Pension Dilemma

[Petals]

Just reading in the news this morning that the present government is considering not providing Australian pensions to people who choose to live overseas once they retire. This should ruffle a lot of feathers with a coming up election. Of course they have made it much more difficult to get a pension if you live overseas. Being that people are required to be living here in order to claim the pension means that a lot of people who choose to move away prior to their retirement age will miss out on a pension anyway. My friend's brother had to move back from Fiji for this reason. He was fine but his wife was 10 years young and if he died then she would not have been able to access an Aussie pension despite having lived and worked here for 25 years. So anyone thinking of moving really has to consider all this as governments of all countries are striving to not pay pensions.

[Quoll]

As the Australian age pension is a welfare payment not an entitlement I think it is quite reasonable. Nothing stopping them taking their superannuation wherever they want. I don't think Australians should be paying welfare payments to anyone not living in Australia.

[amibovered]

Genius, will the great ideas from this Government ever start, imagine the aged care and medical costs that will come with all the pensioners that are forced to return.

[Slean Wolfhead]

As the Australian age pension is a welfare payment not an entitlement I think it is quite reasonable. Nothing stopping them taking their superannuation wherever they want. I don't think Australians should be paying welfare payments to anyone not living in Australia.

 

It's a maths calculation. Is it worth paying somebody an age pension of about $400 a week so they can live overseas and you can forget about them, or do you force them to stay in Australia and then have to account for them with public healthcare costs and the other benefits that pressure the public system?

You'd think any country would rather be rid of their oldies in the cheapest way possible when they stop producing benefit and leave the workforce.

[dmjg]

It's a maths calculation. Is it worth paying somebody an age pension of about $400 a week so they can live overseas and you can forget about them, or do you force them to stay in Australia and then have to account for them with public healthcare costs and the other benefits that pressure the public system?

You'd think any country would rather be rid of their oldies in the cheapest way possible when they stop producing benefit and leave the workforce.

 

 

but that $400 per week will be put back into the Australian economy,

 

where it will be taxed and a fair bit will end up in the gov coffers to start the next cycle

[Petals]

Double edged sword. A lot move to Thailand, Malaysia and other such countries these days as their pension goes further there and medical expenses are cheaper. I get a British Pension and I don't live there. I do not get an Aus one as I am not eligible. So its fraught with problems. It probably would not be retrospective if they passed such legislation but as I said in my original post, its already happening because of my friend's wife. They are on the pension as no super to speak of due to the period they worked so she would not be eligible under present legislation if they stayed in Fiji and he died.

[Parley]

Fair enough.

[Skani]

You'd think any country would rather be rid of their oldies in the cheapest way possible when they stop producing benefit and leave the workforce.

 

Except that they don't "stop producing benefit" when they leave the workforce. You mean the paid workforce. Volunteer services have been calculated as worth over $200 billion to the Australian economy and many of those volunteer services are provided by "oldies" who have retired...and therefore have the time.

 

Several years ago childcare alone, provided by grandparents, was valued at over $90 million.

 

There are many others like me in the retired, 60+ demographic who are providing free employment caring for both grandchildren and our parents at the same time.

[Guest]

Except that they don't "stop producing benefit" when they leave the workforce. You mean the paid workforce. Volunteer services have been calculated as worth over $200 billion to the Australian economy and many of those volunteer services are provided by "oldies" who have retired...and therefore have the time.

 

Several years ago childcare alone, provided by grandparents, was valued at over $90 million.

 

There are many others like me in the retired, 60+ demographic who are providing free employment caring for both grandchildren and our parents at the same time.

 

Incredibly well said, as an idealist 20 something I worked with children in care, as a Youth Justice Worker & as a teacher, in my 30's the lure of easy money lead me to a corporate life, now as I reach 50 my priorities have changed and I would like to work in education again. I have looked at retraining but have decided to simply retire early and volunteer. In my view I have made far less contribution to society in the last 20 years than I hope to in the next!

[FTA]

The current government is trying to scrape together cash from any possible source they can. They are unbelievably shortsighted. The backpacker tax is the most recent example that will bring in a few dollars, but will ultimately hurt the economy. Unfortunately the ALP are even more incompetent when it comes to economic management, so things are not going to improve. I suspect the government will soon include everyone's home in their pension asset test, and we will be forced to reverse mortgage them.

So I am not counting on getting the pension when I retire.

[akiralx]

I suspect the government will soon include everyone's home in their pension asset test, and we will be forced to reverse mortgage them.

 

I actually have no issue with this for expensive homes, maybe $1.5m+ (even in Sydney/Melbourne). It seems absurd that taxpayers, many on low incomes, are supporting seniors with quite large assets whose main concern seems to be to pass on as much as possible to their offspring, thus exacerbating the have/have not property divide.

 

No-one should be forced to move house (but maybe that could be encouraged for those who wish to downsize by maybe reducing stamp duty for seniors) but the government should create some kind of not for profit reverse mortgage scheme, or simply put a charge for the cost of the pension on a house when it is sold/bequeathed.

