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.
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.
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