National Seniors has called on the Government to partially wind-back the higher age pension taper rate.
“The changes to asset test thresholds and taper rates, which came into effect in 1 January 2017, are of significant concern to National Seniors members,” says the 2017/18 pre-budget submission by the organisation.
“While the increase to the assets test free area is welcomed and will improve the situation for around 170,000 pensioners, roughly 330,000 Age Pension recipients will lose either some or all of their pension and associated concessions.”
“This change has been ill-considered and poorly implemented. It has impacted thousands of Australians who have prudently planned and saved for their retirement.”
National Seniors says these changes create “perverse incentives” for middle income households to spend rather than save for retirement.
“Many retirees will be worse off than those receiving a part-pension with less assets and are, in essence, being encouraged to spend or divert asset wealth to remain eligible for the Age Pension and associated concessions.”
“This will dramatically undermine any potential gains and result in a diminishing of the capacity of older Australians to contribute to their retirement over the long-term because they would have diminished their productive asset wealth.”
National Seniors recommends the 2017/18 Budget include a reduction in the taper rate.
“The decision to double the taper rate from $1.50 to $3.00 is too severe and a more reasonable rate of $2.00 should be considered that promotes economic reform that is fair. This will lessen the impact of the current changes, which has been considerable in many instances.”
The pre-budget submission also calls for the government to commit to “fair and equitable” reform of the tax and transfer systems.
“National Seniors feels that the retirement income system is being regularly changed with what appears to be little foresight, planning or gain. Our members feel that they have been asked time-and-again to tighten their belts to deliver budget repair at significant personal cost.”
“While older Australians are conscious of the need for ongoing economic reform and budget repair, they feel they are being constantly and disproportionately targeted when many remain untouched and others are being offered generous tax cuts.”