Older Aussies welcome Labor to review pension means test
OLDER Australians have welcomed Labor's commitment to an independent review of the pension means test, should it win government.
The taper rate changes announced by the Coalition in 2015, and due to take effect in January, will see retirees with modest savings and a family home receiving a lower annual income than someone on a full pension.
National Seniors chief executive Michael O'Neill said: "An independent review into the pension means test is welcome".
"We do not expect the assets test to return to what it was but we do expect the fundamental policy settings to be correct".
"It simply makes no sense to penalise savers," he said.
O'Neill also noted that the Governor of the Reserve Bank had only in the past month identified that low interest rates were likely for many years to come.
"The problem created by the change will only get worse as returns remain so low," he said.
Doubling the asset taper rate (from $1.50 to $3 for every $1,000 of assets over the threshold) is equivalent to a 7.8 per cent marginal tax rate, higher than what those assets can deliver in income.
The pension changes announced in the 2015 budget and rushed through federal parliament will see 325,000 existing pensioners lose all or part of their pension in 2017.
According to the ANU's Tax and Transfer Policy Institute the changes penalise savers outside of superannuation; create perverse incentives to spend; and leave the wealthiest retirees untouched.