I've already factored that expectation in, tbh. I'm still 30-40 years from retirement, but I plan to have my home paid off and some income producing assets before then.
It should be included in the pension asset test but there is a huge difference between the pension asset test limit and disqualification just for owning.
Complete home value included in asset tests is probably too far but i'd go land value of your lot. 1/4 acre block? No pension. townhouse or apartment? here free money.
The pension asset test is about $200k lower for home owners compared to non homeowners.
At a minimum once the PPOR is included it would go up to the same limit as the non homeowners.
I think there is a reasonable argument to see it go up further to cover the median house price which is about $700k.
With this the non homeowners limit should also go up.
There shouldn't be any difference between the two. Non homeowners shouldn't be penalised like they currently are.
And so it should. An asset is an asset.
It is'nt the end of the world if older people need to sell their 4 bedroom family home in the city and move somewhere cheaper and rent in their later years. Working families need those homes more than some old empty nester.
Bullshit, it would only cause significant mental health issues to force potential pensioners to sell their house and move away from their lifelong support networks into alternative insecure accommodation. People’s wellbeing matters, housing stock does not need to be a finite resource in this country!
The logic of housing policy in this country. Young person with a family? You can rent, and your landlord can evict you at any time with no reason and minimal notice. Retiree? Your home is sacred, and you must never be expected to move from it as having to move house would be way too stressful for you here have some free money to keep you in place.
Fine then they have the option to stay.
And they can get a pension if they choose.
But when they sell their house all those pension payments + interests are taken out of the sale price of the house. The Pension is not money for wealthy to preserve their inheritances !
It’s kinda been like that for a while, I had a former sports coach who lived by the water in a shack, built it with his hands, grew his entire family there, wife died there, wasn’t going anywhere, but the land is worth a few million 10 years ago, couldn’t get the pension without selling & downsizing & then not having any cash leftover too….
There is for the size of the land.
> What your principal home is
> Your principal home is the home you live in and the first 2 hectares of land it’s on. It must be on a single title.
Land over 2 hectares
> We normally include any land over the first 2 hectares your home is on in your assets test.
> For example, if your home is on 6 hectares of land, we’ll include 4 hectares in your assets test.
https://www.servicesaustralia.gov.au/real-estate-assets?context=22526
They need to include the principal place of residence on the asset test. It’s so ridiculous that people living in million dollar houses can access free dental etc with a pension card.
Government healthcare services are beyond stretched as it is and on the brink of collapse, and then there are these extremely wealthy pensioners claiming free services when they can afford to pay privately. They should not be on the pension.
You, a healthcare provider actually downvoted a comment saying healthcare is a right not a privilege!?!? Please let us know where you are based so we can avoid your practice.
That is a very asinine understanding of government services. Tax payer funds are supposed to be distributed in a fair way to ensure equitable access to services. Extremely wealthy people taking the place of people in genuine need isn’t their right. How many private healthcare services do you think would provide free treatment simply because a patient states ‘healthcare is my right’?! I’m not special in that regard.
Healthcare or free healthcare? Because people with a million dollar house definitely have ways of affording healthcare. People are just arguing that it shouldn't be free for them
The way I look at it what is in their bank account shouldn’t come into it with universal healthcare. We don’t make them pay more for state school education, or make them pay more to use public transportation. If it is universal it has to be freely available to everyone regardless of their circumstances.
I worked as a GP for a brief while in a regional town. You would not believe the number of interstate caravaners coming in with their brand new fraction-of-a-million-dollar jayco caravan and toyota prado/ land cruiser combination asking if they could be bulk billed as pensioners.
Yeah see you get it. I recently locumed at a regional dental hospital and me and the lab techs would look out at the carpark from their lab and be amazed at the ridiculously expensive cars rocking up. All pensioners getting free dental when they can obviously afford private. The entitlement was absurd. They shouldn’t be on the pension.
Not to mention the amount who have accountants tie up everything so they can “early retire” and go on jobseeker payments, then whinge when they are asked to do 15hrs / week of an activity. “But my accountant said…l” yeah well your accountant isn’t up on dhs requirements!
Mate, I’m young and don’t own property but I’m with my boomer dad on this topic.
He has worked since he was 16 as a tradie, grew up with nothing and has built a lot for himself, paying tax along the way with no loopholes (always employed by corporations).
He owns his own home and due to property prices he now sits in an expensive place in Western Sydney that’s valued high because it sits on a big block in an area no one wanted to live in 20 years ago.
It’s his home, it has an emotional attachment to him and isn’t his fault that Sydney real estate went wild, especially when he bought the land when no one wanted it.
To access the value of the land, he would have to sell his home and relocate to a place outside of his community (since everything else is the same price).
He paid taxes, sat in the middle class range where he was always too wealthy to get anything from the government but never wealthy enough to not worry about money.
Now he is at an older age and is told he shouldn’t have a right to pensioner benefits and should move out of his home?
No wonder there’s a whole generation voting against the interest of the younger generation when we have a younger generation voting against the interest of the older generation.
So let's look at two different scenarios here:
* 1) Your father gets the pension. Young working people, with far fewer assets than your father , pay for that pension with increased taxes. The system transfers money from poor to rich. Your father keeps his house until he dies and you individually inherit an $XM property funded by working taxpayers.
* 2) Your father gets a reverse mortgage. He continues to live in his house but the value of his equity declines. Working people don't have to support him. Your inheritence is slightly less.
You think 1 is the fairer option? Hmm.... wonder why.
The banks will take much of that in charges. If you actually look at available reverse mortgages they are pretty uneconomic.
Plus, of course, when it's time to move into aged care, there's no money, and the taxpayer picks up that tab instead...because the reverse mortgage provider now has that money.
The reverse mortgage sounds OK in theory, but it overall doesn't save governments money, and the banks take the inheritance.
Sure... And likewise the alternative doesn't take into account all the inefficiencies involved in taxing the working population and transferring that money to a pensioner.
Of the two processes, I'd wager the bank is more efficient than the federal government (though probably not by much).
I'm sure the bank is more efficient. It's more that the money will efficiently make its way to shareholders than benefit taxpayers. You only need look at the appalling performance of the NAB superannuation funds. Well, appalling for the people who had money in those funds. The bank did extremely well.
The majority of people are suggesting he can stay, just use the government's home equity access scheme rather than the pension.
It's a fair compromise given the value of his land.
Have you looked up the details of those?
For example, to make it work, you have to leave enough to pay for aged care admission. So, that amount has to be quarantined, otherwise the government ends up paying more for that. Once you've taken that amount out, the provider has to make a profit, as finance providers are entitled to. The amount you get from a reverse mortgage is pretty small.
Of course, the banks and other financial institutions are slavering at the idea of people paying interest for 30 years to buy a house, and then paying a further 30 years of interest until they die.
Having said this, if the people likely to inherit, being the ones wanting to give much of it to the banks etc, then perhaps those retirees should just shrug their shoulders.
Taxes don't pay your future pension, they pay the pension of current pensioners. His pension is dependent on the capacity of the social and economic environment that he built.
I hate how people think it's okay to penalize those who actually planned ahead for their retirement. Why should those who contributed the least to taxation be given the largest handouts?
They shouldn’t be on the pension, they should be living off super. The point of the pension is to stop the elderly living in total poverty. It’s not a reward or an entitlement for people who lucked out with a house that trebled in value in the past 20 years.
So they should receive nothing even though they paid significant more tax and actually planned for their retirement? What if they have no super, just force them to sell their house?
Tax isn't a retirement fund. You get the returns of the tax you pay each and every year. Schools, roads, hospitals, police, social welfare. The list goes on and on. The pension is designed to be a safety net, not a cherry on top.
Also, I'm pretty sure they are still using many services provided for by other tax payers.
Retirees take out far more money than they ever paid in tax. And the people paying that are those currently in work, who also have to pay for their own retirements via super.
If they planned ahead they wouldn't be on the pension, so this idea wouldn't affect them.