[FTA]

I actually have no issue with this for expensive homes, maybe $1.5m+ (even in Sydney/Melbourne). It seems absurd that taxpayers, many on low incomes, are supporting seniors with quite large assets whose main concern seems to be to pass on as much as possible to their offspring, thus exacerbating the have/have not property divide.

Yes, it makes sense, however it won't affect the "haves", who don't need the pension, and it will only make the divide wider for those that do but are forced into a mortgage. Once the big banks become involved, they will have a field day pressuring old people into dying early.

[Keith and Linda]

I actually have no issue with this for expensive homes, maybe $1.5m+ (even in Sydney/Melbourne). It seems absurd that taxpayers, many on low incomes, are supporting seniors with quite large assets whose main concern seems to be to pass on as much as possible to their offspring, thus exacerbating the have/have not property divide.

 

No-one should be forced to move house (but maybe that could be encouraged for those who wish to downsize by maybe reducing stamp duty for seniors) but the government should create some kind of not for profit reverse mortgage scheme, or simply put a charge for the cost of the pension on a house when it is sold/bequeathed.

 

There seems to be a fixation about the "haves" and that folk whom own $m homes are some of the haves, well this is not entirely correct, so lets say I buy a house when I am in my 30's I buy it for say half $m, we buy it because we like the area want to raise our children there and plan to live there for the rest of our life we are just Joe average workers but work hard scrimp and save to pay off the mortgage and have no other source of income or assets, however by retirement time for reasons outside my control the property increases in value to $1.5M, so having no other income other than my pension which could be small super topped up by the government pension, what happens to me now?

[akiralx]

There seems to be a fixation about the "haves" and that folk whom own $m homes are some of the haves, well this is not entirely correct, so lets say I buy a house when I am in my 30's I buy it for say half $m, we buy it because we like the area want to raise our children there and plan to live there for the rest of our life we are just Joe average workers but work hard scrimp and save to pay off the mortgage and have no other source of income or assets, however by retirement time for reasons outside my control the property increases in value to $1.5M, so having no other income other than my pension which could be small super topped up by the government pension, what happens to me now?

 

A charge is placed against the house when it is sold/bequeathed to offset some or all of the pension you receive, maybe up to a ceiling ($500K? Probably less, more like $300K). Or you may choose to downsize, releasing some funds to live on, which may lead to the pension being reduced under the current regime. In this latter scenario I would like to see stamp duty on the new smaller house being waived - this is apparently a large barrier to many retirees downsizing.

 

Such proposals are only designed to protect the viability of the pension - as 85% of retirees end up on it, it cannot continue at its current level.

[Keith and Linda]

A charge is placed against the house when it is sold/bequeathed to offset some or all of the pension you receive, maybe up to a ceiling ($500K? Probably less, more like $300K). Or you may choose to downsize, releasing some funds to live on, which may lead to the pension being reduced under the current regime. In this latter scenario I would like to see stamp duty on the new smaller house being waived - this is apparently a large barrier to many retirees downsizing.

 

Such proposals are only designed to protect the viability of the pension - as 85% of retirees end up on it, it cannot continue at its current level.

 

Down size to what and where, are you saying we force people out of their homes?, one has already chosen the house and area where one wants to be for life, the value of the house can mean nothing to them as they will not be realizing any gain. You however maybe suggesting some form of inheritance tax? Also on the other hand if ones property goes down or does not gain much in value, again through no fault of their own, could they expect a boost from the government coffers?

Is not the idea of "super", over time, to take away the reliance on government pension? so the current 85% you claim would not continue at its current level anyhow.

[Paul1Perth]

It's a maths calculation. Is it worth paying somebody an age pension of about $400 a week so they can live overseas and you can forget about them, or do you force them to stay in Australia and then have to account for them with public healthcare costs and the other benefits that pressure the public system?

You'd think any country would rather be rid of their oldies in the cheapest way possible when they stop producing benefit and leave the workforce.

Nothing to stop the oldies who live abroad coming back here and taking advantage of medicare though. If the guy living in Fiji got really sick would he be prepared to pay for treatment and risk the quality in Fiji or would he come back anyway? Living in some of these cheaper places is fine while you're fit and healthy, different if you need good medical treatment.

[akiralx]

Down size to what and where, are you saying we force people out of their homes?, one has already chosen the house and area where one wants to be for life, the value of the house can mean nothing to them as they will not be realizing any gain. You however maybe suggesting some form of inheritance tax? Also on the other hand if ones property goes down or does not gain much in value, again through no fault of their own, could they expect a boost from the government coffers?

Is not the idea of "super", over time, to take away the reliance on government pension? so the current 85% you claim would not continue at its current level anyhow.

 

In my original post I emphasised no-one could be forced to move house - though many apparently want to downsize owing to maintenance issues etc, but stamp duty puts them off. The other proposal about the charge is the alternative. If one's property does not increase in value, the owner is already getting 'a boost': the aged pension. The point of house values increasing is that it is not earned income; it is not even taxed. It is just an appreciating asset which should not be totally ringfenced when assessing someone for the pension.

