Post by Banjo on Jun 3, 2016 7:46:59 GMT 7
Pension changes: Coalition warned of 'red hot' anger
National Seniors chief says upcoming alterations to assets test is causing more concern than superannuation changes
A major seniors’ lobby group has warned the Coalition there is “red hot” anger over changes that will push 100,000 people off the aged pension and said seniors would rally during the election campaign.
Michael O’Neill, the chief executive of National Seniors, said the changes to the pension assets test in the 2015 budget – due to start on 1 January – were causing much more concern than superannuation changes in the 2016 budget.
“The level of anger for people who are impacted is red hot, no doubt about that at all,” O’Neill told the ABC.
Asked if it would be a vote changer, O’Neill said that for some people: “There’s no doubt it will be.”
“Combined with the changes that are proposed in superannuation, what we have seen created is great uncertainty – I think a lot of confusion – and prospects of reform being less than acceptable,” he said.
From January, singles with savings and assets of more than $547,000 (excluding the family home) will lose the aged pension while couples with savings and assets of $823,000 will lose the pension.
O’Neill said his group would be sending out scorecards to seniors to encourage them to engage with their local candidates over pensions, superannuation and other policies affecting seniors.
National seniors will also run a series of candidate forums from next week to apply pressure to the major parties over the issues.
The policy passed parliament last year with the support of the Greens, under the then social services minister Scott Morrison.
The Australian Council of Social Services supported the changes at the time and its chief executive officer, Cassandra Goldie, said if the assets test did not change, future governments could not fund essential services for older people such as health and aged care.
“The main purpose of the pension is to prevent poverty,” Goldie said. “The 2015 budget changes to the pension assets test were fair and reasonable, better targeting financial support to people at risk of poverty.
“The pension assets test was loosened during the boom years, extending the pension to people who did not really need it, with the result that couples with assets of over half a million dollars apart from the home were eligible for pensions.”
But O’Neill said the long-term effect of the pension changes over 10 years was that people on average incomes – about $63,000 a year – would be adversely affected.
“We have disincentives being created at the moment,” O’Neill said. “Perhaps the most perverse of them is that people who have saved all their lives, who have put money away in superannuation will end up being on less income than the pension.
“And a further perverse outcome and this is quite strange in the context of housing is that financial advisers quite rightly are telling people, reduce your surplus income, put it into your house, invest further in the family home – which is quite a perverse outcome to encourage, given it simply locks up capital.”
A spokeswoman for the social services minister, Christian Porter, said under the new system more than 170,000 pensioners with only modest levels of assets would have their pensions increased by about $30 a fortnight from January 2017.
The spokeswoman said the changes at the lower end of the income scale meant 50,000 part-pensioners would qualify for a full pension, leaving 90% of pensioners better off or with no change.
“The small number of pension recipients who will be effected are those most able to afford the change,” the spokeswoman said. “For instance, under the old rules, a couple with a multimillion-dollar home and more than $1.1m in the bank was entitled to a part-pension.
“The purpose of the Coalition policy is to make a fairer system under which a couple with a multimillion-dollar home can only possess additional assets of around $820,000 before access to the part-pension is affected.”
Labor has said it would not reverse the changes owing to the budget situation but would examine the “disincentives” identified under the new policy.
O’Neill said he had not seen the level of outrage over superannuation policy despite several reports that Coalition MPs had experienced anger in their electorates.
The Coalition superannuation policy places a $500,000 lifetime cap on non-concessional superannuation contributions backdated to 2007, increases the concessional tax rate on asset earnings from 0% to 15% for people aged 56-65 in the “transition to retirement” and taxes accounts of more than $1.6m at 15%.
While the cabinet secretary, Arthur Sinodinos, raised the prospect of some changes to the superannuation policy on Wednesday, the prime minister stood by his policy on Thursday. He said Sinodinos was only referring to the consultations about the details of the draft legislation.
“If you have someone who has $10m in their superannuation account in retirement, currently they are not paying any tax at all on the earnings from that,” Malcolm Turnbull said.
“Under our changes, they will have no tax on the earnings of $1.6m and on the balance they will pay 15%, right?
“Fifteen per cent remains a very concessional tax rate. That is less tax than a kid pays on his marginal income stacking shelves at Woolies. Let’s get real about this.”
Labor’s superannuation policy would also increase tax on contributions from 15% to 30% for people earning more than $250,000 and would tax superannuation earnings above $75,000 a year at 15%. Labor claims this would affect about 60,000 superannuation account holders with superannuation balances in excess of $1.5m.