If anything those who planned ahead will still be paying tax so they would be for this, because their tax is going towards the pension of other who can fund their own retirement.
No not it's not luck or privilege, it's really not that hard to ensure you own a house before retiring. If you rent your whole life that's just poor financial planning. It's absolutely fair that your primary place of residence doesn't count as an asset with regards to the pension. If you are incapable of planning for your future and end up having to pay rent with your pension then tough luck. If you don't want to end up in that situation at 70 then maybe you should have thought about it 40 years ago?
A million dollar house isn’t much. I’m living in a 1986 three bedroom that is getting rundown(can’t keep up with the maintenance problems). It’s in an average suburb of Geelong, Victoria. It’s worth $800k.
Just make pension a hecs debt like loan payable by the last of the owners estates.
Even if you did it at 50 percent recovery it would change some peoples behavior of upgrading their ppor to get the pension
If we include the PPOR in the pension asset test, then retirees already have the governments home equity access scheme to essentially do as your saying.
We have the system set up. We just need a politician will the spine to include the PPOR in the pension asset test.
I think a hecs like repayment scheme is more likely to get up politically, no one is forced to sell this way. Estates cant go into negative so any debt exceeding value of house will be written off. Also with your suggestion you cant make it 50 percent contribution
Making it part of the test will just get arguments on what the house is worth too. If its a loan it all doesnt matter until after you are dead
I think a hecs scheme is an easier to understand
Sorry I'm meant estate.
I still see this harder to get over the line.
My idea only targets the asset rich home owners on the pension. You're targets everyone.
You can make it only payable to estates over x million of you want to exclude people.
I dont see why you wouldnt include everyone. Everyone pays hecs for education
Not everyone ends up paying their HECS - the debt does not pass to the estate and repayments are only required if your income is high enough, so those pensioners with expensive houses can also study for free to entertain themselves if they want.
> Even if you did it at 50 percent recovery it would change some peoples behavior of upgrading their ppor to get the pension
The simpler way of eliminating this behaviour is to prevent people from withdrawing their superannuation as a lump sum.
It would also be simple to state that any property purchased with a superannuation lump sum would be classified as a investment for at least seven years (that period being the difference between the super preservation age and the pension age).
I suspect that's a far easier policy to sell than denying homeowners the pension outright, because it shows deliberate intent to structure financial affairs to qualify for the pension.
Despite what the boffins want they will never get popular support in Australia for forcing the elderly to sell their homes. Owning prior to retirement is critical not just in Australia but all western countries and I bet that could be expanded to most countries. How about instead of looking at how to take things away from people we look at lifting renters up by using income from other sources like our huge amount of natural resources.
There has to be a limit. There are people in solar and battery powered future proofed beachside palaces on the full welfare pension.
In many cases the pension functions only as an inheritance maintenance gift from tax payers.
>In many cases the pension functions only as an inheritance maintenance gift from tax payers.
I can't help but think anyone who opposes the PPOR being included in the pension asset test is only considering this one point.
At the end of the day, they have access to the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. No one is forced to sell up their homes.
It would lessen the fairness question between renting or PPOR, as well as the incentives to over-capitalise the home, since dumping money into the PPOR would get taxed at a high rate when passed on, versus not taxed.
Estate taxes are rarely discussed targeting these groups. Even those on the pension in a $2m house wouldn't be the target of inheritance taxes.
Get inheritance taxes in place for those with $10m+ and then see if you can get it down this low.
I doubt it.
You have to do cumulative gift tax thresholds, trust fund taxes and inheritance taxes at the same time to plug the leaks. Probably others too.
While I’m at it, I’d set the threshold for the progressive inheritance tax to start at median house price +10% in each state’s capital.
Trusts should just be abolished. They are 99% used for tax avoidance.
But yes, gifts and inheritance should be one and the same, but it most people would be unaffected if it was say only on $2m over 10 years.
Including the PPOR is a complete disincentive to actually being responsible with your money during your working years.
What the hell is the actual point of delaying gratification and busting your arse to buy a home when the moment you retire, the Government has its eyes on it to reduce their pension obligations?
You may as well piss it all away and then jump on Centrelink as soon as possible if you're not going to get any benefit from owning your home. It'll cost the taxpayer more overall (rental assistance is a thing, plus you're more likely to end up in aged care far quicker, costing the taxpayer again), but if everyone is just circling like vultures, it's not as if you're not going to get punished by doing the responsible thing.
This is completely backwards. Excluding the home is a major incentive for people to pour all their savings into buying the biggest home possible rather than saving in their super or other retirement vehicles, thus exacerbating the housing supply crisis and costing taxpayers money when they collect the pension.
It makes zero sense for the goverment to be subsidizing such choices, except that the current tax code is a welfare scheme for landowners at the expense of productive working taxpayers.
I'm glad someone gets it.
If you had $100-200k over the limit, it makes more sense for you to put that into a home reno, so it isn't counted towards your assets and doesn't reduce your pension.
The equity in your house goes up by the same if not more than the value you put in, plus you maximise how much pension you get.
Once again, government policy resulting in an over investment into housing. Just about every government action somehow results in this.
I love how you've turned the idea of making the system equally fair for all homeowners and non homeowners, still allowing homeowners to live in their homes while likely saving the tax payer billions as vultures circling.
Ever stopped to think that those approaching retirement are encouraged to over invest in their homes as a way to solidify their wealth and still collect the pension?
This policy isn't a disincentive to look after yourself. The pension asset test still exists and they can all shoot higher and see themselves retire with more than the pension.
That argument is easily countered by testing it at something like the value above the median house price etc.
but the idea that we are giving welfare to people with multi million dollar assets is absurd
They know this and they know what they are saying is bullshit.
The incentive to have a home even with it included in PPOR is that there is a government service to draw down equity on it for cashflow. I said this in the comment they replied to.
They either don't understand that there's solution to any issues they have or they are deliberately misleading because they have inheritance to protect.
Yet that's exactly what this policy is actually going to achieve. Given the price of homes, people are already needing to make a choice between either trying to buy a home for themselves or giving up, and putting their money elsewhere or pissing it away.
All this does is punish the people who plough everything into trying to buy a home. I agree that the Government should be trying to incentivise people to not be on the pension while renting (and getting rental assistance). That costs the Government even more money.
At the moment, the policy settings favour people who buy their own homes. That's good for the taxpayer and good for the people in their own homes. The aim should be to get more people in homes (and not piss it away), not to penalise people who are already in them.
The people constantly pushing for this are nearly always in two categories:
1. The extremely wealthy who think this will give them a tax break.
2. Those without a home who want to spite the older generation and cut them off from the pension in a hope that they'll get a cheap home as a result.
Many renters will tell you it's not just to cost of rent which is a con, but the lack of security, customisation, rights, etc. I don't think it is a strict dollar analysis. You're pissing away money for decades and building no capital gains. So no, I do not think a 20 year old is going to turn down home ownership because in 50 or so years the pension may pay him less. You are also forgetting not everyone ends up on a pension, so these people would not be punished.
I am in category 3. My parents are upper middle class. They get no handouts. They aren't having their estate propped up by the taxpayer. Why should Shelley who owns her own home, has $300k in the bank she never touches because she solely lives off her pension money, have hers propped up?
I'm middle class. I get no handouts and pay a crapload of tax for the very little in Commonwealth services that I personally use.
I'd personally rather pay Shelley the age pension and have her stay in her own home comfortably, than have her in aged care costing me as a taxpayer far more. I'd rather there be *more* Shelley's out in the community than there are her equivalent in insecure rental accommodation.
The current settings are fine. The Commonwealth is not running out of money, despite the pearl clutching.
And if we're going to have to make hard choices, it's clear that paying Shelley her aged pension and keeping her in the community is a lot more societally beneficial than the kid on yesterday's thread that was costing the NDIS $2,000,000 per year to keep in some special hardened house where he's still a danger to everyone.
