etc and her social network including neighbours all look out for each other.

 

I sincerely doubt your sincere doubt.

Nothing's cheap when the govt is paying. There are around 2.5m aged pensioners in Australia (you have to add in disability pensioners to be fair). So around 3m in total. How many own a home? 2/3's? Probably more. How many pensioners in a home? 1.75 pensioners per home to be generous. So somewhere around 1.1m+ homes would need to be valued every 3-4 years.

How many pensioners homes are worth double the median. Not many. It's from clear that your proposal would save money.

 

maybe it isnt double then, maybe it's 50%. i read that as of 18 months ago about half the people claiming pension had homes worth over 500k. with the growth in melb and syd its arguably higher now.

it is clear something needs to be done. alternatively i guess we could just not try at all and say it's too hard like you appear to be advocating.

more of the same pls, it's clearly working when around 11% of the entire govt budget is spent on old age pension and it jumps up to over 15% when you add in carers pension etc.

no wonder there is a budget issue in this country

just in pension +carers pension alone it pretty eats up the entire country's company tax collections and more than the entire yearly GST tax take for the whole country.

 

You have to remember, people with an expensive PPOR on the pension arent just taking from current tax payers who may or may not have a home themselves.
They are also taking from other pensioners, often ones who could really use the extra money.

The broader the application of the pension, the more expensive it is and as a result the more basic it needs to be.

As Australia go's through demographic change we are starting to see the strain this puts on the budget.
As a result the government is having to lower the rate of indexation to make it still affordable. This is only going to get worse.

I think ultimately we are going to have to go down the path of people choosing to reverse mortgage or down size else we probably will end up with a death/estate tax.

In saying that I am starting to become more 'pro' an estate tax. Who wouldnt prefer to pay tax after you die so you can pay less as you go along?

 

your right Sanj - the home is exempt and it appears it doesn't matter how much it is worth, it will still be exempt.

I think there may have been talk about changing this but it doesn't appear to have happened.

 

I like the idea of a reverse mortgage but with interest rates capped at the Centrelink deeming rates.
Stops these blood hungry organisations from creating a product that prey on the poorer elderly.

 

To me with an ageing population and a budget that always seems to be in deficit, it is hard to justify paying the pension to anyone at retirement age with net assets over $1 m (ppor or otherwise).

I think we have a severely distorted welfare system in the this country, it should be reserved for those most in need, and then only what is required for survival.

On the flip side the government should keep its hands out of the pockets of these individuals, theyve worked hard to get there, dont deserve to be taxed after they die/forced into a reverse mortgage etc, just asset test and withhold the pension from those who don't really need it. If this were the rule then people would just factor it into their retirement planning.

Mic drop, Rant over.

 

That would be far more likely to save the budget some money.

So?

$500k get's you an average house in most capitals, a below average house in Melb and a way below average house in Syd.

You believe it's clear that something needs to be done.

Done about what? 'Millionaires' receiving the state pension or the amount the country is spending on pension welfare? There are only 4 countries in the OECD that spend less on pension welfare than Australia. Even the USA spends nearly double what we do. Half of all OECD countries spend at least double what we do.

85% of the entire govt budget is not spent on old age pension. Looks like a much larger/easier/better target for savings.

'emergency' or 'crisis'. Using the word 'issue' will not whip up the frenzy you're looking for.

 

Reverse mortgages seem the logical direction to go IMO.

We (the hands UP crowd) work and save/invest all our lives to provide a good lifestyle both along the way and into retirement, and one of those strategies is the ownership of a house that we know goes up in values over the longer haul.

Therefore; we are all going to be sitting on a decent amount of wealth under our feet, so it makes sense that we can tap into that to fund our retirement, lessen the burden on the Gubb, no need to move out of the home as an elderly person/couple, etc.

I think a threshold should be in place though - start at $1m

 

I respect your opinion but disagree with them all.

Person A - Never buys a house, lives off centrelink, never does anything to improve their situation and then gets to 60 and gets the pension.

Person B - Buys a house that was 50k in the working class suburb back 40 years ago and today it is worth 1M. This person worked every day and paid taxes, never claimed the dole but had contributed to society.

Person C - Bought a house, started a business, grew the business employed 5 staff members sold their house and bought a bigger home and today the house is worth 1.5M in Sydney and they sold the business. This person had again paid tax, also had paid company tax, payroll tax and all the other taxes with them.

Person D - Bought a house, drew out the equity, bought an IP, drew equity again, bought more IPs. Ended up with a house worth 1.5M and 5 properties worth combined 2.5M.

