National Seniors calls for action on taper rate

'Taper trap' targeting savings of older Australians: National Seniors

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Peak advocacy group says current taper rate is a disincentive for people who try to put away more for their retirement.

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SENIORS advocates are calling for an end to what it calls a "ludicrous trap", which sees people who save more, earning less in retirement by as much as $1000 a month.

Peak advocacy organisation for older Australians, National Seniors, is calling on the government to lower the taper rate.

This is used to gradually reduce the age pension for retirees, with assets over a certain amount, not including the family home.

In 2017 the rate doubled from $1.50 to $3.00 per $1,000 of assets above the threshold.

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The threshold is $394,500 in assets for a couple with a home and $263,250 for a single pensioner with a home.

National Seniors chief advocate, Ian Henschke, said the current rate penalises older Australians who save more for their retirement.

"It's the taper trap targeting the savings of older Australians," Mr Henschke said. "It acts as a disincentive for people who try to put away more for their retirement."

"Someone who has saved twice as much as a retiree on a full pension, can be $1,000 a month worse off because of the taper rate. How is that fair?"

"It's ludicrous and forces people who have put away money to spend it, so they stay under the threshold."

"Put simply, the higher the taper rate, the less pension you get."

"We know of situations where people will spend money renovating their home or going on overseas trips so they can still get a decent retirement income," he said.

Mr Henschke said the upcoming retirement income review is the perfect opportunity to lower the taper rate. "The taper rate is integral to the age pension and its interaction with superannuation."

National Seniors is also calling for an independent body to set the rate of the pension.

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