Raise Age Pension to 70?

[Banjo]

Raise pension age to 70 'or greying will cripple economy'

The Productivity Commission has suggested raising taxes, lifting the retirement age, and taking a slice of a pensioner's home to pay for Australia's ageing population.

The key Federal Government advisory body's latest research report warns of the rising financial strains of health and aged-care costs.

It says lifting the pension age to 70 would provide savings of around $150 billion over 50 years.

It warns the longevity of Australians has been underestimated and that taxes would need to rise 21 per cent unless steps are taken to pay for Australia's extra health and aged-care costs.

The pension age is already being raised from 65 to 67, but Productivity Commission chairman Peter Harris wants it lifted higher.

"We'd like to provide some better incentives for people to think about continuing to work, because an ageing population will cost us," he said.

"At the time we introduced the aged pension arrangement in 1900 or so, people had a reasonable expectation of about 13 years of retirement.

For a person born in 1986, now they have an expectation of a period outside work - which includes both a longer period of education but also primarily a longer period of retirement - of about 30 years."

However, Australian Council of Trade Unions (ACT) national secretary Ged Kearney said lifting the pension age is not the only solution.

"To just say you will raise the retirement age is, I think, very short sighted and way too simplistic," she said.

"It's ironic also that we are saying that if we don't raise the retirement age we're going to have to raise taxes at a time when the government has made a categorical decision not to tax super profits on mining."

National Seniors Australia chief executive officer Michael O'Neil says workplace ageism continues to be a problem for those in their late 50s and older.

"You can whistle dixie all you like about shifting to age 70," he said.

"At the moment, if you lose your job at 55 you are out of work for 72-plus weeks on average and that excludes the number of folk who are shifted onto the disability pension.

"You really are just sailing in the wind at suggestions of age 70 for the pension."

The group COTA Australia, which represents older people, says removing age discrimination in the workplace should be a priority.

"We don't think there's any one silver bullet, so we don't oppose it if it comes out of a consensus," chief executive Ian Yates said.

"If taxpayers as a whole want to pay significantly higher taxes we can have a more generous pension, we can have free health care, we can have free aged care.

"If the taxpayers don't then we have to work out what the users pay arrangements that we will have."

www.abc.net.au/news/2013-11-22/productivity-commission-recommends-raising-pension-age-to-70/5109630

[Deleted]

Hope this does not happen too soon
My Pension due in less than 2 years.
Hope it takes them that long to decide.
I might be luck, if they change after 1951
If before i will be Not Happy Jan.

[Banjo]

Government brushed off proposal to make Australians work until 70

UNIONS blasted proposals to raise the retirement age to 70, declaring it cruel to make "worn-out'' workers clean toilets or lug bricks.

A key government policy agency, the Productivity Commission, had proposed the retirement age be pushed from 65 to 70 to prevent a Baby Boomer blowout in aged care costs.

It suggested that manual workers go onto the disability pension if they are not fit enough to keep working until 70.

But the United Voice union, representing cleaners, childcare and aged care workers, said it was "criminal'' to make them work even longer.

"These are the people who clean our offices, clean shopping centres, clean 80 toilets an hour - you cannot expect a 69-year-old to keep doing that,'' national president Michael Crosby said.

"Their bodies just wear out.

"To push the pension age even further beyond their reach is just criminal.''

Mr Crosby said it would be demeaning to make worn-out workers apply for a disability pension.

"They're not unfit, they're old,'' he said.

"As far as they're concerned they've earned the pension - they've contributed their taxes.''

The Abbott government said it had "no plans" to raise the pension age, but would not elaborate on its reasons.

But bosses said it would be "sensible'' to make Australians stay in the workforce longer.

"Eligibility for the income-tested age pension is a disincentive to workforce participation,'' Australian Industry Group chief executive Innes Willox said.

He said older workers could be re-skilled, and the change phased in slowly.

