Government backflips on pension

The government has backflipped on a key budget policy that would have seen the value of the Age Pension diminish for all recipients.

In its place, the government is considering a plan to restrict the access of wealthier retirees to the Age Pension, in a move to take pressure of the budget.

Social Services Minister Scott Morrison flagged the policy yesterday, telling The Australian, “It should very much be on the agenda for debate.”

Speaking on Thursday, Mr Morrison said the government would consider the policy as part of a “coalition of ideas for a sustainable pension,” which was needed to avoid a “very serious fiscal situation.”

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However, Mr Morrison said any changes would not take effect in the current term of government.

The move to target richer retirees is a backflip from the government’s unpopular budget-saving policy of pegging Age Pension increases to inflation rather than wage rises, which was announced in last year’s budget.

In explaining the backflip, Mr Morrison said he was “open to alternatives that achieve the same outcome” of taking pressure off the budget.

The idea for the change came from the Australian Council of Social Services (ACOSS), which yesterday called the plan to peg the Age Pension to inflation “unfair”.

“It would effectively lead to people on pensions, including older people, sole parents, and people with disabilities, falling behind community living standards,” said ACOSS chief executive Dr Cassandra Goldie.

Dr Goldie urged the government to increase the Age Pension threshold, which she said currently “allows couples with as much as $1.1 million in assets on top of the family home to qualify for a Part Pension”.

Mr Morrison told The Australian, “For ACOSS to put it on the table is a good contribution. The precise measure they’ve put forward is obviously something we would have to look at in terms of whether we think it goes too far or is too extreme. That’s an assessment that needs to be made.”

ACOSS also called for the government to target super tax concessions for wealthy retirees.

The call followed a report from the Association of Superannuation Funds of Australia (ASFA) which found that there are over 200,000 people who have superannuation account balances in excess of $1 million, with around 70,000 with balances in excess of $2.5 million.

ASFA said the majority of these were in self-managed superannuation funds.

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