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NEWS: Raise pension age to 70 'or greying will cripple economy'

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Surprise to many but none on this forum! Future governments will not provide any pension until you own next to zero assets, including downsizing your home to a shoe box. I expect that anybody who had a physical job will end up on a disability pension until they reach the new pension age as I doubt their bodies will cope. Office workers will struggle to find jobs under the current climate where they're considered fossils.

 

 

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THE pension and superannuation ages need to be raised to 70 years and indexed to longevity, the Productivity Commission has warned in a report that reveals the ageing of the population is a much bigger threat than previous Treasury reports have suggested.

Calling for an urgent commitment to reform, the government's premier economic advisory body has also urged it to tackle the poor productivity of the health sector, which it estimates is 20 per cent lower than it should be.

The report shows that any return to budget surplus will be short-lived, with permanent and growing deficits beyond 2020, reaching 5.9 per cent of GDP by 2060. In today's dollars that would be equivalent to a deficit of about $100 billion.

"The preferable time to contemplate the policy implications of these developments is while these near-inescapable trends are still in their infancy," the report says.

It warns that Australia faces a risk of complacency. "Recent reform efforts have been stymied," it says. "More significantly, there is no immediate crisis to spur reform. Rather the prospect is for a slow decline into a low-growth scenario, with the possibility of certain sectoral exceptions."

The commission calculates that taxes would have to rise 21 per cent unless steps are taken to reduce the impact of the ageing population on budget.

"The size of the incipient fiscal gap will almost certainly require some tax increases," it says.

The report is an initiative of the commission's new chairman, Peter Harris, rather than a response to a government request. It is designed to inform the next intergenerational report.

The commission has gone beyond previous Treasury intergenerational reports to examine the impact of ageing on both commonwealth and state governments and has made policy suggestions for dealing with it.

Besides lifting the retirement age, the commission urges that elderly people pay for their care by giving up equity in their homes. It also recommends a range of health reforms.

The Productivity Commission's deficit forecasts are much more alarming than those included in Treasury's 2010 intergenerational report, which envisaged the deficit reaching 2.7 per cent of GDP by 2050.

The Productivity Commission has rejected as unrealistic the former government's budget strategy of keeping spending growth to no more than 2 per cent after inflation. This had been fed into the last intergenerational report.

It says the commonwealth deficit will rise to at least 3.2 per cent of GDP by 2050 and 4.5 per cent by 2060, while state deficits will rise from 1 per cent to 1.4 per cent over the same period.

Since states have little ability to finance themselves, the commission says the bill for rising state costs will end up shouldered by the commonwealth.

The commission says longevity has been underestimated. It estimates that a person born last year would, by the time they reach 65 years, expect to live for another 29 years, reaching the age of 94. On current life expectancy, they would only expect to live for 19 years beyond the standard retirement age.

It calculates that by the end of the century, there will be as many centenarians as there are babies born each year.

The ageing population will bring a steady reduction in the working share of the the adult population from the current level of 64 per cent to about 59 per cent, a level not seen since 1978.

The commission acknowledges that lifting the retirement age to 70 would result in some people transferring to the disability support pension, but it would bring a budget saving equivalent to 0.15 per cent of GDP.

Although the Labor government legislated a gradual increase in the pension age from 65 to 67 years, the commission says this is not enough. It says the pension age should be linked to life expectancy at the point at which a person enters the workforce.

It says the current system of indexing pensions to male total weekly earnings means there is no benefit to the budget from increases in productivity.

Governments should seek to recoup more of the cost of providing aged care by enabling elderly people to give up equity in their homes, it says. If they sacrificed only half the post-retirement growth in their property values, it would reduce the government's cost of aged care by one-third.

While stopping short of calling for an inheritance tax, the commission says most value in the housing of the aged is passed on in bequests to children. It foreshadows the number of inheritable estates with housing assets rising from 35,000 in 2009 to 68,000 by 2025 with the total value of inherited housing assets over that period reaching more than $400 billion. It notes some local governments already allow people to give up equity to cover the cost of council rates.

The commission also sees opportunity for big savings in the health system, which is the biggest single cause of rising costs from the ageing population.

It says the average "productivity gap" or inefficiency in hospitals is 10 per cent, while inefficiency across the health system could be 20 per cent. A 5 per cent improvement in the efficiency of the health system could reduce the budget impact of the ageing population by 10 per cent.

 

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Surprise to many but none on this forum! Future governments will not provide any pension until you own next to zero assets, including downsizing your home to a shoe box. I expect that anybody who had a physical job will end up on a disability pension until they reach the new pension age as I doubt their bodies will cope. Office workers will struggle to find jobs under the current climate where they're considered fossils.

 

 

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What if the equity in your home (or string of investment properties) is neutralised by the outstanding mortgage debt? Can property investors still get the pension? :shocking:

Edited by Ugg

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What if the equity in your home (or string of investment properties) is neutralised by the outstanding mortgage debt? Can property investors still get the pension? :shocking:

I believe currently yes. It's net assets for the pension. 

 

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As long as there's a decent (10 yr?) lead in time for changes then it's easy reform for the government. 

 

I'm 40 and have said recently that I expect that pension age will be 70 before I get there. I have expected that it would be 10 years before the retirement age was lifted another 3 years over a 10 year lead in period. May still happen like that, after all this is not policy....   Yet.

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...after all this is not policy....   Yet.

