What the Budget means for FiftyUps
What the Budget means for FiftyUps
Everyone else is giving their verdict on the Budget today, so it’s important us older Australians get a word in edgeways – especially since issues around retirement planning have been, and will remain, a key battleground.
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So… what was there in it for you? It largely depends on your age, income and assets but there are key changes to pension eligibility and incentives to keep older Aussies in w
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Much of this we knew before Tuesday night, due to planned ‘leaks’, but now the political horse-trading begins meaning it’s even more important to know where your interests lie.
Cost of Living
The Treasurer seemed to take credit for the cost of living falling, due to somewhat cheaper electricity post the carbon tax and lower mortgage rates thanks to the Reserve Bank. He also told the ABC “petrol is cheaper than it has been”.
I’m sure a few self-funded retirees, suffering from still-very high energy and petrol bills and hit by ever lower interest rates on bank deposits, might beg to differ.
Pensions.
Joe Hockey sought to inspire some confidence on retirement incomes.
“I want to reassure all Australian workers that they can have confidence in their retirement plans under this government. There will be no new taxes on superannuation under this government, and their age pension will continue to increase twice a year this year and every year at the highest available index rate,” he said last night.
“These measures are all intended to provide security and and certainty for older australians in the years ahead.”
The key ‘benefit’ to all pensioners is the dropping of plans to reduce the rate at which they were indexed. It never happened but generated plenty of fear and anger.
Despite fears of cuts to the Pensioner Concession Card, which delivers much-appreciated discounts on public transport, utilities, medicines and GPs, it has also been quarantined from changes.
So those who might lose access to the pension with the new assets test and still have the card will keep it.
But the real meat of the changes for older Australians involved tightening the pensions assets test, to keep the pension – more than 10% of government spending – sustainable and affordable.
The new thresholds to the pension-asset test and changes to the taper rate will see 50,000 more of us get the full pension. In addition, 122,000 part-pensioners will get another $30 a fortnight.
But the $44 billion annual bill for the Age Pension bill has been cut by $2.4 billion and there are some losers who, while they may be portrayed as relatively well-off, will have complaints.
By the government’s own figures they include 91,000 who will lose the pension altogether and 235,000 who will find their pension reduced.
The changes have been largely greeted by seniors’ group but analysts have pointed out it brings uncertainty into the incentives to save for your retirement. Under the changes some people who’ve saved more will end up worse off than those who’ve saved less.
In simple terms, as outlined by Andrew Main in Tuesday’s The Australian a home-owning couple, with assets outside the house worth less than $600,000, get a higher income than an otherwise similar couple with assets worth between $650,000- $1.1million.
He says the changes to the taper rate would leave a couple with $800,000 of assets about $12,000 a year worse off.
The argument around who gets what in the pension will continue, and that means over-50s will continue to feel insecure.
Work
The incentives for employers to engage older workers are to be overhauled with faster access to a $10,000 subsidy for hiring new workers aged over 50.
The program called Restart is meant to make it easier for older workers to get jobs. The Treasurer said the changes were designed to make the subsidies more available when and where they were needed.
You have to wonder whether the scheme is not working, given it’s only a year old.
There will also be a scheme to offer better training for older workers to find work instead of relying on benefits, which the FiftyUp Club has been calling for over a year. Read more about Seniors concerned about job competition here.
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