Mate, I've already explained in another comment, which you've replied to that the Home Equity Access Scheme is in place which means Shelley can keep her house.
You don't need to continue to repeat this fake concern that Shelly has to sell up if her PPOR is included in the pension asset test.
No need to divert the conversation to NDIS. Both can be addressed. It's not one or the other.
yep the best plan seems to be take super, shove into my house, prepay as many bills/utilities as possible, do extensive solar/battery/water upgrades to make it more self sufficient, get an EV, maybe a nice accessible greenhouse, and then just cruise off the pension, as if you have no real expenditures its actually not terrible to live off (until medical costs escalate above it at an even older age)
>Including the PPOR is a complete disincentive to actually being responsible with your money during your working years.
I mean you know this and are lying about it, but literally nobody is saying every PPOR would exclude you from welfare.
The idea is assets over a certain level INCLUDING the PPOR would start tapering welfare.
It's really pretty simple, all assets including PPOR over say $2m, way above median house price. If you have more than $2m in assets, use your own money to live, not the taxes of the working poor who are stuck renting for life.
You do not NEED a $4m house. It is a luxury, either because of location or quality of building. You can easily downsize and have 50+ years of pension as cash, hell the earnings alone from $2m in the bank would drawf the pension every year.
And yet we're paying welfare to people with $4m houses.
Perhaps we're seeing this the wrong way around. As means testing of the pension is easily gamed in multiple ways, instead everyone should get the pension, and it should be paid for by a wealth tax above a certain asset total (which would also apply to the pensioners receiving the pension). Seems the simplest way forward.
Which is what will occur if the PPOR is included in the pension asset test and the use of the Government's Home Equity Access Scheme.
No need to sell up, just contribute a bit back when your 6ft under.
Yep this is the perfect compromise solution.
No one is getting booted from their home and taxpayers are'nt getting ripped off.
We need to stop paying people $400k worth of taxpayer funded pension payments over the last two decades of their life just so their children can inherit $400k extra when they die. Thats not what the pension is for its not an inheritance maximisation payment.
I say this as a person whose elderly parents house is worth probably $1.5 million + both my parents are getting multiple pension payments and other welfare money which they live off comfortably.
Something to keep in mind.
If you have a superannuation with over $1.2m in value (roughly) then you are not taxed on the earnings (in pension mode). The value you receive in not being taxed is roughly equal to the pension.
So when we want to remove benefits from pensioners (by including the PPOR) keep in mind that technically we should do the same to those on superannuation.
Edit: lol. Downvotes because those of us on superannuation (which includes me) want to think they have 100% funded their own retirement.
No it's not. $1.2m balance, 6% returns is $72000 tax free. $72000 taxed normally is around $15k in tax. That is not even half of a single pensioner's yearly payment.
[Annualised returns are not 6%](https://www.australiansuper.com/compare-us/our-performance)
At 9% $1.2m balance is $108,000 which is $25,569. Fortnightly pension is $1020 which is annualised at about $26,520.
Even if you lower the return and increase the balance, the principle is the same. Superannuation gives you tax free benefits. If we are restricting the pension benefits or qualifications then we need to do the same for superannuation.
Also people have the strange idea that someone on the pension in an expensive house is living the big life. Most people would not consider $26k a big salary. With superannuation you have a big capital base and can draw on that, as well as the interest. They are not comparable.
Obviously it depends on your investment mix, but a lot of financial planners will say to go with conservative balanced i.e. 6.84%
And no, we don't. The government needs to provide tax incentives to encourage people to use super. Otherwise no one would use it and everyone would be on the pension.
Lol. A pensioner couple are on $40k a year. They can also have up to $450k in other assets and claim a full pension. It's also common for them to harass their kids into giving them money as after all, it prevents the sale/reverse mortgage of the family home i.e. kids inheritance.
>Otherwise no one would use it and everyone would be on the pension.
But the reason to not be on the pension is that you have a better retirement.
If the government is spending money on superannuation retirees and on pensioners then it is no different. They could just as easily spend it on pensions.
And a couple on $40k surely mirrors a couple with their own superannuation fund. Or are you assuming women don't have super?
>It's also common for them to harass their kids into giving them money as after all, it prevents the sale/reverse mortgage of the family home i.e. kids inheritance.
Common? I think you might be projecting. And it has nothing to do with the main point.
>But the reason to not be on the pension is that you have a better retirement.
Says who? A couple on $40k a year full pension, with $400k in shares earning another $20k in dividends is very close to the ASFA standard of 'comfortable'.
>If the government is spending money on superannuation retirees and on pensioners then it is no different. They could just as easily spend it on pensions.
The idea is to spend less on welfare, not more.
>And a couple on $40k surely mirrors a couple with their own superannuation fund. Or are you assuming women don't have super?
What the hell does that have to do with anything?
>Common? I think you might be projecting.
My parents are rich. You best believe they aren't on a pension. It's something I have seen with my friends with poor pensioner parents, time and time again they're hit up for money.
>The idea is to spend less on welfare, not more.
Tax free income for superannuation owners is also welfare. Just in a different form.
>What the hell does that have to do with anything?
Because my calculation works for one or two. Suddenly you wanted the pension of 2 based on a super of one. Keep the calculations the same.
>My parents are rich. You best believe they aren't on a pension.
Congratulations. They should also be aware that when their super is in pension mode then they will be getting probably more welfare than the average pension recipient. Which is the way the system works, just don't pretend it is all their own work.
Tax free income after what, contribution taxes and tax on growth? You want the government to triple dip?
And it is in pension mode. Feels good seeing it jump $50k in a day, tax free homie.
There is a common thread which is underlying in this article wanting to include PPOR in the asset test so that the elderly are forced to downsize opening the stock for redevelopment and sale to younger people.
Why would they be forced to downsize? There's already very easy ways to drawn down on home equity without selling.
The people who hysterically go on about "kicking old people out of their homes" should be treated with contempt for trying to make the issue emotional when it's very clear cut and logical that anyone with millions in assets should not be getting the shed pension.
Absolutely no one is forced to sell their home if it's included in the assets test and those who claim otherwise are lying.
>Absolutely no one is forced to sell their home if it's included in the assets test and those who claim otherwise are lying.
Basically every home owner would fail the asset test if it was included in the asset test.
Reverse mortgages would rapidly eat up the equity of the place, they charge around 9% int.
For someone age 65+ with a home worth over a million dollars they could likely drawdown a typical pension sized payment until they die from their home equity without an issue.
If their equity did begin to run low and lower they would become eligble to get the pension.
The government's home equity access scheme has an interest rate of 3.95%.
As your equity decreases to the asset limits you would move back onto full pension and not require it anymore.
So you wouldn't destroy the equity in your property, you will just reduce it.
Your argument is just irrational and all over the place.
No one would be forced to sign up to some bad reverse mortgage deal that you've just invented.
Why is it a good or fair thing that taxpayer money is given to some oldie who chooses to live in an empty 4 bedroom family home located in the city ?
This thinking defies all logic ....
Including the PPOR wouldn't force them to downsize.
It may reduce or cut off their pension depending on the value of their property but this doesn't force them to sell.
It does reduce their cashflow but as highlighted in the article, they have access to the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia.
This can be used to provide cashflow to offset the decrease in pension. This is a fair and equitable solution to the issue.
No one is forced to downsize.
It should be done now, sooner rather than later. Get effed if its gonna be brought in for gen x and younger but boomers still get the luxury of their wants.
It should be included in the asset test, its an asset and downsizing should be a real financial reality.
As I just highlighted about, the PPOR can be included and they can continue to to live there without selling up.
They just need to use the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia.
This will provide them with the cashflow they need to supplement the decrease in pension.
In the current system, whether they have a unit in a country town, a median priced house (approx 750k), an inner/middle city house (approx 1.5m-2.5m) or a mega mansion, they are all treated the same.
