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Wednesday, 23 April 2014

Pension plans won't win many fans

Pension plans won't win many fans

Pension plans won't win many fans

Updated
3 hours 56 minutes ago
With big spending planned on fighter jets
and a generous new paid parental leave scheme, changes to the pension
could turn voters off, write Peter Lewis and Jackie Woods.
Tony Abbott is a very black and white sort of leader. He stops the boats. He ends the waste. He cuts the taxes.

But
outside the election cycle, our Prime Minister is discovering
government is less black and white and more grey, not least when it
comes to the budgetary challenge of managing our ageing population.


As three-word slogans go, Stop the Pensions doesn't really cut it.

As
the Government prepares for its tough love "age of entitlement"-ending
budget, Treasurer Joe Hockey has put the sustainability of the aged
pension front and centre of public debate. But while the demographic
forecasts might be straightforward, paying for our ageing population
comes with a whole set of complicated policy challenges.


We are
living longer - which is a good thing. But that is putting pressure on
pensions as well as health care - which is a bad thing if you are
fighting a war on debt.


Many are working in jobs that could see us
remain in the workforce longer. Others work in manual jobs where their
bodies have had enough by their mid-60s.


Compulsory superannuation
means that many people have at least some money set aside for
retirement. But the nature of income-based contributions plus tax
concessions brought in during the Howard era means super schemes
disproportionately benefit high earners.


For generations,
Australians have invested their financial security in the family home;
and booming capital city property prices mean many people have
considerable assets on retirement. Yet the Government doesn't look at
that wealth when calculating an individual's eligibility for a pension.


And to muddy the waters further, older Australians disproportionately vote for the Coalition and are easily upset.

With
these grey areas in mind, this week's Essential Report suggests
Hockey's attempt to transfer his war on the age of entitlement to the
aged pension arena is looking decidedly brave.


Australians reject the proposition that people should wait until 70 before being entitled to retire on an age pension.



The opposition crosses party lines and age
demographics, as does resistance to stricter asset tests to include the
value of the family home.




In the public mind, aged pensioners are considered the most worthy in the hierarchy of welfare recipients. 

Australians
hold a firm view that after a lifetime of work and paying tax, it's
only fair that seniors get some public support. Plus, we'll all be old
one day (if we're lucky) - negotiating the financial challenges of old
age isn't just something that happens to other people.


And while
the demographic challenges might be irrefutable, there are still choices
about where and how to find the money to fund our ageing population -
and whose retirements public money should be directed towards.


After
all, the Abbott Government has delayed Labor's planned increase in
compulsory superannuation by two years, taking billions out of the
national savings pool.


And while preparing to tighten the screws
on pensions it has scrapped a tax on superannuation for the 16,000
highest income earners announced by Labor.


As the Australia Institute points out
in its report this week on superannuation the skyrocketing costs of
superannuation tax concessions are leaving the increasing cost of
pensions for dead, with most of the benefits going to the top income
brackets.


Hockey inadvertently touched on the ineffectiveness of superannuation tax concessions in reducing reliance on the pension in a keynote speech this week,
saying that despite spending billions on tax concessions the number of
Australians receiving a full or part pension in 2050 will still be about
four out of five.


Heading towards the budget, the Government is ramping up its entitlement-busting talk.

But
while the public may be convinced there are some unworthy recipients of
taxpayers' support, aged pensioners aren't among them.


And with
big spending planned on fighter jets and a generous new paid parental
leave scheme, cuts to the pension could leave voters decidedly grey
around the gills.


The survey was conducted online from April 18-21, 2014 and is based on 1004 respondents.

Peter Lewis is a director of Essential Media Communications. View his full profile here. Jackie Woods is a communications consultant at Essential Media Communications. View her full profile here.



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