Seniors groups have stepped up calls for a retirement incomes review after a conservative think tank issued a report calling for the family home to be included in the pension assets test.
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The Centre for Independent Studies also urges the government to legislate for a default reverse mortgage product to support retirement incomes, with the resulting income to be deemed in the same way as income from financial assets.
The report says rent assistance for non home-owning pensioners should be increased, and the base rate of the pension increased but a tighter taper rate implemented. It says only 2 per cent of pensioners would be worse off if the changes were made.
Centre research fellow Simon Cowan said under current policy the average worker might be contributing more to other people’s pensions than they were saving towards their own retirement.
“Each generation is demanding the next generation pay more for their retirement than those workers were willing to pay the generation before,” Mr Cowan said. The report also says 25 per cent of pensioners are among the wealthiest 40 per cent of Australians, and that 40 per cent of workers have no superannuation left by the time they reach pension age.
While it says two-thirds of retirees leave the workforce early, it acknowledges only a third of those do so voluntarily. Council on the Ageing Australia chief executive Ian Yates said the report made some recommendations that should be considered in a comprehensive review.
However, “alarmist” claims about the impact of the pension on the budget’s bottom line were disappointing.
“The OECD’s 2015 Pensions at a Glance report shows that Australia’s pension system is sustainable over the long term, spending just 3.5 per cent of GDP on age pensions compared with the OECD average of 7.9 per cent,” he said.
“The OECD also recently found that one third of Australian pensioners are living below the poverty line, ranking the country among the worst for ensuring financial security for the elderly. “Again we see demonising of pensioners when our inequitable retirement system rewards the highest income earners with such generous superannuation tax concessions that they will soon have the same impact on the federal budget as the whole age pension.”
Mr Yates said the government had committed last year to making retirement incomes a part of the Tax White Paper review process, but “this seems to have derailed”, giving space for the public debate to rage without a framework for evidence-based discussion.
National Seniors chief executive Michael O’Neill described the Centre for Independent Studies report findings as divisive and inconsistent with international perspectives of the Australian system.
“For over a decade Australia’s retirement income system, now also bolstered by the $2 trillion superannuation industry, has been considered world class both in terms of its comprehensiveness and its sustainability,” he said. “The line this report runs is tired and, in pitting generations against each other, divisive.”
Mr O’Neill said the family home should not be sacrificed to budget shortfalls.
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NSW pensioner Peter Knox, 76, says drawing on the family home to fund retirement is not an option.
Mr Knox, who is president of the Combined Pensioners and Superannuants Association in Griffith, said he had been in his home for about 50 years and had worked since he was a teenager to fund it as rates and maintenance became increasingly expensive.
In regional areas like the Riverina, he said selling your home could mean a fast-track into aged care and out of your community.
“We need to stay in our homes for as long as we can,” he said.
“In Griffith there’s a shortage of nursing home beds and we have people who can’t get into a nursing home and have to go 100km away to Hillston or Narrandera, and there’s no public transport.”
He said it was also important for many older people to be able to leave their home to their children and grandchildren.