 

The other alternative is a property tax, i.e. a percentage of a property's value to be paid each year. This is favoured by most economists, it is certainly difficult to evade (houses and land can't really be hidden) but is politically dangerous, which is why no party has seriously proposed it - yet. It is generally considered the fairest way of raising income.

 

There would be the issue of asset rich but cash poor individuals, e.g. pensioners in large houses who would claim that they could not afford the tax. That would have to be looked at, though over time the property tax would be accepted just as a cost of owning property, like house maintenance. We might initially welcome some assistance for low income seniors in large houses - but would we be as happy to subsidise if such a senior said the roof needed repairing? Most people would probably just say the person can't afford to live there any more and should move somewhere cheaper...

 

As an aside, in your post you would claim that someone who buys a house for $0.5m and sees it appreciate to $1.5m is not really a 'have' - but for a renter that increase in assets on the average salary would take twenty years' employment.

[Parley]

A few nutty ideas here.

I suppose the UK has something similar but they wait until people die before they steal some of their money through death duties.

 

I don't believe Australia will ever do any of these things which is only really about punishing people who have invested successfully during their working lives.

If you pay income tax then the government should not also try and steal from your assets which you have worked hard for.

[Marisawright]

There seems to be a fixation about the "haves" and that folk whom own $m homes are some of the haves, well this is not entirely correct, so lets say I buy a house when I am in my 30's I buy it for say half $m, we buy it because we like the area want to raise our children there and plan to live there for the rest of our life we are just Joe average workers but work hard scrimp and save to pay off the mortgage and have no other source of income or assets, however by retirement time for reasons outside my control the property increases in value to $1.5M, so having no other income other than my pension which could be small super topped up by the government pension, what happens to me now?

 

 

You sell the house because you don't need all those rooms any more, and you downsize to something more manageable.

 

When I was in Sydney I knew several old people who were clinging obstinately to their big house because if they sold it, they wouldn't get the pension. They could've been living in a lovely waterfront unit or townhouse with plenty of money to live on, but instead they were eking out an existence in an old house that was falling apart, because they were determined not to miss out on the pension they were "entitled" to.

[Parley]

That is not true. You have no idea of the rationale.

 

It is more likely they have a lifetime of memories of raising a family in that home and want to see out their days there.

Why should they be forced out of their own home which they have lived in for forty years or more ?

[JockinTas]

That is not true. You have no idea of the rationale.

 

It is more likely they have a lifetime of memories of raising a family in that home and want to see out their days there.

Why should they be forced out of their own home which they have lived in for forty years or more ?

 

Of course nobody should be forced out of their own home but I agree with Marisa about some people rattling around in a huge house they no longer need and no doubt also struggling to maintain a large garden just so they can receive a pension.

 

I have no doubt that OH and I will downsize again later in our lives to a small retirement townhouse type of home or a unit. I'd rather be living in a small, cosy, comfy home than a large houses but then I am not sentimental about any of the houses we have lived in, including the one my OH built with his own hands.

[Marisawright]

I have no patience with this "not wanting to sell your own home" rubbish.

 

Of course everyone would like to hang on to their home forever, but the reality is that if you can't afford to live in luxury, then you have to cut your cloth to suit your budget - you shouldn't expect the taxpayer to foot the bill.

[dmjg]

I have no patience with this "not wanting to sell your own home" rubbish.

 

Of course everyone would like to hang on to their home forever, but the reality is that if you can't afford to live in luxury, then you have to cut your cloth to suit your budget - you shouldn't expect the taxpayer to foot the bill.

 

But if you are entitled to it, why shouldn't you apply?

 

This forum is full of people who expect to take the taxpayers money when they have the budget to pay fully for themselves,

 

Think of any of the following:

 

Bulk billing doctor.

 

Medicare gap scheme.

 

First home buyers allowance.

 

Low income rebate on tax in the first year of immigrating. (Claimed in both the uk and oz)

 

Rebate on childcare (CCR and CCB)

 

Rebate on private health insurance.

[Keith and Linda]

I have no patience with this "not wanting to sell your own home" rubbish.

 

Of course everyone would like to hang on to their home forever, but the reality is that if you can't afford to live in luxury, then you have to cut your cloth to suit your budget - you shouldn't expect the taxpayer to foot the bill.

 

It may not be a question of living in luxury, the value of ones home does not necessarily equate to luxury either. Ones longer term plans may have been to buy the house one wants in the area one wants ready for retirement in the full knowledge of what your retirement income will be.

Downsizing? well a small two bedroom place can be worth more than some 4 bedroom homes depending on their locations, so how does one downsize from and/or to a two bed then?

[Keith and Linda]

You sell the house because you don't need all those rooms any more, and you downsize to something more manageable.

 

When I was in Sydney I knew several old people who were clinging obstinately to their big house because if they sold it, they wouldn't get the pension. They could've been living in a lovely waterfront unit or townhouse with plenty of money to live on, but instead they were eking out an existence in an old house that was falling apart, because they were determined not to miss out on the pension they were "entitled" to.

 

So are we now talking about the size of the house and not the value?