Archive for November, 2012

Safety net of age pension

November 22nd, 2012 1 comment

Safety net of age pension.

The Australian government provides a financial safety net for any person above certain age and other qualification, in the form of the basic age-pension, which it means tests for both income and assets, yet it provides very generous tax concessions for people of considerable assets or income, which now equal the cost of the age-pension.
Would it not be more sensible and fairer for the government to abolish the means test of the age pension and abolish the tax concessions for super.

This is what the select committee had to say about the means test of the age pension.
As mentioned in the “Select Committee on Superannuation” report of 2003, Australia is the only OECD country which has a means test for the basic pension, and it is mean.

The Report’s recommendation for a review of the employment-superannuation nexus errs on the side of caution. This caution is well justified since it opens up a much broader debate on the structure of Australia’s retirement income system, including proposals for a universal pension than that originally envisaged in the terms-of-reference. The fiscal impact of widening the spread of tax concessions is also unclear.

Why does the Australian government persist with the unfair treatment of the retirees, punishing the lower income ones with the means test of the age pension, while giving the rich retirees huge tax concessions?

I have put this question to numerous politicians, from all the parties and independents, yet none has so far given me a reasonable answer, to what I consider a reasonable question.

Why can all the politicians just ignore my question? Because I seem to be the only one asking it.

Who gives the politicians security that this unfair social treatment of the majority of age pensioners will not affect their chances of re-election at next election: It is organizations which should protect the interests of the age pensioners on low incomes, like COTA( Council on the aging), ACOSS, Australian Council on Social Service, ACPSRO,Australian Council Public Service Retirees Organization and its affiliated Associations, which are opposing a Universal Age Pension and are therefore endorsing the governments policy which keeps low income pensioners poor, yet almost seventy per cent of their members are on moderate incomes and are greatly affected by the means test of the age pension, while the rich pensioners are gallivanting all over the world, spending money outside the country which should be spent in Australia to support local businesses; Gerry Harvey must have missed his opportunity in broadcasting this.

The other influential group which tacitly supports the government, to keep the lower income earners and pensioners poor, are the Australian Union bosses, many of which sit on Superannuation Funds boards, earning incomes of $500,000, as is the case of David Atkin of industry superannuation fund, Cbus.

Then there are retirement scheme operators, which never miss an opportunity to remind the government to raise the compulsory super contribution to 12%;
Ms.Reynolds chief executive of the Australian Institute of Superannuation Trustees was reported as saying,” The move to 12 per cent needs to go ahead regardless”. Pauline Vamos also never misses an opportunity to promote the raise of super contributions to 12per cent.

It is not hard to see, for whose benefit the compulsory super was introduced; the super industry, union bosses, who earn large fees or union bosses who collect nice incomes for sitting on boards of industry super funds.

The SMSF’ owners are also very pleased with the large tax concessions for super, and should their income in retirement fall below a certain level, they can and will always avail themselves of the age pension.

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