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Aged pension asset test changes hit middle-income Australians
Changes to the asset test rules for the ages pension damage the retirements of middle-income Australians, and should be replaced with a single test for both superannuation and the pension, according to the SMSF Association.
The Association believed that the changes to the means test taper rate and thresholds, which were effective from 1 January, 2017, actively discourage middle-income earners from saving to be self-sufficient in retirement, as they reduce individuals’ entitlement to the age pension as their assets increase.
John Maroney, SMSF Association chief executive said that this could significantly impact middle-income Australians receiving a part age pension payment to supplement their superannuation income.
The Association said that the asset test should instead be changed to integrate both superannuation and aged pension testing.
“We believe that having the superannuation and social security systems properly integrated is a key facet to achieve an efficient and sustainable retirement income system, and that the current siloed approach to policy making in these areas is creating perverse outcomes,” Maroney said.
The Association suggested that a single means test that applied a deeming rate to financial and non-financial assets could provide a more appropriate and simple alternative.
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