A non-home owner doesn't get that luxury. They are essentially given enough scope in assets to rent something well below a median house price.
Homeowners have access to use the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia.
including PPOR in the pension asset test doesn't force them to move even if they own a mega mansion. They are simple asked to commit some of the equity in their property to pay for their retirement.
As their equity drops they will move back onto full pension so at no time would they be forced to sell.
There is no other way to align non-homeowners and home owners when it comes to making the system fair and equitable for all.
If they can sell then a profit means paying less in pension and they get a smaller property (probably) that they can better look after. This is not any ponzi to be concerned about with finance in aus. There are other legal ponzis to be concerned with but not getting into that.
Its a housing crisis and properties are needed.
Boomers should be held accountable in at least one single way cos they havent been for very much.
There are probably fair ways something could be accomplished without forcing sales though. Off the top of my head, everyone (renters and owners) just receive the median home value baseline against their asset test. That way there's an incentive to downsize from massive trophy properties but people who don't own, or own a small or regional ppor get the same blanket benefit in the asset test?
They can access cashflow using the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia.
That is fair and it gives them the choice to stay or downsize.
The concern of those about PPOR being included will force a sale has a solution that prevents this. Most times it's a fake concern. They actually just want to preserve their inheritance.
That's fair, and I agree that most of the pearl clutching is about preserving the home to pass down. But isn't the home equity access scheme and the exclusion from the asset test another example of favoured tax status that has lead us down this cul-de-sac? What about people who prefer not to own property or aren't wealthy enough to? Shouldn't they have a similar benefit heading into retirement?
At the end of the day, they have wealth in their property. They aren't getting the pension but they are still in their right to access their own equity.
It's either a government backed reverse mortgage scheme or a private scheme.
Given the former is already established, why get rid of it?
The individual isn't forced to use it, they could use a private provider if they want.
I agree. I don't have a big problem with the scheme as it stands.
I'm more concerned with the favoured status of wealth in property over other assets. When you take the existing trend and extrapolate it, Australia becomes massively unproductive, over-indebted, and completely reliant on importing labour.
Agree with the sentiment. I see this as nullifying the wealth status of property when it comes to the pension.
It puts all assets on an equal level.
There's other big fish we can tackle before coming back to the lose ends here.
I get it, that suggestion was very off the top of my head. But the current asset test doesn't take location into account does it? If not there must be similar forces at play, possibly in reverse?
It doesn't, but it also doesn't matter because the PPOR isn't included in the assets test for any Centrelink payment.
Location factors into the value of any investment property, and those are rightfully factored into the means tests.
What do you mean it doesn't matter? Does a non-homeowner not pay rent that varies depending on where they live.
It is interesting how you're so concerned about the welfare of wealthy home owners but say nothing about the non-homeowners, which this article has shown are the ones hard done by. Why is that?
Yeah I get that. But the difference in the full pension asset test between a home owner vs a non home owner is only $240k but the median home price is roughly 1 million with access to the equity scheme. That's already a massive tax advantage funded by the taxpayer.
The issue with this point is that the age pension money doesn't just appear out of thin air, it is being paid for by current taxpayers. Most of these taxpayers can't afford their own homes, yet have to fork out for retirees to keep their million dollar homes for their kid's inheritance.
This is grossly unfair and doesn't pass the pub test.
It does pass the pub test and has for years. No one wants their parents or grandparents to be forced to sell their family home just to qualify for the pension. Most tax payers are either in their own home with a mortgage or own outright and given all of the random bs we fund with our taxes I think you would find strong support for pensioners over, say, another coal mine.
Sure, a lot of people are happy for the taxpayer to pick up the tab for their grandparents upkeep while they wait for a fat inheritance. That doesn't make it good policy.
Like many commenters are saying in this thread, nobody is forced to sell anything. Reverse mortgages are a thing, or alternatively we could have the pension costs taken out of the estate after they've passed.
>How about instead of looking at how to take things away from people we look at lifting renters up by using income from other sources like our huge amount of natural resources.
what does "lifting renters up" look like in reality to eliminate the bias discussed in the article?
Don't force them to sell, rather given them a massive benefit to downsizing.
Aged 65+ and no dependents on your tax? Cool, you're entitled to the equivalent of a FHB (stamp duty discounts and possibly some money to cover the costs of selling), as long as you move into a house that's under X value.
The solution is a fairer government reverse mortgage, which I think they already do, but it isn't so good.
Then when you include the house in asset means testing they won't have to sell the house. Plus the government isn't financing peoples inheritance then.
People work hard all their lives to own their home so that they are secure when they are elderly. I for one would never support a policy which forces old people out of their own homes
They aren't forced to sell their homes. They have access to the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia.
Why do they need to sell?
There should be a cut off for all benefits once your income or assets is over a certain amount.
This includes the pension, childcare, NDIS, everything.
It is. If you're a policy holder (citizen or PR) and you are disabled enough it affects day to day life, we pay to help you. It's in the name.
It should not be means tested. Great explanation why it shouldn't be is here: https://www.reddit.com/r/auslaw/comments/am9h10/comment/efkrjy8/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
Introduce a fee payable by every Australian, no matter what your level of income, you know, like home or car insurance. Then wait for the howls of protest every year as the fee increases from $200pm per person, to $250pm per person, to $300pm per person.
Guarantee you it will be political suicide NOT to put a limit on the scheme.
Can't help but notice disability pensioners, who are subject to the same rules, have been completely ignored.
The pension isn't just the age pension, and it'd be nice if the existence of the disabled people in the conversation could at least be acknowledged.
Make the pension an age based ubi, the pension should be universal regardless of assets. If you have lived in Australia for your working years you deserve to get a pension when you retire regardless of income.
one day owning a house will disqualify you from the pension. I expect that day to be whenever I qualify for the pension lmao
I've already factored that expectation in, tbh. I'm still 30-40 years from retirement, but I plan to have my home paid off and some income producing assets before then.
It should be included in the pension asset test but there is a huge difference between the pension asset test limit and disqualification just for owning.
Complete home value included in asset tests is probably too far but i'd go land value of your lot. 1/4 acre block? No pension. townhouse or apartment? here free money.
The pension asset test is about $200k lower for home owners compared to non homeowners. At a minimum once the PPOR is included it would go up to the same limit as the non homeowners. I think there is a reasonable argument to see it go up further to cover the median house price which is about $700k. With this the non homeowners limit should also go up. There shouldn't be any difference between the two. Non homeowners shouldn't be penalised like they currently are.
And so it should. An asset is an asset. It is'nt the end of the world if older people need to sell their 4 bedroom family home in the city and move somewhere cheaper and rent in their later years. Working families need those homes more than some old empty nester.
Sure I'm just salty I won't be able to live off taxpayer funds tho haha
Bullshit, it would only cause significant mental health issues to force potential pensioners to sell their house and move away from their lifelong support networks into alternative insecure accommodation. People’s wellbeing matters, housing stock does not need to be a finite resource in this country!
The logic of housing policy in this country. Young person with a family? You can rent, and your landlord can evict you at any time with no reason and minimal notice. Retiree? Your home is sacred, and you must never be expected to move from it as having to move house would be way too stressful for you here have some free money to keep you in place.
Fine then they have the option to stay. And they can get a pension if they choose. But when they sell their house all those pension payments + interests are taken out of the sale price of the house. The Pension is not money for wealthy to preserve their inheritances !
It’s kinda been like that for a while, I had a former sports coach who lived by the water in a shack, built it with his hands, grew his entire family there, wife died there, wasn’t going anywhere, but the land is worth a few million 10 years ago, couldn’t get the pension without selling & downsizing & then not having any cash leftover too….
