Pension cuts to heighten retiree weaknesses

By 2055 a comfortable retirement will be out of reach for 80 per cent of single women due to the pension taper rate changes to be introduced in the new year, according to Industry Super Australia (ISA).

The superannuation body said the Age Pension taper rate increase, the assets test changes, and low interest rates could result in retirees near the thresholds with simple investments living off less than the full Age Pension.

ISA chief executive, David Whiteley, said the changes would heighten existing weaknesses and disproportionately hit low to middle income retirees well into the future.

Related News:

He said the new policy assumed retirees could earn over 7.8 per cent each year on the top portion of their savings which was not feasible.

"The new settings provide perverse incentives to splash out on a cruise or renovate the family home, rather than save. It is not as simple as giving assets away to children or grand kids, as gifting restrictions can also affect pension eligibility," Whiteley said.

"For most Australians, these changes mean working longer, retiring with less or saving more. Industry Super is calling on government to revise the taper rate down to $2 per fortnight."

The cuts will see the Age Pension taper rate double to $3 per fortnight and the upper thresholds of the assets test decrease to $542,500 (from $793,750) for singles, and $816,000 (from $1.1 million) for couples.

Related Content

ANZ Chief Risk Officer to retire

ANZ’s long-serving Chief Risk Officer, Nigel Williams, will be retiring from the role early next year.The big banking group announced Williams’ re...more

Vision Super program helps employees ‘save more later’

Vision Super has helped implement an innovative program based on behavioural economics at Mount Alexander Shire Council, with more than 70 per cent of...more

Warning on Age Pension and preservation ages

A key industry superannuation fund group has urged the Government against raising the Age Pension eligibility age beyond 67.The Australian Institute o...more



Add new comment