The Federal Government needs to better target the age pension in circumstances where it sustainability is being undermined by loose eligible rules that enable individuals to receive payments while still owning substantial assets, according to the Financial Services Council (FSC).
The FSC has used its pre-Budget submission to the Treasury to urge that the Government "consider whether the correct people are receiving the age pension based on their personal wealth".
The FSC has specifically recommended that the Government conduct a review on whether the income and asset tests for the age pension are too generous and whether the long-term cost of the pension is sustainable.
"Appropriate targeting of public benefits is becoming increasingly important as a factor of budget sustainability," the submission said. "The FSC is concerned that the stability of the retirement system is being undermined by loose eligibility rules that enable individuals to receive pension payments whilst still owning substantial assets."
The submission then pointed to actuarial research which it said had demonstrated that, in 2012, there were over 850,000 retirees receiving the part age pension, or 36 per cent of the total retiree population and that this rate was significantly increased when the Government reduced the taper rates for the asset test for the age pension
"When retirees become eligible for the part pension varies depending on the income test and asset test formulas. By way of example, it is unsustainable for a retired couple who own their own home, hold over an additional $1 million in assets and receive an income of over $60,000 per year to still be eligible to receive a part age pension," the FSC submission said.