The Australian Council of Trade Unions called on the government to cut superannuation tax breaks for high income earners, instead of making the poorest workers wait longer for an aged pension.

AN AGEING AUSTRALIA: PREPARING FOR THE FUTURE

"How can construction workers be expected to haul concrete around a work site or a childcare worker keep up with a room full of kids until they're 70?'' ACTU president Ged Kearney said yesterday.

The Combined Pensioners and Superannuants Association of NSW warned that raising the retirement age "will see grandmothers and grandfathers joining the dole queue.''

National Seniors chief executive Michael O'Neill said half the nation's disability support pensioners were older than 50.

"Currently, older Australians want to work but no one will hire them,'' he said.

"Raising the pension age without providing jobs will see older Australians merely shifted from one form of welfare to another.''

Age Discrimination Commissioner Susan Ryan said it would serve "no social or economic purpose'' to force more older Australians onto the dole queue.

Too many employers refused to hire the over-50s, she said, while insurance and workers' compensation schemes discourage the over-60s from staying in the workforce.

"Setting a long term target of increasing the age pension age to 70 makes economic sense for Australia, but such a change should only be considered when we have eliminated age discrimination from the workplace,'' Ms Ryan said.

At the age of 45, school cleaner Ana De Freitas is already feeling the wear and tear of hard work and cannot bear the thought of working another 25 years.

"I don't want to think about it - it's going to be terrible,'' she said.

"I have pains here and there - I can't carry the vacuum and the buckets properly, so it's hard to imagine 25 years more.

"For office people, it should be all right, but I think it's unfair for manual workers.''

Ms De Freitas, who migrated to Australia from Portugal in 1997, has worked as a cleaner at the Fort Street High School in Sydney for a decade.

Australia's pension age is already on track to increase to 67 years by 2023, while the "preservation age'' for accessing superannuation will jump from 55 to 60 years by 2024.

Taxpayers spent $36 billion last financial year on pensions for the nation's 2.4 million retirees, who receive $376 a week for singles or $567 a week for couples.

Two out of three Australians aged 65 or older rely on the aged pension.

www.couriermail.com.au/news/national/government-brushed-off-proposal-to-make-australians-work-until-70/story-fnihslxi-1226766363056

[scallywag]

He said older workers could be re-skilled, and the change phased in slowly.

What he probably meant to say is , there is a fortune to be made educating people that will never get a job.


You can teach an old dog new tricks but he will still get treated like a dog.

[zingzingzing]

100% agreed scallywag.

[Banjo]

Cut welfare to older Australians to balance the budget: report

The Australian Government should tighten the welfare system for older Australians, adding the family home to the assets test for the age pension and limiting tax concessions on superannuation contributions, argues a new report from the Grattan Institute.

The report, entitled “Balancing budgets: tough choices we need” also supports the Productivity Commission’s recent suggestion that the eligibility age for the age pension be lifted to 70, a suggestion hosed down by the government on Friday. The report’s authors argue the age for access to superannuation should also be lifted.

The Grattan Institute’s package of suggested reforms to help balance the budget also includes broadening the GST to include fresh food and private spending on health and education.

Report author John Daley said Australian governments must make tough choices now to balance the budget, rather than waiting for a crisis to act.

“It is not sustainabile to be running a budget deficit, which we have for the last 6 years, which every indication says will get worse,” Dr Daley said.

“We don’t have a budget emergency in the sense of flashing blue lights and cardiac arrest, but we do have a very substantial budgetary problem – we’re unfit, we’re overweight, we’re eating too much cheese and we all know where that ends.”

The Grattan Institute has calculated increasing the age of access for the age pension and superannuation, limiting tax concessions for superannuation, and including owner-occupied housing in the age pension assets test would collectively improve budget balances by A$27 billion a year.

“The issue that we’ve got is that our tax and welfare system, and that includes superannuation so far as it affects older people, is by and large age-based not needs-based,” Daley said.

“It essentially says if you are older we will give you welfare and tax breaks even if you don’t really need it.”