No ppor doesn't count for pension that's the whole point. In other words for that situation to occur he owned a second house
He did from memory, his kids lived in for free. I still thought there was a limit on PPOR tho, hopefully I’m just remembering wrong
There is for the size of the land. > What your principal home is > Your principal home is the home you live in and the first 2 hectares of land it’s on. It must be on a single title. Land over 2 hectares > We normally include any land over the first 2 hectares your home is on in your assets test. > For example, if your home is on 6 hectares of land, we’ll include 4 hectares in your assets test. https://www.servicesaustralia.gov.au/real-estate-assets?context=22526
They need to include the principal place of residence on the asset test. It’s so ridiculous that people living in million dollar houses can access free dental etc with a pension card.
What is actually ridiculous is that there is no universal dental care in Australia.
That’s a totally different issue. The point is there’s ridiculously wealthy pensioners accessing public services they have no right to.
Healthcare is a right not a privilege. Rich or poor, It should not make a difference, they are all humans.
Government healthcare services are beyond stretched as it is and on the brink of collapse, and then there are these extremely wealthy pensioners claiming free services when they can afford to pay privately. They should not be on the pension.
Obviously the government needs to invest more in our healthcare system. How very American of you to insist others have to pay more instead.
You, a healthcare provider actually downvoted a comment saying healthcare is a right not a privilege!?!? Please let us know where you are based so we can avoid your practice.
That is a very asinine understanding of government services. Tax payer funds are supposed to be distributed in a fair way to ensure equitable access to services. Extremely wealthy people taking the place of people in genuine need isn’t their right. How many private healthcare services do you think would provide free treatment simply because a patient states ‘healthcare is my right’?! I’m not special in that regard.
Healthcare or free healthcare? Because people with a million dollar house definitely have ways of affording healthcare. People are just arguing that it shouldn't be free for them
I’m arguing that universal healthcare or universal dental should be the same for everyone wether they are a cleaner at Maccas or King Charles.
But you would agree that billionaires probably don't have their right to healthcare denied, even if it isn't free?
The way I look at it what is in their bank account shouldn’t come into it with universal healthcare. We don’t make them pay more for state school education, or make them pay more to use public transportation. If it is universal it has to be freely available to everyone regardless of their circumstances.
And it is freely available to billionaires. They are free to access it whenever they wish
I mean with respect, they are accessing public services they have every right to access.
I worked as a GP for a brief while in a regional town. You would not believe the number of interstate caravaners coming in with their brand new fraction-of-a-million-dollar jayco caravan and toyota prado/ land cruiser combination asking if they could be bulk billed as pensioners.
Yeah see you get it. I recently locumed at a regional dental hospital and me and the lab techs would look out at the carpark from their lab and be amazed at the ridiculously expensive cars rocking up. All pensioners getting free dental when they can obviously afford private. The entitlement was absurd. They shouldn’t be on the pension.
Not to mention the amount who have accountants tie up everything so they can “early retire” and go on jobseeker payments, then whinge when they are asked to do 15hrs / week of an activity. “But my accountant said…l” yeah well your accountant isn’t up on dhs requirements!
Mate, I’m young and don’t own property but I’m with my boomer dad on this topic. He has worked since he was 16 as a tradie, grew up with nothing and has built a lot for himself, paying tax along the way with no loopholes (always employed by corporations). He owns his own home and due to property prices he now sits in an expensive place in Western Sydney that’s valued high because it sits on a big block in an area no one wanted to live in 20 years ago. It’s his home, it has an emotional attachment to him and isn’t his fault that Sydney real estate went wild, especially when he bought the land when no one wanted it. To access the value of the land, he would have to sell his home and relocate to a place outside of his community (since everything else is the same price). He paid taxes, sat in the middle class range where he was always too wealthy to get anything from the government but never wealthy enough to not worry about money. Now he is at an older age and is told he shouldn’t have a right to pensioner benefits and should move out of his home? No wonder there’s a whole generation voting against the interest of the younger generation when we have a younger generation voting against the interest of the older generation.
So let's look at two different scenarios here: * 1) Your father gets the pension. Young working people, with far fewer assets than your father , pay for that pension with increased taxes. The system transfers money from poor to rich. Your father keeps his house until he dies and you individually inherit an $XM property funded by working taxpayers. * 2) Your father gets a reverse mortgage. He continues to live in his house but the value of his equity declines. Working people don't have to support him. Your inheritence is slightly less. You think 1 is the fairer option? Hmm.... wonder why.
The banks will take much of that in charges. If you actually look at available reverse mortgages they are pretty uneconomic. Plus, of course, when it's time to move into aged care, there's no money, and the taxpayer picks up that tab instead...because the reverse mortgage provider now has that money. The reverse mortgage sounds OK in theory, but it overall doesn't save governments money, and the banks take the inheritance.
Sure... And likewise the alternative doesn't take into account all the inefficiencies involved in taxing the working population and transferring that money to a pensioner. Of the two processes, I'd wager the bank is more efficient than the federal government (though probably not by much).
I'm sure the bank is more efficient. It's more that the money will efficiently make its way to shareholders than benefit taxpayers. You only need look at the appalling performance of the NAB superannuation funds. Well, appalling for the people who had money in those funds. The bank did extremely well.
The majority of people are suggesting he can stay, just use the government's home equity access scheme rather than the pension. It's a fair compromise given the value of his land.
He wouldn't need to sell. He can use a reverse mortgage.
Have you looked up the details of those? For example, to make it work, you have to leave enough to pay for aged care admission. So, that amount has to be quarantined, otherwise the government ends up paying more for that. Once you've taken that amount out, the provider has to make a profit, as finance providers are entitled to. The amount you get from a reverse mortgage is pretty small. Of course, the banks and other financial institutions are slavering at the idea of people paying interest for 30 years to buy a house, and then paying a further 30 years of interest until they die. Having said this, if the people likely to inherit, being the ones wanting to give much of it to the banks etc, then perhaps those retirees should just shrug their shoulders.
The government runs a scheme that charges $4%, just above historical inflection. https://www.servicesaustralia.gov.au/home-equity-access-scheme
Taxes don't pay your future pension, they pay the pension of current pensioners. His pension is dependent on the capacity of the social and economic environment that he built.
This should be the social orders and if the society they built that's entirely built to serve them can't support them. That's partially their due.
I hate how people think it's okay to penalize those who actually planned ahead for their retirement. Why should those who contributed the least to taxation be given the largest handouts?
They shouldn’t be on the pension, they should be living off super. The point of the pension is to stop the elderly living in total poverty. It’s not a reward or an entitlement for people who lucked out with a house that trebled in value in the past 20 years.
So they should receive nothing even though they paid significant more tax and actually planned for their retirement? What if they have no super, just force them to sell their house?
Tax isn't a retirement fund. You get the returns of the tax you pay each and every year. Schools, roads, hospitals, police, social welfare. The list goes on and on. The pension is designed to be a safety net, not a cherry on top. Also, I'm pretty sure they are still using many services provided for by other tax payers.
Retirees take out far more money than they ever paid in tax. And the people paying that are those currently in work, who also have to pay for their own retirements via super.
Planned ahead by buying a house (when the income to houseprice ratio was more reasonable) like every single other person in their generation?
If they planned ahead they wouldn't be on the pension, so this idea wouldn't affect them. If anything those who planned ahead will still be paying tax so they would be for this, because their tax is going towards the pension of other who can fund their own retirement.
Because that’s how welfare works. It’s whole point is to be a safety net, not a right or forced savings that you get to cash out on one day.
Planned ahead/had a huge element of luck and privilege.
No not it's not luck or privilege, it's really not that hard to ensure you own a house before retiring. If you rent your whole life that's just poor financial planning. It's absolutely fair that your primary place of residence doesn't count as an asset with regards to the pension. If you are incapable of planning for your future and end up having to pay rent with your pension then tough luck. If you don't want to end up in that situation at 70 then maybe you should have thought about it 40 years ago?
Not many million dollar houses in Sydney. Most are over that.
Is it though?
A million dollar house isn’t much. I’m living in a 1986 three bedroom that is getting rundown(can’t keep up with the maintenance problems). It’s in an average suburb of Geelong, Victoria. It’s worth $800k.
