Investors are scrambling to fix their dwindling financial position and retirement plans, and taking on more investment risk to make up shortfall after the asset test changes to the Age Pension, according to Trilogy Funds.
Under the new asset test, a couple with a house and assets of $375,000 are entitled to the full pension of $34,000 while those with assets of $816,000 would receive nothing.
Trilogy managing director, Philip Ryan, said the changes meant thousands would be left with no retirement plan, and had “had the rug pulled out from underneath them”.
“When the goal posts shift so dramatically and so suddenly it will inevitably cause significant difficulties for thousands of people,” Ryan said.
“Retirement income is something most people plan for over many, many years.”
Australians would now be forced to entirely re-evaluate their post-work life and from an income point of view, could be $34,000 worse off.
“The biggest issue we’re seeing from our clients is that many are having to consider taking on more investment risk in their portfolio to make up the shortfall in income,” Ryan said.
“To make such a significant change in such a short space of time is deeply unfair to the thousands of people who planned for their retirement based on a set of rules.”
While family homes were exempt from the asset test, significant overall asset wealth would be needed to secure a full pension, and depended on other assets totalling less than $375,000.
Ryan said Australians had worked hard to earn their retirement savings, and would now have to compromise on standards of living.
“I would hope that’s not the message the government is trying to send to hardworking Australians,” he said.
“[They] have painstakingly put together a nest egg to fund their retirement.”