Person E - Bought a house went into business was in business for 40 years until one day it crashed and they ended up bankrupt now have zero assets.

Person F - Worked as a self employed, earned fantastic dollars (100k+) but never paid anything into super and rented their whole life (I know numerous people in this situation).

Person G - Worked as a self employed, earned fantastic dollars (100k+) but never paid anything into super and bought a house.

In this I would be happy (to different degrees) to give B C D E F and G the pension but not A who did nothing with their life but sponge off the tax payers. In the current setup B C E F G and A get the pension yet C had taken a lot of risks in their life. In including the home or reverse mortgage B D G are worse off even though they contributed and tried to give themselves a better life.

I understand we need a safety net but you cannot always keep asking for Pete to pay for Paul. If you make Pete draw down his house cause he sacrificed saving and took risk buying a property and the associated costs with it what incentive was there for Pete to buy a house to begin with, why shouldn't everyone sell everything and take the cash out and get the pension.

I would prefer a pension where you get minimum and a % of the tax you had paid, however that will never happen as the cost in setting and monitoring it is just stupid. So I am okay with the PPOR not being included but would like it to be capped at 2x or 3x the median house price for the city it is located in.

We have to remember super has been around since 1983 for ALL Australians, that is 36 years.. So if you started when you were 20 and you have worked all this time you are 56 years old and have had 36 years of super. I know that super was different to today but there are numerous threads where people have either zero super or next to none (sorry if this strikes a chord) and are less than 5 years away from when you want to retire (60).

As a blanket pretty much anyone who has been working and looking at retiring has had 36 years of super benefits, if you have nothing there it is your fault not the governments. I do understand that people had medical expenses (there is insurance for this) and sometimes life throws curve balls and for those people I believe should get the pension but the others who spent their super (which was allowed back in the days) why should I (person who is 30) have to pay for you to have an even better life when you spent your future money?

Ideally I would prefer every person over the age of 60 to receive the pension and it not be classified as part of income tax. Then any super, shares, IP, cash, businesses whatever else is a bonus for your hard work and making a difference. Will this happen? I highly doubt it as lefties will call it 'unfair'. I think it is fair as the person who is having a better lifestyle earned it.

rant over.

TLDR - Everyone should get the pension in my opinion regardless of their assets/income and if someone has 200k in passive income and 10M in assets that is great they worked hard and paid tax on everything through their life so they should have a better life than someone who didn't contribute to society.

 

@Big Will - Thank you!
Could not have said it better!

I'll also add, these elderly never asked or imagined their house would be worth so much in the future. But frankly, some just don't care. They love where they live, they love their house, even if its falling apart - every piece of the house has a memory that means something to that person.

 

and they're perfectly entitled to those feelings but if they want to collect a pension on top then i feel in the future there has to be some sort of compensation or delayed payment to the taxpayer to make up for this.

otherwise where does it end? im sure plenty of the homeless or low income or people on disability would also love to do something that would mean lots to them, should the govt pick up that tab too?

every pensioner out there who is capable of funding their retirement (be it through reverse mortgage or estate tax or whatever metric works out to be the best) but doesnt is taking funds away from people who need it more.

we live in a country with finite resources which means they have to be deployed as wisely and fairly as possible and no one is suggesting kicking well off pensioners out of their homes now, whidh i agree would be harsh.

 

We are retired, fully self funded and don't get a cent from the Government. Can't even get the senior health care card. (We do get a state govt concession on car rego and electricity and half price public transport.)

However, if we were so inclined, we could sell our PPOR, cash in our investments and buy a multi million dollar PPOR, keeping back just enough to meet the income and asset cut-off amounts.

Then go straight on to the full pension. With all entitlements.
Marg

 

fine sentiment, as someone who has paid a bucketload in taxes of all kinds, never claimed a cent in any of family bonus, kids bonus, childcare rebate, unemployment benefit etc id be lying if a small part of me didnt feel the same way as you but just answer this 1 question:

- how would the government afford giving every single person the pension? where would it find another more than $10bn per year based on current population of retirees? where would it find another $50-60bn per year (in todays dollars) when the % of people over 65 in this country doubles in the future?

If you can find an extra $60bn in the budget lying around someone and can justify it being spent here vs elsewhere in the country then they might need to hire you to work for treasury

 

everyone should get $300pw. Get rid of all other pensions, allowances, newstart, concessions, centrelink, baby bonus, family tax benefits and the whole apparatuses that administer them.

