Rice Warner calls for changes to age pension eligibility
Rice Warner has proposed lowering the age pension threshold to $500,000, and including family homes valued above $1.5 million in the asset test, in its submission to the Tax Discussion Paper.
The research firm said in the submission that the “age pension should be phased out”.
“Retirees should first spend their own assets and be eligible for a full Age Pension when they fall below a threshold,” Rice Warner said.
While the firm argued it would be appropriate for a couple to keep a family home up to the value of $1.5 million and all other assets, including superannuation of no more than $500,000, and to continue to receive the age pension, individuals with assets above this should not be able receive it.
“This still favours home owners over renters so you might allow higher levels of assets for renters to compensate,” said the submission.
“This level of exempt asset would move some people currently on a part pension to a full pension and others to no pension, [although] we favour grandfathering of the current retirees for at least a decade.”
The submission said that under the proposal, if people have a valuable home they have the choice of downsizing or requesting a government pension that is paid as a loan with the home as security.
“At present, people won’t downsize as the cash generated impacts on their age pension,” the submission said.
Rice Warner also made two other suggestions which the firm said would remove incentives for running down funds as quickly and falling back on the age pension.
Pensioners should be able to receive a health card, irrespective of their financial assets, from a specified age such as 75, it suggested.
“This would remedy the current situation where linkage of eligibility for the Health Card with being on the Age Pension acts as a powerful incentive for retirees to manage their affairs in a way that makes them eligible for at least a Part Pension,” said the submission.
The submission also proposed that retirees beyond an advanced age such as 90 should be able to receive the age pension without means testing.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.