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ACOSS Push on Indexation of Pensions


2 April 2015 at 10:15 am
Xavier Smerdon
Welfare peak body, the Australian Council of Social Service has called on the Federal Parliament to reject the plan to lower the indexation of pensions and instead focus on eligibility for the part-pension - a move that already appears to be gaining support from the Abbott Government.

Xavier Smerdon | 2 April 2015 at 10:15 am


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ACOSS Push on Indexation of Pensions
2 April 2015 at 10:15 am

Welfare peak body, the Australian Council of Social Service has called on the Federal Parliament to reject the plan to lower the indexation of pensions and instead focus on eligibility for the part-pension – a move that already appears to be gaining support from the Abbott Government.

“The decision to reduce the Indexation of pensions in the last Budget would effectively lead to people on pensions, sole parents, and people with disabilities, falling behind community living standards," ACOSS CEO Dr Cassandra Goldie said.

ACOSS said these group would lose as much as $80 per week over the next 10 years based on modelling by the National Commission of Audit.

"This would be a massive cut to the income of some of the most vulnerable people in our community. The last thing we should be doing is reducing indexation of payments for pensioners down to the inadequate indexation which is still in place for people struggling to survive on Allowances, including young people on Youth Allowance (just $30 a day) and unemployed people on Newstart (just $37 a day),” Goldie said.

"We urge the Government, Opposition parties and crossbenchers to work together on alternative solutions to ensure the sustainability of retirement incomes system into the future. This must include reform to better target the Age Pension to those who need it and to superannuation tax concessions as part of the tax review.”

ACOSS also put forward recommendations including reducing the current threshold that allows couples with as much as $1.1 million dollars in assets on top of the family home to qualify for a Part Pension.

The call has already made an impression on Social Services Minister Scott Morrison who has told several media outlets the Federal Government is prepared to restrict access to the part pension for wealthier retirees in return for dumping CPI-increases on all pensioners.

He said he was prepared to seriously consider the alternative proposals put forward by the Australian Council of Social Services.

Support also from the Australian Greens. WA Senator Rachel Siewert said the Australian Greens oppose the indexation measure as it will have an unfair impact on pensioners.

"The Australian Greens support the Council on the Ageing’s (COTA) call for a broad review of retirement income instead of fragmentary changes to the pension. This review should include looking at the assets test and changes to super concessions," Senator Siewert said.

ACOSS said it also supported the Government's move to abolish the Seniors Supplement, which is available to people who are not eligible for the Aged Pension because they are in a much better financial position than most.

"The Supplement extends to older people who are disqualified from the Age Pension due to the assets test – which means for example, it would go to couples with assets in excess of $1 million apart from the family home. By excluding superannuation income from the income test for existing recipients, it also extends to people with significant superannuation incomes,” Goldie said.

"A couple could have a million dollars in a superannuation fund paying them an income of $100,000 a year in addition to their assets and still receive the supplement.

"We strongly support the need for an adequate safety net system to ensure that people are supported when they fall into hard times. However, this supplement of $858 each year for singles and $1,295 for couples, simply cannot be justified.”

ACOSS recommendations

1. Tighten the Age Pension assets test

•    Reduce the assets test free area for home owners to $100,000 for singles and $150,000 for couples, and increase the taper rate for both home owners and non-home owners from $1.50 per $1,000 of additional assets to $2 per $1,000, so that the cut out point for the part pension for couples is reduced from $1.1 million in assets besides the family home to $794,250 in assets besides the family home – Savings: $1,350 million ($1,450 million in 2016-17).

2. Abolish the Seniors Supplement

•    Abolish the Seniors Supplement (available to people who do not qualify for the Age Pension due to their income and assets) from 1 July 2015 leaving the Pension Supplement in place for Age Pensioners – Savings: $240 million ($250 million in 2016-1).

3. Reform Superannuation system

•    Increase the preservation age so that it corresponds to the Age Pension access age by 2027 – with early access arrangements for people with disabilities and caring roles that effectively require them to retire earlier. May include allowing access from age 55 for Aboriginal and Torres Strait Islander people and people whose disabilities or caring roles would ordinarily qualify them for certain social security payments (such as the Disability Support Pension or Carer Payment) or by allowing withdrawals earlier than 55 for any purpose up to modest annual and lifetime limits – Revenue neutral.

•    Replace existing tax concessions for superannuation contributions with a simpler taxation structure, in which employer contributions are taxed at the employee's marginal tax rate and a capped superannuation rebate is paid into employee's superannuation accounts – Revenue neutral.

•    Extend the 15 per cent tax rate on superannuation fund earnings to accounts in the ‘pension phase', in three annual steps of 5 per cent each year – Saving $300 million in 2016-17.

•    Stem the avoidance of personal income tax by individuals over 55 years of age who ‘churn' their earnings through superannuation accounts: From 1 July 2016, reduce the annual cap for concessional contributions by $1 for every dollar withdrawn from a superannuation account in the same year by a fund member – Saving $500 million in 2016-17.


Xavier Smerdon  |  Journalist  |  @XavierSmerdon

Xavier Smerdon is a journalist specialising in the Not for Profit sector. He writes breaking and investigative news articles.


Tags : ACOSS, pension, Welfare,

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One comment

  • Jo Keith says:

    The ACOSS recommendations on new Asset Test Caps and rates will be a disaster for all persons receiving at least some Age Pension. For example a couple who have $300,000 in superannuation or other assessable assets will loose $280 from their age pension each fortnight. These recommendations don't affect the "rich" they affect all age pensioners.


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