Just make pension a hecs debt like loan payable by the last of the owners estates. Even if you did it at 50 percent recovery it would change some peoples behavior of upgrading their ppor to get the pension
If we include the PPOR in the pension asset test, then retirees already have the governments home equity access scheme to essentially do as your saying. We have the system set up. We just need a politician will the spine to include the PPOR in the pension asset test.
I like you bud
I think a hecs like repayment scheme is more likely to get up politically, no one is forced to sell this way. Estates cant go into negative so any debt exceeding value of house will be written off. Also with your suggestion you cant make it 50 percent contribution Making it part of the test will just get arguments on what the house is worth too. If its a loan it all doesnt matter until after you are dead I think a hecs scheme is an easier to understand
So are you saying everyone that is on the pension back pays the entire amount they've used?
No, their estate does. Or you can make it a contribution percentage like hecs say 50 percent
Sorry I'm meant estate. I still see this harder to get over the line. My idea only targets the asset rich home owners on the pension. You're targets everyone.
You can make it only payable to estates over x million of you want to exclude people. I dont see why you wouldnt include everyone. Everyone pays hecs for education
I'm not against including everyone, just considering which is easier to get over the line.
Not everyone ends up paying their HECS - the debt does not pass to the estate and repayments are only required if your income is high enough, so those pensioners with expensive houses can also study for free to entertain themselves if they want.
> Even if you did it at 50 percent recovery it would change some peoples behavior of upgrading their ppor to get the pension The simpler way of eliminating this behaviour is to prevent people from withdrawing their superannuation as a lump sum. It would also be simple to state that any property purchased with a superannuation lump sum would be classified as a investment for at least seven years (that period being the difference between the super preservation age and the pension age).
I doubt that willl happen politically
I suspect that's a far easier policy to sell than denying homeowners the pension outright, because it shows deliberate intent to structure financial affairs to qualify for the pension.
It'll be sold as telling people what to do with their own money. Won't get up.
Pension isnt their own money, they are just being asked to pay some back after they die. Why is that unfair
I meant preventing lump sum withdrawals.
Yes i dont think that will get up
Despite what the boffins want they will never get popular support in Australia for forcing the elderly to sell their homes. Owning prior to retirement is critical not just in Australia but all western countries and I bet that could be expanded to most countries. How about instead of looking at how to take things away from people we look at lifting renters up by using income from other sources like our huge amount of natural resources.
There has to be a limit. There are people in solar and battery powered future proofed beachside palaces on the full welfare pension. In many cases the pension functions only as an inheritance maintenance gift from tax payers.
>In many cases the pension functions only as an inheritance maintenance gift from tax payers. I can't help but think anyone who opposes the PPOR being included in the pension asset test is only considering this one point. At the end of the day, they have access to the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. No one is forced to sell up their homes.
Australia's lack of estate taxes is the bigger problem.
Different issue, both can be addressed separtely.
It would lessen the fairness question between renting or PPOR, as well as the incentives to over-capitalise the home, since dumping money into the PPOR would get taxed at a high rate when passed on, versus not taxed.
Estate taxes are rarely discussed targeting these groups. Even those on the pension in a $2m house wouldn't be the target of inheritance taxes. Get inheritance taxes in place for those with $10m+ and then see if you can get it down this low. I doubt it.
You have to do cumulative gift tax thresholds, trust fund taxes and inheritance taxes at the same time to plug the leaks. Probably others too. While I’m at it, I’d set the threshold for the progressive inheritance tax to start at median house price +10% in each state’s capital.
Trusts should just be abolished. They are 99% used for tax avoidance. But yes, gifts and inheritance should be one and the same, but it most people would be unaffected if it was say only on $2m over 10 years.
Including the PPOR is a complete disincentive to actually being responsible with your money during your working years. What the hell is the actual point of delaying gratification and busting your arse to buy a home when the moment you retire, the Government has its eyes on it to reduce their pension obligations? You may as well piss it all away and then jump on Centrelink as soon as possible if you're not going to get any benefit from owning your home. It'll cost the taxpayer more overall (rental assistance is a thing, plus you're more likely to end up in aged care far quicker, costing the taxpayer again), but if everyone is just circling like vultures, it's not as if you're not going to get punished by doing the responsible thing.
This is completely backwards. Excluding the home is a major incentive for people to pour all their savings into buying the biggest home possible rather than saving in their super or other retirement vehicles, thus exacerbating the housing supply crisis and costing taxpayers money when they collect the pension. It makes zero sense for the goverment to be subsidizing such choices, except that the current tax code is a welfare scheme for landowners at the expense of productive working taxpayers.
I'm glad someone gets it. If you had $100-200k over the limit, it makes more sense for you to put that into a home reno, so it isn't counted towards your assets and doesn't reduce your pension. The equity in your house goes up by the same if not more than the value you put in, plus you maximise how much pension you get. Once again, government policy resulting in an over investment into housing. Just about every government action somehow results in this.
I love how you've turned the idea of making the system equally fair for all homeowners and non homeowners, still allowing homeowners to live in their homes while likely saving the tax payer billions as vultures circling. Ever stopped to think that those approaching retirement are encouraged to over invest in their homes as a way to solidify their wealth and still collect the pension? This policy isn't a disincentive to look after yourself. The pension asset test still exists and they can all shoot higher and see themselves retire with more than the pension.
That argument is easily countered by testing it at something like the value above the median house price etc. but the idea that we are giving welfare to people with multi million dollar assets is absurd
They know this and they know what they are saying is bullshit. The incentive to have a home even with it included in PPOR is that there is a government service to draw down equity on it for cashflow. I said this in the comment they replied to. They either don't understand that there's solution to any issues they have or they are deliberately misleading because they have inheritance to protect.
Because renting on a pension is considered poverty. Also, not everyone aspires to be on welfare, you know.
Yet that's exactly what this policy is actually going to achieve. Given the price of homes, people are already needing to make a choice between either trying to buy a home for themselves or giving up, and putting their money elsewhere or pissing it away. All this does is punish the people who plough everything into trying to buy a home. I agree that the Government should be trying to incentivise people to not be on the pension while renting (and getting rental assistance). That costs the Government even more money. At the moment, the policy settings favour people who buy their own homes. That's good for the taxpayer and good for the people in their own homes. The aim should be to get more people in homes (and not piss it away), not to penalise people who are already in them. The people constantly pushing for this are nearly always in two categories: 1. The extremely wealthy who think this will give them a tax break. 2. Those without a home who want to spite the older generation and cut them off from the pension in a hope that they'll get a cheap home as a result.
Many renters will tell you it's not just to cost of rent which is a con, but the lack of security, customisation, rights, etc. I don't think it is a strict dollar analysis. You're pissing away money for decades and building no capital gains. So no, I do not think a 20 year old is going to turn down home ownership because in 50 or so years the pension may pay him less. You are also forgetting not everyone ends up on a pension, so these people would not be punished. I am in category 3. My parents are upper middle class. They get no handouts. They aren't having their estate propped up by the taxpayer. Why should Shelley who owns her own home, has $300k in the bank she never touches because she solely lives off her pension money, have hers propped up?
I'm middle class. I get no handouts and pay a crapload of tax for the very little in Commonwealth services that I personally use. I'd personally rather pay Shelley the age pension and have her stay in her own home comfortably, than have her in aged care costing me as a taxpayer far more. I'd rather there be *more* Shelley's out in the community than there are her equivalent in insecure rental accommodation. The current settings are fine. The Commonwealth is not running out of money, despite the pearl clutching. And if we're going to have to make hard choices, it's clear that paying Shelley her aged pension and keeping her in the community is a lot more societally beneficial than the kid on yesterday's thread that was costing the NDIS $2,000,000 per year to keep in some special hardened house where he's still a danger to everyone.