Current superannuation taxation arrangements mean workers over 60 pay substantially less income tax than younger workers with a similar income.

“Someone who’s 60 years old and on $75,000, more or less an average wage, pays about $5,000 less tax than a 30 year old with children on exactly the same wage,” Dr Daley said.

“It’s not clear to us that the 60 year old is so much more needy than the 30 year old.”

At present employees are only taxed at 15% for the first A$25,000 – or A$35,000 for those aged 59 and over – that they put into their superannuation account each year. The Grattan report suggests reducing these thresholds to A$10,000. It also suggests taxing superannuation earnings of those over 60 at 15%, as is currently the case for younger taxpayers. When combined, these measures would contribute A$9 billion a year to the budget.

Dr Daley said the original idea behind super was that it would promote intergenerational equity, encouraging one generation to save rather than putting a burden on the next generation.

“It’s become a device for transferring liability from the older generation to the younger generation, which is the precise opposite of what the entire system was designed for.”

Helen Hodgson, senior lecturer in taxation at UNSW agreed the super system wasn’t intended as a way for people to increase their super without paying any tax on it.

“We’re the only country in the OECD that uses the model of tax we do, which is concessional tax on earnings and tax exemptions for withdrawals by members over age 60. All of the other major economies apply tax when you withdraw it from the fund.”

Chris Lloyd, a statistician at the Melbourne Business School said it was debatable whether the current tax incentives made any difference to the amount saved by retirees.

“If people have a target amount in mind, then increasing tax or decreasing tax concessions might lead them to save at higher rates, or work for longer. It may have very little effect on the amount saved,” Professor Lloyd said.

“Reducing the threshold for the lower 15% contribution tax may lead to people putting more money into standard investments rather than superannuation. But there is no reason to assume their total savings would reduce.”

Dr Hodgson said the Grattan Institute recommendations would hit all groups of older Australians, including those on a full pension, part pension, or drawing down from their super to fund their retirement.

She said this would make implementing such a package of reform a political problem for the government.

“The number of older voters that are going to be voting on the government as Australia ages is growing. The skew to older voters will limit the government’s appetite for reform that’s going to hurt older people,” Dr Hodgson said.
Targeting the family home

The report’s authors say including owner-occupied housing in the calculation of a retiree’s eligibility for the age pension would contribute about A$7 billion a year to the budget, and encourage people to downsize to housing which may be better suited to their needs, enabling more efficient use of existing housing stock.

“There are a large number of people who are sitting on a million dollars worth of assets and yet almost all those people are collecting a part pension of over A$200 a week,” Dr Daley said.

“The problem with the super assets test is that it encourages people to live in houses that are more expensive than they necessarily want, because if they put all of their assets into their house then they collect a pension.

“The minute they sell the house they’re not going to collect their pension, so they stay there as long as they can. What this would do is unglue all of that.”

But Dr Hodgson said she did not agree with all of the reasoning in the report on this issue.

“For a lot of policy analysts owning your home is regarded as the fourth pillar of the retirement income system.”

She said removing the different treatment between home owners and non home owners would be problematic as renters generally needed more cash to live on.

The report recommended that people who fail the asset test due to the value of their houses be allowed to collect the pension. But this would be accumulated against the value of their homes, and be reclaimed when transferred or sold.

Judy Yates, a researcher in housing economics at the University of Sydney, said this would have a greater impact on income poor households than on income rich ones.

“I would prefer to see other solutions considered at least at the same time. One example could be removing the significant tax concessions on superannuation income for retirees,” she said.

“In the absence of an adequate supply of suitable, affordable down-size housing, it’s not obvious that older households will be able to down-size even if they choose to.”

“It’s important to consider the supply side as well if demand based solutions are to work. Down-sizers won’t move if there is nothing that meets their size, location and cost preferences,” Professor Yates said.

theconversation.com/cut-welfare-to-older-australians-to-balance-the-budget-report-20649