If there is then a shortfall, tax every rate able property, resi, PPOR, commercial industrial etc like council rates we pay now. Remove tax concessions on negative gearing and super while your at it.

the rich can upgrade their golf memberships, artists can afford paint AND food, retired people can stay at home if they want or travel Australia. The tele and the sun will find something else to write about.

 

This is why it wont happen but people saying people should sell their homes to fund their retirement isn't going to solve the problem.

There is always going to need to be a safety net (I understand this) but I think we can make changes to the dole. As I have a number of friends (I guess you can call them that) that have no intentions of working.

Currently the dole is $527.60 p/f, as we understand the first time you need this will probably be the hardest adjustment to for people. I would be happy that you receive 110% of the dole ($580.36) for the first year and then after 12 months of receiving it you drop down to 100% (527.60) after 2 years you are now on 90% (474.84) and so on down to maybe 50% $263.80.

However each year you are employed you receive back a further 10% to the cap of 110%.

Again this will not be approved as when someone is getting 263.8 pf some people would rather resort to crime.

I am also up for removing all income tax and instead change GST to 15 or 20%, this wouldn't stop cashie jobs but at least you will still get tax from them when they spend their money. Plus another advantage is that people from overseas can also help contribute.

So there are 3 ways I have improved revenue the other way is cut the pension rate for people who are 60 or below (as in when someone who is 58 turns 60 in 2 years).. This wont win an election on this but cutting the pension down to 100% of the new start (saving $267.2 pf per single). The 'shortfall' should be made up by people with their super contributions (if your super grows at 5% you would only need $278k in super (7k p.a contribution without any gains over 40 years).... Btw my calcs were making $267 p.w as to avoid any issues with drawing into your capital. If you did it as a p/f you and were okay to maybe eat into the capitial then we are talking about 3.5k p.a for 40 years (without including any gains)... I think this is doable by everyone if they actually worked.. FYI 3.5k contributions at 7% super contribution (Super cont are higher than this but were lower to begin with) would mean anyone on 50k a year.

If you didn't use super (or spent the super) over the last nearly 40 years you will not have a great retirement compared to someone who made the sacrifices. However if you paid off your home (even if it is 3M in value) you will most likely have an okay life (remember the new start person still needs to pay rent.

I guess lucky I am not PM However that I feel is a fair solution as a single person can live off the dole why cant a pensioner who didn't look after their financial future?

 

I think a funny thing is if you went to a lot of the elderly in this position they would;

A - Have no idea the value they are sitting on unless told by their family.
B - If shown how tough some other elderly are doing it would probably be more than happy to sell up if it meant it could help others.

 

i dont disagree with you re A but that shows how backwards we are as a country sometimes. imagine not knowing, wanting to know or needing to know how much your house is worth because you get paid by the government anyway? it'a not like living on the pension is a lavish life either, many would have no idea that they actually could live a lot more comfortably by downsizing and still live in a nice property in the area they like

 

Do you understand that a large percentage of those who never own a house - forget about whether they are on Centrelink or not - have a disability or impairment of some kind or other? Does someone who is mentally impaired, and has tried to get work for their life but cannot, count in your "I wouldn't give them the pension"? What about those who are carers for someone with PTSD or cancer who don't own a house now? Do you think all these people like their condition?

Sure, there are some people who simply like to go surfing all the time. I get that. But I don't believe - and the stats are there if you look - that the majority are like that.

It gets my blood up that people imagine everyone is able to get job that leads them to investment or superannuation, saving or even just living! There are people who cannot ever get what we would consider a job in our society. Everyone doesn't have your mental faculties to even think like that.

rant over.


But going back to the original purpose - retired, equity a plenty, living off the pension - then I agree there should be community discussion around means testing or not. Last time, IIRC, the decision was not to means test. Perhaps the time is ripe to ask the community again.

 

I worked until I was 68 but do not qualify for any government pension. I have friends who have never worked but get full pension and all its benefits, discounted phone, car reg, etc. I had accumulated IPs by scrimping and saving, so when I finally retired I had to sell some to be able to live off the rents of the remaining IPs. I paid an enormous amount in CGT as I had purchased the IPs many years ago in preparation for old age.

I can come and go as I like, I travel, go to a gym of my choice, purchased a beach house. I think I prefer my way of living, than answering to the government for a pension.

On the other hand, had I remained in the UK, like my sisters and kept working until I was 68, I would have received the pension, as I paid "stamps" as they were called which means no matter what your income you receive the pension. In other words its a type of superannuation which everyone gets.