Budget fails struggling retirees

pension taper rates

The federal budget has neglected retirees who had hoped to receive more income through a more lenient tapering of their asset test, a pension expert says.

Retirees hoping the federal budget would allow them to access more income from the age pension via lower taper rates have been left disappointed, a pension expert has said.

Pension Boost founder Paul Rogan noted the budget had neglected retirees with assets beyond the current age pension limits who had hoped for an opportunity to receive more income with lower taper rates applied to their assets test.

The lack of such a provision in the budget was especially problematic for retirees who were dependent on the age pension and had found the COVID-19 measure reducing minimum superannuation drawdown rates had not improved their financial circumstances, Rogan noted.

“This lack of action means that more retirees will be forced to dip into their superannuation more heavily to fund living costs at a time where markets are recovering from COVID gyrations,” he said.

“For many age pension-dependent seniors the COVID reduced minimum super drawdown rates are of no benefit as their costs still need to be met.”

He highlighted the Pension Loans Scheme (PLS), the loans scheme run by the federal government, as a possible alternative form of income support for retirees seeking more income, noting the scheme would provide access to fortnightly payments that would not impact their age pension entitlements.

“In addition to income support, another benefit of the PLS is that it assists seniors to continue living in their homes for longer,” he said.

Citing research from National Seniors Australia, he also pointed out retirees considering downsizing as a “fix-all” solution for their financial issues might be disappointed.

“The majority of seniors prefer to live in their homes rather than downsizing as a way to release equity to fund retirement,” he said.

“The resultant dislocation caused by moving to a new area away from their familiar surroundings and network of friends is stressful.”

Last week, Association of Independent Retirees president Wayne Strandquist said self-funded retirees had been overlooked in the budget, which should have included support measures to offset retirement income losses stemming from the impact of COVID-19 on the economy.

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