Pension Asset Test Changes.

[Renato1 (Renato)]

I've spent the last week reading and hearing how great Scott Morrison and Richard Di Natale were for agreeing to cut part pensions to people with more than $823,000. And I've been hearing what a dill Bill Shorten was for supporting millionaire pensioners. I knew something didn't add up, and it took this article by Pete Smith to get me wondering who exactly is the dill and who is rational.
http://quadrant.org.au/opinion/qed/2...suring-greens/

Basically, as he points out, someone with $823,000 winds up with no pension and an income of $33,000 a year from say an Allocated Pension paying 4%.

But someone who hasn't been as frugal and has just saved $375,000 will be on $49,000 a year (i.e. $34,000 base pension, plus $15,000 earned from 4%). He actually forgets to add an extra thousand or so a year taken from the rich to give to the poor from this change, plus access to the Health card which is worth anywhere from $3000 to $5000 a year.

So, if one saves real hard one can wind up $5000 to $7000 a year worse off than a base grade pensioner with no assets, and $20,000 to $22,000 a year worse off than a pensioner who has saved the maximum amount which does not reduce the pension.

Basically, self funded retirees who have under $1,375,000 in assets beyond the family home, are going to be worse off income wise compared to someone with $375,000 (assuming they all agree that it is best to get tax free income from an Allocated Pension, the way the government wants them to). They face the choice of either gambling on riskier investments to try make their pie bigger, or spending really big on bigger homes and better cars to reduce their assets to $375,000 - in order to increase their income.

While none of this affects me, I suspect that there are going to be hundreds of thousands of very unhappy people around who feel they have been very unfairly betrayed. I am wondering if this may be Tony Abbott's smaller version of Work Choices.

Any thoughts?
Cheers,
Renato

[Allan_L (Allan)]

Thanks for your post Renato.
This is very disturbing as you have pointed out.
Almost unbelievable

[xelasnave]

It's hard to talk about this without politics..can we discuss it

[xelasnave]

Would it be a problem if returns were higher

[Hans Tucker (Hans)]

Originally Posted by xelasnave

It's hard to talk about this without politics..can we discuss it

Under the IIS TOS, no it is a topic that can't be discussed because it is a political topic...but that has never stopped people before.

[xelasnave]

Actually this is economics which is unrelated to politics

[Hans Tucker (Hans)]

Originally Posted by xelasnave

Actually this is economics which is unrelated to politics

Sooo....Scott Morrison, Richard Di Natale, Bill Shorten mentioned in the original post are actually economists and the end sentence about Tony Abbott is also an economic inference...yeah...right.

Sorry I got it so wrong.

[Kev11 (Kevin)]

This is a con - recalculate at 8% (any respectable allocated pension will return at least 7%) and the difference disappears.
Typical propoganda of lobbyists for the wealthy including Joe Hockey: convince middle income earners that they are being ripped off by low income earners not by the rich.
Same people who assert that low income workers would be better off working longer hours for less pay and casual and part-timers would benefit from a lower minimum wage and the elimination of penalty rates.
And the majority of middle Australia falls for it again and again!

[glend (Glen)]

removed my input

[Hagar (Doug)]

I really fail to see what all the fuss is about. Government be it Labour, Liberal or the Sex party are going to take from those who have a little or a lot and give it to themselves.

For many years I was unable to join a Superannuation Fund due to health reasons and when I was finally accepted to my industry fund after taking them to court I was slapped with a superannuation tax because I was considered a high income earner. The same tax applied to Pollies on their super but there was one catch, They could elect to voluntarily pay the tax or disregard it without payment.
I doubt many would have paid the tax. This only applied to politicians.

All are equal is nothing more than just lip service and like it or not there will always be those that have more and those that have less and we will always have a government that will exploit this division.

[Eratosthenes (Peter)]

....the top 1% of Australia's wealthy class control/own almost 50% of the wealth and pay minimal tax via various accounting and legislative vehicles erected - especially over the past 5 decades or so.

Incidentally the "so-called" Australian mining and energy resource sector is 83% foreign owned (mainly in the hands of US multinationals who control about 55%). This lucrative sector is only responsible for employing about 3% of the total Australian workforce. It also pays minimal tax on its revenue and profits and is subsidised by the Australian tax payer to the tune of 12 billion dollars per year.

Currently we have BHP being dragged into court for setting up an off shore tax evasion system (scam) in Singapore. Apparently ladies and gentlemen, BHP can internally sell coal for example to a BHP intermediate setup in Singapore very cheaply, to avoid tax liabilities in Australia, and then off sell it to the eventual buyer (China) as global prices. The amount being sought from BHP in this litigation is almost half a billion dollars.

Meanwhile the Australian government forks out 2.5 billion dollars per year to detain refugees and asylum seekers illegally in off shore detention centers, costing the tax payer on average $170,000 per refugee per year - way more than what the dole is in Australia.

