Pro­posal over­look­ing the most needy

Central and North Burnett Times - - YOUR SAY -

NA­TIONAL Se­niors’ Right­siz­ing pro­posal was pretty straight-for­ward.

We asked that $250,000 be quar­an­tined from the prof­its of the sale of the fam­ily home and ex­empted from the Aged Pen­sion means test.

Older Aus­tralians could keep this money to pay for es­sen­tials and keep their pen­sion and con­ces­sions.

Around one in four Na­tional Se­niors’ mem­bers have told us they live in un­suit­able houses – they are too big, too ex­pen­sive to main­tain, or even un­safe if your mo­bil­ity is com­pro­mised.

Our aim was to help those older Aus­tralians who most needed it – the ones on part and full aged pen­sions, that top out at $888pf for a sin­gle per­son and $1339.40pf for a cou­ple, in­clud­ing sup­ple­ments.

The gov­ern­ment’s ini­tia­tive is more about su­per­an­nu­a­tion than down­siz­ing. It’s com­plex and re­lies on the transfer of sur­plus sales pro­ceeds into su­per­an­nu­a­tion.

That money will then be con­sid­ered for the means test. So those who want to down­size will lose some, most, or all of their pen­sion de­pend­ing on the cal­cu­la­tions.

That was a key rea­son many home-own­ing pen­sion­ers were stay­ing put be­fore the bud­get, and it’s hard to see how that will change be­cause of this ini­tia­tive. There’s also the added is­sue of stamp duty costs, which vary from state to state.

But here’s a cou­ple of sce­nar­ios.

A sin­gle pen­sioner in a house worth $870,000 sells and down­sizes to a $320,000 sin­gle bed­room unit. They make $550,000 on the sale and would be able to put $300,000 into a su­per ac­count, leav­ing $250,000 cash.

This puts them over the pen­sion thresh­old, with­out con­sid­er­ing any non-home as­sets (e.g. car and fur­ni­ture). They would need to earn a re­turn of 4.25% pa on their $550,000 in su­per and cash just to re­place the pen­sion (now $23,096pa, in­clud­ing sup­ple­ments, with no tax payable), and that’s a tall or­der in to­day’s eco­nomic cli­mate. They’d also lose the pen­sion con­ces­sion card, which is worth $2-3000 pa.

A cou­ple who are self-funded re­tirees have more than $821,500 in non-home as­sets so are not el­i­gi­ble for a pen­sion. They are as­set rich be­cause they have a home worth $2.4 mil­lion. They down­size to a unit worth $1.8 mil­lion. They can add a fur­ther $600,000 in pro­ceeds from the sale to their su­per, tak­ing it to a to­tal of $1,421,500. The min­i­mum in­come they are al­lowed to draw is $71,075 pa, with no tax payable.

They are win­ners, but hardly liv­ing a life of lux­ury.

SHARE YOUR VIEWS: Let­ters to the edi­tor can be emailed to ed­i­to­rial@south­bur­nett­times.com.au or mailed to PO Box 312, Kin­garoy, Qld, 4610. All let­ters are sub­ject to edit­ing. Anony­mous let­ters will not be pub­lished.

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