Government changes put retirement burden on individuals
Where possible, Australians must be prepared to fund their own retirement.
Or at least that the perceived message of the changes to pension and aged care rules introduced in 2015 by the Abbott-Turnbull governments, involving a significant withdrawal of government subsidies for older Australians.
The burden of retirees on the public purse is trying to be lessened by changes to mean testing for the age pension, eligibility for the Commonwealth Seniors Health Card (CSHC) and the treatment of account-based pensions.
"The government is pushing retirees to use their own capital to fund their retirement," said Natasha Panagis, technical specialist at advice business Strategy Steps.
The most controversial of these measures has to be the scaling back transfers to older Australians is the more stringent means testing of the age pension and the extent to which part pension payments are affected by additional savings. Under the new regime which comes into force in January 2017:
- The threshold for a part pension for couples who own their home will fall to $820,000 from $1.1 million.
- For singles who are homeowners, the threshold will fall from $775,000 to $547,000.
As a result of these new measures, the government estimates roughly 91,000 people will no longer qualify for a part pension, and another 235,000 Australians will have pension payments reduced.
Combined, the measures are expected to save the government $2.4 billion between now and 2019.
The squeeze from the government on older Aussies doesn’t stop there.
From January this year, non-taxable superannuation income was included in the means testing for the CSHC, making it far more difficult for older Australians to qualify for the card, which provides discounts on prescription medicines, concessional rail travel on some lines and, depending on the state, extra health, education and recreation concessions.
In a move designed to keep workers employed for longer, the age at which individuals can access their super savings rose to 56 from 55 this year – and will continue to rise in future years.
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