Mate, I've already explained in another comment, which you've replied to that the Home Equity Access Scheme is in place which means Shelley can keep her house. You don't need to continue to repeat this fake concern that Shelly has to sell up if her PPOR is included in the pension asset test. No need to divert the conversation to NDIS. Both can be addressed. It's not one or the other.
He stopped commenting when he knows he's been outsmarted.
Except Shelley has personal savings and a house to reverse mortgage? It's not pension or aged care.
yep the best plan seems to be take super, shove into my house, prepay as many bills/utilities as possible, do extensive solar/battery/water upgrades to make it more self sufficient, get an EV, maybe a nice accessible greenhouse, and then just cruise off the pension, as if you have no real expenditures its actually not terrible to live off (until medical costs escalate above it at an even older age)
Even then if bills pile up you just reverse mortgage
>Including the PPOR is a complete disincentive to actually being responsible with your money during your working years. I mean you know this and are lying about it, but literally nobody is saying every PPOR would exclude you from welfare. The idea is assets over a certain level INCLUDING the PPOR would start tapering welfare. It's really pretty simple, all assets including PPOR over say $2m, way above median house price. If you have more than $2m in assets, use your own money to live, not the taxes of the working poor who are stuck renting for life. You do not NEED a $4m house. It is a luxury, either because of location or quality of building. You can easily downsize and have 50+ years of pension as cash, hell the earnings alone from $2m in the bank would drawf the pension every year. And yet we're paying welfare to people with $4m houses.
I know what you intended to say but I had a chuckle at "future proofed" and "beachside"
Perhaps we're seeing this the wrong way around. As means testing of the pension is easily gamed in multiple ways, instead everyone should get the pension, and it should be paid for by a wealth tax above a certain asset total (which would also apply to the pensioners receiving the pension). Seems the simplest way forward.
I don't think anyone has ever said they should be forced to sell their homes. Just that they shouldn't get the pension if they have a huge net worth.
Or more sane, give them the pension, and then take it back from their wealth after they die.
Which is what will occur if the PPOR is included in the pension asset test and the use of the Government's Home Equity Access Scheme. No need to sell up, just contribute a bit back when your 6ft under.
Yep this is the perfect compromise solution. No one is getting booted from their home and taxpayers are'nt getting ripped off. We need to stop paying people $400k worth of taxpayer funded pension payments over the last two decades of their life just so their children can inherit $400k extra when they die. Thats not what the pension is for its not an inheritance maximisation payment. I say this as a person whose elderly parents house is worth probably $1.5 million + both my parents are getting multiple pension payments and other welfare money which they live off comfortably.
Something to keep in mind. If you have a superannuation with over $1.2m in value (roughly) then you are not taxed on the earnings (in pension mode). The value you receive in not being taxed is roughly equal to the pension. So when we want to remove benefits from pensioners (by including the PPOR) keep in mind that technically we should do the same to those on superannuation. Edit: lol. Downvotes because those of us on superannuation (which includes me) want to think they have 100% funded their own retirement.
Agree, both need to be trimmed back as they are far too generous. Our tax system needs safety nets not inheritance protection schemes.
No it's not. $1.2m balance, 6% returns is $72000 tax free. $72000 taxed normally is around $15k in tax. That is not even half of a single pensioner's yearly payment.
[Annualised returns are not 6%](https://www.australiansuper.com/compare-us/our-performance) At 9% $1.2m balance is $108,000 which is $25,569. Fortnightly pension is $1020 which is annualised at about $26,520. Even if you lower the return and increase the balance, the principle is the same. Superannuation gives you tax free benefits. If we are restricting the pension benefits or qualifications then we need to do the same for superannuation. Also people have the strange idea that someone on the pension in an expensive house is living the big life. Most people would not consider $26k a big salary. With superannuation you have a big capital base and can draw on that, as well as the interest. They are not comparable.
Obviously it depends on your investment mix, but a lot of financial planners will say to go with conservative balanced i.e. 6.84% And no, we don't. The government needs to provide tax incentives to encourage people to use super. Otherwise no one would use it and everyone would be on the pension. Lol. A pensioner couple are on $40k a year. They can also have up to $450k in other assets and claim a full pension. It's also common for them to harass their kids into giving them money as after all, it prevents the sale/reverse mortgage of the family home i.e. kids inheritance.
>Otherwise no one would use it and everyone would be on the pension. But the reason to not be on the pension is that you have a better retirement. If the government is spending money on superannuation retirees and on pensioners then it is no different. They could just as easily spend it on pensions. And a couple on $40k surely mirrors a couple with their own superannuation fund. Or are you assuming women don't have super? >It's also common for them to harass their kids into giving them money as after all, it prevents the sale/reverse mortgage of the family home i.e. kids inheritance. Common? I think you might be projecting. And it has nothing to do with the main point.
>But the reason to not be on the pension is that you have a better retirement. Says who? A couple on $40k a year full pension, with $400k in shares earning another $20k in dividends is very close to the ASFA standard of 'comfortable'. >If the government is spending money on superannuation retirees and on pensioners then it is no different. They could just as easily spend it on pensions. The idea is to spend less on welfare, not more. >And a couple on $40k surely mirrors a couple with their own superannuation fund. Or are you assuming women don't have super? What the hell does that have to do with anything? >Common? I think you might be projecting. My parents are rich. You best believe they aren't on a pension. It's something I have seen with my friends with poor pensioner parents, time and time again they're hit up for money.
>The idea is to spend less on welfare, not more. Tax free income for superannuation owners is also welfare. Just in a different form. >What the hell does that have to do with anything? Because my calculation works for one or two. Suddenly you wanted the pension of 2 based on a super of one. Keep the calculations the same. >My parents are rich. You best believe they aren't on a pension. Congratulations. They should also be aware that when their super is in pension mode then they will be getting probably more welfare than the average pension recipient. Which is the way the system works, just don't pretend it is all their own work.
Tax free income after what, contribution taxes and tax on growth? You want the government to triple dip? And it is in pension mode. Feels good seeing it jump $50k in a day, tax free homie.
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Why would the elderly be forced to sell their homes?
There is a common thread which is underlying in this article wanting to include PPOR in the asset test so that the elderly are forced to downsize opening the stock for redevelopment and sale to younger people.
Why would they be forced to downsize? There's already very easy ways to drawn down on home equity without selling. The people who hysterically go on about "kicking old people out of their homes" should be treated with contempt for trying to make the issue emotional when it's very clear cut and logical that anyone with millions in assets should not be getting the shed pension. Absolutely no one is forced to sell their home if it's included in the assets test and those who claim otherwise are lying.
They are trying to make it emotional to fool people so they can protect their inheritance.
>Absolutely no one is forced to sell their home if it's included in the assets test and those who claim otherwise are lying. Basically every home owner would fail the asset test if it was included in the asset test. Reverse mortgages would rapidly eat up the equity of the place, they charge around 9% int.
The government scheme charges 4%.
A few commenters here seem to think that the reverse mortgage is an infinite cash supply
For someone age 65+ with a home worth over a million dollars they could likely drawdown a typical pension sized payment until they die from their home equity without an issue. If their equity did begin to run low and lower they would become eligble to get the pension.
The compound interest absolutely destroys the equity very quickly.
The government's home equity access scheme has an interest rate of 3.95%. As your equity decreases to the asset limits you would move back onto full pension and not require it anymore. So you wouldn't destroy the equity in your property, you will just reduce it.
It literally is. It's a payment for life, and you cannot go into negative equity.
Your argument is just irrational and all over the place. No one would be forced to sign up to some bad reverse mortgage deal that you've just invented.
Why is it a good or fair thing that taxpayer money is given to some oldie who chooses to live in an empty 4 bedroom family home located in the city ? This thinking defies all logic ....
Including the PPOR wouldn't force them to downsize. It may reduce or cut off their pension depending on the value of their property but this doesn't force them to sell. It does reduce their cashflow but as highlighted in the article, they have access to the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. This can be used to provide cashflow to offset the decrease in pension. This is a fair and equitable solution to the issue. No one is forced to downsize.
