Super sector supports age pension changes


By Elizabeth Somerville

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Proposed changes to tighten the eligibility rules around access to the age pension have been largely supported by the superannuation industry, with the measures expected to provide greater clarity and improve fairness within the system.

In handing down his budget for 2015, Treasurer Joe Hockey stressed the need to ensure the pension was sustainable and affordable in the future as it formed a safety net for many Australians.

“The age pension will continue to increase, twice a year, this year, and every year, at the highest available indexation rate,” Hockey said in his budget speech delivered tonight.

“From 1 January 2017, we will make changes that benefit pensioners with fewer assets beyond the family home.

“But we will also tighten eligibility for those pensioners with higher levels of assets.”

The changes provided the necessary clarity the industry required and would enable further discussions about the importance of saving more for superannuation, Association of Superannuation Funds of Australia chief executive Pauline Vamos told financialobserver.

“We now have clarity on the part age pension and the full age pension,” Vamos said.

“It makes it easier to have the discussion on the relationship between super and the pension system.

“It makes the tax discussions better.”

These sentiments were echoed by the Australian Institute of Superannuation Trustees (AIST), which acknowledged pension eligibility changes were a good first step towards a longer-term superannuation strategy and a welcome alternative to the government’s previous plan to change the pension indexation rate.

“We are happy with the announcements around the age pension; they were the right steps,” AIST chief executive Tom Garcia told financialobserver.

“The previous measures of indexation would have penalised the wrong people.”

Financial Services Council chief executive Sally Loane told financialobserver the body welcomed the tightening of the asset test for the age pension and the measures would create more equity for retired Australians.

“The living standards of lower-income retirees will be improved, while at the same time the taper rate will be increased to ensure higher-income retirees are required to spend their private savings before falling back on the government purse,” Loane said.

“These reforms improve the integrity and targeting of the retirement system.”

However, Industry Super Australia chief executive David Whiteley said the decision to tighten access to the age pension would potentially leave middle-income earners worse off unless it was coupled with an increase in the super guarantee.

“For the majority of Australians the age pension and super are two sides of the same coin,” Whiteley said.

“Changes to the pension assets test will require most Australians to save more in super or work longer.

“Unfortunately, moves to boost self-reliance have been undermined by freezing the super guarantee and removing the low-income super contribution.”

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