Anyone in here have a dwelling under their spouses name that they can claim $270 per night to stay in? Hockey was very clear that the age of entitlement is over.

We live in a strange nation of intense hypocrisy and selective application of basic morals and ethics.

And there is no mass vehicle in the media for some of these problems to be even discussed let alone tackled with sensible solutions.

Unless you want call Murdochs primary attack dog Andrew Bolt, as a credible informer of what matters to people in this country.

[Eratosthenes (Peter)]

Originally Posted by xelasnave

Actually this is economics which is unrelated to politics

intimately interwoven I'm afraid Alex.

We live in a Corpocracy - a form of fascism.

have you notice how useless the vote is every few years at the ballot box?

Same puppets, same corporate clowns, serving the same masters.

never vote for the major parties (IMO) - it's a wasted corporate nod.

The best short term result for Australia at elections in the current corpocratic environment is a "hung" parliament.

Hung parliaments until a genuine democracy is in operation in this nation where the citizenry are actively participating in important decision making.

[glend (Glen)]

Removed my input

[RB (Andrew)]

Originally Posted by glend

I believe Renato's OP was a discussion about the pension changes. Rants about politicians/politics are likely to get this thread killed off pretty quick.

Exactly.

[Renato1 (Renato)]

Originally Posted by Kev11

This is a con - recalculate at 8% (any respectable allocated pension will return at least 7%) and the difference disappears.
Typical propoganda of lobbyists for the wealthy including Joe Hockey: convince middle income earners that they are being ripped off by low income earners not by the rich.
Same people who assert that low income workers would be better off working longer hours for less pay and casual and part-timers would benefit from a lower minimum wage and the elimination of penalty rates.
And the majority of middle Australia falls for it again and again!

Recalculate at 8%
Couple with $823,000 gets $66,000pa
Couple with pension and $375,000 gets $35,000 pension + $24,000 from money + $3000 to $5000 from health card = $64,000

Just one problem, we are in a far more volatile world where governments owe over 100 trillion US Dollars. Investment returns are highly variable - back in 2008 and 2009 returns of -15% and -40% were not uncommon. And where interest rates are at historical lows on government bonds, so that it is much harder to get a "safe" investment.

So, even if an Allocated Pension's investment return from a balanced fund earned 8 to 10% last year, 2.5% or so of value would have disappeared from inflation. And if one wants to be able to ride out fluctuations in earnings, one had better only take out the minimum required by law of 4% and leave the remainder there to cover the inevitable years of poor performance.
Regards,
Renato

[Hans Tucker (Hans)]

Originally Posted by glend

I believe Renato's OP was a discussion about the pension changes. Rants about politicians/politics are likely to get this thread killed off pretty quick.

If that is the case did Renato really need to drop political names in his OP and then finish with I am wondering if this may be Tony Abbott's smaller version of Work Choices. if he didn't want the discussion to turn to politics.

Why not just quote the numbers.

[Renato1 (Renato)]

Originally Posted by Eratosthenes

....the top 1% of Australia's wealthy class control/own almost 50% of the wealth and pay minimal tax via various accounting and legislative vehicles erected - especially over the past 5 decades or so.

That is not accurate. By the Credit Swisse Global Wealth report, the richest 10% of Australians own 50% of the wealth, which is a much better outcome than say the USA, where the top 10% own 76% of the wealth, and the UK where the top 10% own 85% of the wealth. And there are plenty of countries where that percentage is much higher.

As for paying minimal tax, that winds up being incorrect to. Most of the tax revenue comes from companies and the top 35% of taxpayers. Yes, we always used to see articles and news bulletins how people like Kerry Packer only paid 13 cents in the dollar tax. What none of those articles pointed out was the reason he only paid 13 cents in the dollar was because his companies had paid the other 33 cents in the dollar - and that people like Paul Keating had bought in something called Franking Credits to make sure that people were only taxed once on their income, rather than being unfairly taxed twice (which would have made them eventually move overseas).
Regards,
Renato

[sn1987a (Barry)]

$823000-$375000 = $448000

take $448000 to the casino and put it on black

roughly 50% of people win an extra $448000 to make up the difference and the losers are still better off with $375000

vote me for treasurer
you know it makes cents

[leon]

Yep, we can do that Barry, you seem to have it nailed

Leon

[Renato1 (Renato)]

Originally Posted by glend

Finally, I agree entirely with a loss of pension for people with assets of over $1mil on top of the home, and would go so far as to suggest that the family home should be included in the asset test (with perhaps a percentage realised).

The problem is that you are discriminating.

A current pensioner couple with nothing by way of assets get $34,000 a year plus up to $5000 equivalent on the Health card, totalling $39,000 year effectively.

To get that sort of income, indexed for CPI or wages for life, would require around $1.2million to $1.4 million, if paid for out of cash from an annuity.

So all those old age pensioners are effectively "millionaires".

Thus those who have actually saved only one million are in effect poorer than the old age pensioners.
Regards,
Renato