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Means test of age pension creates two classes of citizens

5th July 2014

Dear Mr.Southcott.

Thank you for your letter of the 25’th of June 2014 in which you state “There have been no adverse changes to the superannuation system for self-funded retirees”, and then you give some figures on pensions and their indexation, all of which I,am well aware, because they are easily accessible either from Centrelink or government data.

 My concern is the means test of the age pension.

By using the means test for the basic age-pension, the government splits the Australian retirees into two groups; the 80% of either full or part-pensioners, which are greatly affected by the means test, and the other 20% of self-funded retirees, who greatly benefit from the tax-free super, if the income is derived from a so-called taxed fund, and the recipients of large defined super income, with more than $200,000 of super, who benefit to the tune of $20,000 from the 10% tax offset, which is more than a single pensioner receives in age-pension.

Any self-funded retiree also enjoys the safety net of the age pension, should their income or assets fall below a certain level, yet a single pensioner loses 50% of his/her age pension once their other income exceed $4,000 per annum, or $6,000 for a couple, which is virtually a 50% tax rate, higher than the highest income earner.

This situation will not change in the future, because the 80% of workers or salary earners will never accumulate sufficient funds to become self-funded, and only the top 20% will become self-funded, by salary sacrificing, saving tax in the process.

Furthermore, the people who manage the super assets of the majority of the Australian workers, sometimes even Union officials, are becoming wealthy in the process, even if the performance of the super funds is at times rather woeful, yet the super industry is guaranteed an  influx of super contributions, because of the compulsory super laws.

I,am not aware of any country, which has the means-test of the basic age pension, or a compulsory super system, where the members have to carry all the risk, yet are not provided by a government guaranteed defined super system. Maybe you can enlighten me on this matter.

The government and the media also put a lot of emphasis on the word, “sustainable”, but can a system be sustainable, when the tax concessions for super to the government equals the cost of the entire age-pension?

It is obvious that the Australian government only governs for the benefit of the top 20% of the population as far as income and assets are concerned.

I would like to refer you to two articles  mentioned below, and maybe the government should take note of, because, Australia is becoming a very un-egalitarian society, heading for a lot trouble in the future.


Government dodges the super elephant.

Superannuation tax breaks described by Australia Institute as the Hindenburg of the federal budget


By James Glenday

Audio: Think tank wants big change to retirees’ benefits (AM)

“Superannuation concessions are unfair … the top 5 per cent of income earners get a third of the benefit, and the bottom 20 per cent get literally nothing.”

The report suggests scrapping concessions entirely, introducing a universal or non-means-tested age pension and upping the current rate by about 7.5 per cent to $26,273 a year for singles and nearly $39,611 for couples.


Set super free to grow the economy, AFR 5-6.July 2014 page 22, by Brian Toohey.


Yours truly


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  1. January 3rd, 2016 at 12:31 | #1