News

Pension asset test changes a worry for 'wealthy' retirees

FLAWS in the Abbott government's plans to block wealthy retirees' access to the age pension may result in them being unable to draw an income if their superannuation provider goes bust, an expert says.

Government budget changes will reduce the asset threshold for part-pension eligibility to $823,000, forcing about 91,000 Australians off the benefit and reducing pensions for another 235,000 people.

QUT Business School pension expert Dr Anup Basu, who has examined the policy in detail, says the policy, although designed to be "fair", will have "unfair consequences".

While lowering the threshold should make the pension accessible only to those who needed it, "simple arithmetic" showed the changes were "deeply flawed", he said on Thursday.

Dr Basu said under the new rules and based on rates from major providers, a retired 65-year-old couple who owned their own home and had $823,000 in liquid assets could draw an annual income of less than $29,000 in the current low-interest environment by buying an inflation-protected lifetime annuity.

However, while the current assets tests treated annuities as a "reducing asset value", a lifetime annuity meant retirees would need to hand over all their savings to a private provider to guarantee a regular income.

Dr Basu he said that "guarantee" from private providers was not as certain as a government pension as "adverse circumstances" could change the provider's ability to pay the promised income.

"In contrast, a retired couple who own their home and have liquid assets up to $375,000 would receive the full pension and associated supplements close to $34,000 per year, plus the benefits of many other government concessions," Dr Basu said.

"The 'wealthy' retiree couple who bought the annuity would not get back their original savings of $823,000, at least if they live as long as the average Australian."

Dr Basu said while lower income couples would get a "risk-free government pension", wealthier couples would be worrying about financial markets.

Topics:  federalbudget2015-16 pension superannuation



How to survive a bushfire in your car

IT SOUNDS like a nightmare, but it can happen.

Eight reasons to join the RFS

SPREAD across 93% of Queensland, the Rural Fire Service has about 36,000 volunteers. And you could be one of them.

What if my insurer gives me grief?

CLAIMING your insurance cover after a natural disaster can go one of two ways. It can be a breeze, or like pulling teeth.

'He's my house deposit': bulk bill IVF welcomed in Bundy

'I WORKED THREE JOBS': Krystal Templeton with her son Marty.

"This,” Krystal says holding a smiling Marty, " is my house deposit”

Bundy dad to be behind bars for Christmas

Man's matter adjourned until February

Local Partners

Rob's off to start a fresh new chapter

AFTER more than three decades delivering fruit and vegies to loyal customers across Bundaberg, Robert Ward is packing up his ute and retiring.


Kernaghan's a 'boy from the bush' with a timeless quality

Country music singer Lee Kernaghan.

Lee Kernaghan is celebrating the 25th year of his breakthrough song.

What's on: Saturday, December 3

Not sure what to do today? We've got you covered

Head to the sugar museum for a sweet taste of history

Cutting the ribbon to officially open the revamped Sugar Museum at Fairymead House is Mayor Jack Dempsey and Fairymead House Team Leader Hayley Vale.

Learn about the industry that made Bundy what it is

Amanda Seyfried lets slip the sex of her baby

Amanda Seyfried has suggested the sex of her baby

Meet the Brisbane breakfast radio king's replacement

Craig Zonca ABC Radio

ABC announces Craig Zonca as the replacement for Spencer Howson

How predictable are your Netflix habits?

Stranger Things is taking the world by storm as a new-age nostalgic Sci-Fi Thriller

The new entertainment binging pattern

Kanye West is on the mend now he's back from hospital

Kanye West is more relaxed since returning home from hospital

WATCH: The young Aussie actor playing Barack Obama

A screenshot of the trailer for Barry, a new film from Netflix.

Aussie teen nails Obama's early university years

Boy George named as a coach on The Voice Australia

Iconic pop star Boy George is to appear as a coach on 'The Voice'

Ipswich City Properties asset portfolio retains its value

Ipswich City Council Administration Building, South Street, Ipswich. Photo: Claudia Baxter / The Queensland Times

New website launched by Ipswich City Council

INSIDE STORY: The highlights of your $150 million CBD

GRAND PLAN: The highlights of the Ipswich CBD redevelopment and where they will be located.

Work on city heart's radical transformation to begin next year

VOTE IN OUR POLL: Sand mine opponents face serious dilemma

Public meeting for the proposed sand mine at Maroochydore last week.

Coast MP calls on Minister to stop KRA proposal with stroke of a pen

Developer's grand new multi-million dollar estate

NEW ESTATE: This is the only plan revealed by the property developer's new Billabongs Estate in Agnes Water.

DEVELOPER given the go ahead for a massive estate with 149 homes.

Couple's desperate $550K price drop to sell Gladstone home

Brian Headley and Kirstene Staib are selling their Kin Kora mansion for $750,000.

TELL tale sign of Gladstone's property market.

Ready to SELL your property?

Post Your Ad Here!