The Greens have a sliding scale for superannuation tax, which starts at zero cents in the dollar for those earning less than $19,401, increasing to 32 cents for those on $180,001 or more.
www.theguardian.com/australia-news/2016/jun/02/pension-changes-coalition-warned-of-red-hot-anger-election
National Seniors chief says upcoming alterations to assets test is causing more concern than superannuation changes
A major seniors’ lobby group has warned the Coalition there is “red hot” anger over changes that will push 100,000 people off the aged pension and said seniors would rally during the election campaign.
Michael O’Neill, the chief executive of National Seniors, said the changes to the pension assets test in the 2015 budget – due to start on 1 January – were causing much more concern than superannuation changes in the 2016 budget.
“The level of anger for people who are impacted is red hot, no doubt about that at all,” O’Neill told the ABC.
Asked if it would be a vote changer, O’Neill said that for some people: “There’s no doubt it will be.”
“Combined with the changes that are proposed in superannuation, what we have seen created is great uncertainty – I think a lot of confusion – and prospects of reform being less than acceptable,” he said.
From January, singles with savings and assets of more than $547,000 (excluding the family home) will lose the aged pension while couples with savings and assets of $823,000 will lose the pension.
O’Neill said his group would be sending out scorecards to seniors to encourage them to engage with their local candidates over pensions, superannuation and other policies affecting seniors.
National seniors will also run a series of candidate forums from next week to apply pressure to the major parties over the issues.
The policy passed parliament last year with the support of the Greens, under the then social services minister Scott Morrison.
The Australian Council of Social Services supported the changes at the time and its chief executive officer, Cassandra Goldie, said if the assets test did not change, future governments could not fund essential services for older people such as health and aged care.
“The main purpose of the pension is to prevent poverty,” Goldie said. “The 2015 budget changes to the pension assets test were fair and reasonable, better targeting financial support to people at risk of poverty.
“The pension assets test was loosened during the boom years, extending the pension to people who did not really need it, with the result that couples with assets of over half a million dollars apart from the home were eligible for pensions.”
But O’Neill said the long-term effect of the pension changes over 10 years was that people on average incomes – about $63,000 a year – would be adversely affected.
“We have disincentives being created at the moment,” O’Neill said. “Perhaps the most perverse of them is that people who have saved all their lives, who have put money away in superannuation will end up being on less income than the pension.
“And a further perverse outcome and this is quite strange in the context of housing is that financial advisers quite rightly are telling people, reduce your surplus income, put it into your house, invest further in the family home – which is quite a perverse outcome to encourage, given it simply locks up capital.”
A spokeswoman for the social services minister, Christian Porter, said under the new system more than 170,000 pensioners with only modest levels of assets would have their pensions increased by about $30 a fortnight from January 2017.
The spokeswoman said the changes at the lower end of the income scale meant 50,000 part-pensioners would qualify for a full pension, leaving 90% of pensioners better off or with no change.
“The small number of pension recipients who will be effected are those most able to afford the change,” the spokeswoman said. “For instance, under the old rules, a couple with a multimillion-dollar home and more than $1.1m in the bank was entitled to a part-pension.
“The purpose of the Coalition policy is to make a fairer system under which a couple with a multimillion-dollar home can only possess additional assets of around $820,000 before access to the part-pension is affected.”
Labor has said it would not reverse the changes owing to the budget situation but would examine the “disincentives” identified under the new policy.
O’Neill said he had not seen the level of outrage over superannuation policy despite several reports that Coalition MPs had experienced anger in their electorates.
The Coalition superannuation policy places a $500,000 lifetime cap on non-concessional superannuation contributions backdated to 2007, increases the concessional tax rate on asset earnings from 0% to 15% for people aged 56-65 in the “transition to retirement” and taxes accounts of more than $1.6m at 15%.
While the cabinet secretary, Arthur Sinodinos, raised the prospect of some changes to the superannuation policy on Wednesday, the prime minister stood by his policy on Thursday. He said Sinodinos was only referring to the consultations about the details of the draft legislation.
“If you have someone who has $10m in their superannuation account in retirement, currently they are not paying any tax at all on the earnings from that,” Malcolm Turnbull said.
“Under our changes, they will have no tax on the earnings of $1.6m and on the balance they will pay 15%, right?
“Fifteen per cent remains a very concessional tax rate. That is less tax than a kid pays on his marginal income stacking shelves at Woolies. Let’s get real about this.”
Labor’s superannuation policy would also increase tax on contributions from 15% to 30% for people earning more than $250,000 and would tax superannuation earnings above $75,000 a year at 15%. Labor claims this would affect about 60,000 superannuation account holders with superannuation balances in excess of $1.5m.
The Greens have a sliding scale for superannuation tax, which starts at zero cents in the dollar for those earning less than $19,401, increasing to 32 cents for those on $180,001 or more.
www.theguardian.com/australia-news/2016/jun/02/pension-changes-coalition-warned-of-red-hot-anger-election