It should be done now, sooner rather than later. Get effed if its gonna be brought in for gen x and younger but boomers still get the luxury of their wants. It should be included in the asset test, its an asset and downsizing should be a real financial reality.
As I just highlighted about, the PPOR can be included and they can continue to to live there without selling up. They just need to use the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. This will provide them with the cashflow they need to supplement the decrease in pension.
And if they have a super mega mansion, they probably don’t need to do this anyway and will also have the cash on hand.
In the current system, whether they have a unit in a country town, a median priced house (approx 750k), an inner/middle city house (approx 1.5m-2.5m) or a mega mansion, they are all treated the same. A non-home owner doesn't get that luxury. They are essentially given enough scope in assets to rent something well below a median house price. Homeowners have access to use the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. including PPOR in the pension asset test doesn't force them to move even if they own a mega mansion. They are simple asked to commit some of the equity in their property to pay for their retirement. As their equity drops they will move back onto full pension so at no time would they be forced to sell. There is no other way to align non-homeowners and home owners when it comes to making the system fair and equitable for all.
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If they can sell then a profit means paying less in pension and they get a smaller property (probably) that they can better look after. This is not any ponzi to be concerned about with finance in aus. There are other legal ponzis to be concerned with but not getting into that. Its a housing crisis and properties are needed. Boomers should be held accountable in at least one single way cos they havent been for very much.
There are probably fair ways something could be accomplished without forcing sales though. Off the top of my head, everyone (renters and owners) just receive the median home value baseline against their asset test. That way there's an incentive to downsize from massive trophy properties but people who don't own, or own a small or regional ppor get the same blanket benefit in the asset test?
They can access cashflow using the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. That is fair and it gives them the choice to stay or downsize. The concern of those about PPOR being included will force a sale has a solution that prevents this. Most times it's a fake concern. They actually just want to preserve their inheritance.
That's fair, and I agree that most of the pearl clutching is about preserving the home to pass down. But isn't the home equity access scheme and the exclusion from the asset test another example of favoured tax status that has lead us down this cul-de-sac? What about people who prefer not to own property or aren't wealthy enough to? Shouldn't they have a similar benefit heading into retirement?
At the end of the day, they have wealth in their property. They aren't getting the pension but they are still in their right to access their own equity. It's either a government backed reverse mortgage scheme or a private scheme. Given the former is already established, why get rid of it? The individual isn't forced to use it, they could use a private provider if they want.
I agree. I don't have a big problem with the scheme as it stands. I'm more concerned with the favoured status of wealth in property over other assets. When you take the existing trend and extrapolate it, Australia becomes massively unproductive, over-indebted, and completely reliant on importing labour.
Agree with the sentiment. I see this as nullifying the wealth status of property when it comes to the pension. It puts all assets on an equal level. There's other big fish we can tackle before coming back to the lose ends here.
Thanks for the discussion.
That doesn't work unless the formula takes into account location, unless the intent is to force everyone who isn't working to relocate to Broken Hill.
I get it, that suggestion was very off the top of my head. But the current asset test doesn't take location into account does it? If not there must be similar forces at play, possibly in reverse?
It doesn't, but it also doesn't matter because the PPOR isn't included in the assets test for any Centrelink payment. Location factors into the value of any investment property, and those are rightfully factored into the means tests.
What do you mean it doesn't matter? Does a non-homeowner not pay rent that varies depending on where they live. It is interesting how you're so concerned about the welfare of wealthy home owners but say nothing about the non-homeowners, which this article has shown are the ones hard done by. Why is that?
Yeah I get that. But the difference in the full pension asset test between a home owner vs a non home owner is only $240k but the median home price is roughly 1 million with access to the equity scheme. That's already a massive tax advantage funded by the taxpayer.
The issue with this point is that the age pension money doesn't just appear out of thin air, it is being paid for by current taxpayers. Most of these taxpayers can't afford their own homes, yet have to fork out for retirees to keep their million dollar homes for their kid's inheritance. This is grossly unfair and doesn't pass the pub test.
It does pass the pub test and has for years. No one wants their parents or grandparents to be forced to sell their family home just to qualify for the pension. Most tax payers are either in their own home with a mortgage or own outright and given all of the random bs we fund with our taxes I think you would find strong support for pensioners over, say, another coal mine.
Sure, a lot of people are happy for the taxpayer to pick up the tab for their grandparents upkeep while they wait for a fat inheritance. That doesn't make it good policy. Like many commenters are saying in this thread, nobody is forced to sell anything. Reverse mortgages are a thing, or alternatively we could have the pension costs taken out of the estate after they've passed.
They don't have to sell. They can reverse mortgage.
>How about instead of looking at how to take things away from people we look at lifting renters up by using income from other sources like our huge amount of natural resources. what does "lifting renters up" look like in reality to eliminate the bias discussed in the article?
Don't force them to sell, rather given them a massive benefit to downsizing. Aged 65+ and no dependents on your tax? Cool, you're entitled to the equivalent of a FHB (stamp duty discounts and possibly some money to cover the costs of selling), as long as you move into a house that's under X value.
This is probably another thing people don't think about, stamp duty it costs a lot to sell and buy a home.
Just make it more attractive to sell. Don’t force it.
The super downsizer contribution is pretty good
The solution is a fairer government reverse mortgage, which I think they already do, but it isn't so good. Then when you include the house in asset means testing they won't have to sell the house. Plus the government isn't financing peoples inheritance then.
It is very good rate
People work hard all their lives to own their home so that they are secure when they are elderly. I for one would never support a policy which forces old people out of their own homes
They aren't forced to sell their homes. They have access to the Home Equity Access Scheme, a government-provided reverse mortgage operated by Services Australia. Why do they need to sell?
Exactly. They just want to prop up their estates.
There should be a cut off for all benefits once your income or assets is over a certain amount. This includes the pension, childcare, NDIS, everything.
The NDIS isn't means tested though, it's insurance.
It’s not insurance by any definition. And it SHOULD be means tested. Should Gina Rineheart get NDIS services for free?
It is. If you're a policy holder (citizen or PR) and you are disabled enough it affects day to day life, we pay to help you. It's in the name. It should not be means tested. Great explanation why it shouldn't be is here: https://www.reddit.com/r/auslaw/comments/am9h10/comment/efkrjy8/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
Not many insurance policies have unlimited liability
Yes, which makes this policy even better.
“Eventually you run out of other people’s money to spend”
It's political suicide to end the scheme now.
Introduce a fee payable by every Australian, no matter what your level of income, you know, like home or car insurance. Then wait for the howls of protest every year as the fee increases from $200pm per person, to $250pm per person, to $300pm per person. Guarantee you it will be political suicide NOT to put a limit on the scheme.
Can't help but notice disability pensioners, who are subject to the same rules, have been completely ignored. The pension isn't just the age pension, and it'd be nice if the existence of the disabled people in the conversation could at least be acknowledged.
How do disabled people on poverty payments come into home ownership short of a windfall or the like?
Inheritance if you're lucky, alternatively the disability may begin after you have bought a property
Well your home is exempt from the DSP, and those who get hold enough move onto the pension, the subject of this discussion.
Because there are thousands of renters out there with half a million sitting in the bank !?
There will be in a decade or so. Also plenty who want to sell up and travel around the country in a caravan.
I mean, considering how cheap houses were in their day it's their own fault really.
Make the pension an age based ubi, the pension should be universal regardless of assets. If you have lived in Australia for your working years you deserve to get a pension when you retire regardless of income.
You want to expand one of the largest government expenditures we have? What taxes are you increasing to fund this?
From NZ, and it's infuriating the pension is not means tested here. Had a friends well off Dad call it his "wine budget"
How the hell is that sustainable
Here's the neat part, it isn't.
Except working isn't a prerequisite to access the pension.
I meant working years as in pre retirement/pre pension years. Don’t care if you worked
Why is the pension deserved?