 

This is how it starts. First make an announcement as a suggestion and then check for the reaction from the sheeple. If there is no major uproar, then the suggestion eventually becomes legislation.

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What if the equity in your home (or string of investment properties) is neutralised by the outstanding mortgage debt? Can property investors still get the pension? :shocking:

When my father retired, about 10 years ago they (I don't know which agency) only counted assets and not any associated debt.  He had his outstanding car load and a few other debts (less than $30k) which he was paying off in the weeks after he retired.  Like all honest/organised old people he put in his pension paperwork a few days after he retired.  On his calculations he would get a few dollars a week but would be eligible for a pensioner card for travel and some medical services.  H was classed him as ineligible for any benefits for about a year in which he was expected to use these 'savings'.

If he had made all the payments and then put in the forms he would have been eligible.  In the end it didn't make a big difference to him, cost more for travel and medical, but it seemed particulary mean and unnecessary when he actually paid the debts and did not spend any of the money on living expenses. 

 

In some circumstances it could really burn say if you were using some mortgage offset accounts and those balances were counted as living expenses for the next few years, so no pension, but you still have the mortgage debt.

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Soo....

 

The good pension benefits that boomers have enjoyed will be gradually phased out just before gen X and Y retire?

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Yep. Saw it coming.

Many years ago, I think I mentioned on GHPC that this would be a possible future for the older workers.

The other string to this bow is to keep the younger people at university longer, so they don't add to the unemployment figures.

What can society do about the impending age rise?

Nothing!

Zilch!

There won't be any backlash. We will bend over and take it. We will simply surrender to the politicians corrupt system, because we know what it will cost to do otherwise.

We are so compliant to what governments want, until it eventually effects us personally.

Why?

Because if the older people complain, they will simply be labelled as whingers, and will be determined to be not wanting to contribute to the greater good of the country.

Look at the huge backlash government faced when they raised the retirement age to 67!!! (Cynicism)

 

I know the young don't want the burden of an aging population. Soylent Green is alive and well. I don't blame them, and why should they have to pay for our sins. Yet, our advances in medical science and health has ensured better lives, and given us a consequence we didn't want to contemplate.

I have now heard that China have lifted their restriction on the one child policy, because they have identified they won't have enough population to support their own aging people. They now need more children. :huh:

Besides we also know, (those who have any skerrick of a brain that is), and have discussed on here many times, that if we don't do something like this, the country will simply run out of money like some others have done in Europe. That was the Grattan Report's spokespersons argument.

The other option as I see it, (if we want to maintain the status quo), is to eventually reach a tax threshold of 80% of earnings in order to prop up the Government sector. That will only leave about 20% of your earnings for discretionary spending.

That will have its own consequences.

On this particular issue I agree wholeheartedly with Martin Armstrong. Governments will continue to reap whatever revenue they can to sustain their continual system of growth.

Including to the point of eventually, putting restrictions on people's private savings.

 

So what's the answer.

If we don't introduce policies like this now though, when we arrive at crunch time, there will be no welfare whatsoever.

No one wants to contemplate that scenario.

At the bottom of all this is simply human greed, and the unwillingness by any sector of society to take a haircut. To be willing to operate with less. Who wants to take the first reduction in wages or salary? Please stand up!!

No one wants less than they currently have.

Well, we harvest what we sow..

Edited by Solomon
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It has not taken long for the wheels to start falling off the Abbott campaign promise wagon. One of the major promises made was the ironclad guarantee that no adverse changes would be made to superannuation in the first term of the new government.

An adverse change in the way that superannuation pensions are treated by Centrelink is now being introduced by stealth.

Buried in a bill introduced into the House of Representatives on November 20 was legislation that will, among other things, change the way superannuation pensions are counted by Centrelink.

Read more: http://www.smh.com.au/business/broken-promise-alters-application-of-centrelink-income-test-20131201-2yjlz.html#ixzz2mGkMjeGw

 

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I think Staring Clown might have just booked his tickets for travel :)

 

Hehe. I have booked but not for the reason of raising of the pension age. I'm a cranky asshole now. I can barely wait till I reach 70 and am still working. I would pity my colleagues.  :sly:

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One step closer to reality!

 

NEWS: Plan to apply full value of family home to aged pension asset test just 'a new tax on Sydney'

 

 

A MEMBER of the Senate committee investigating the government's budget cuts has warned any plans to apply the full value of the family home to the aged pension asset test would impose a "new tax on Sydney".

NSW Labor Senator Sam Dastyari has called for the government to rule out the proposal included in a submission from the Business Council of Australia to Tony Abbott's Commission of Audit, claiming Sydney families would be hit the hardest because of higher property prices.

Mr Dastyari, a Labor member of the inquiry, will seek to amend the Commission of Audit's terms of reference to include a Sydney cost of living index to any government budget cuts which hit the family hip pocket, warning Sydney families would be otherwise forced to carry the burden of national austerity measures.

Mr Dastyari said he would raise the issue of Sydney's high living costs today during the first hearings into the Commission of Audit which has been tasked with identifying cuts to government services and middle class welfare to repair the budget.

"Every time the government looks to cut costs, Sydney families are disproportionately affected," Mr Dastyari said.

"The government needs to start taking into consideration that cost of living pressures and housing prices in Sydney are greater than anywhere else around the county.

"It needs to rule out any means testing of the family home for the pension or any other benefit. We all know the family home in Sydney costs more than anywhere else in the country. We can't risk a new tax on Sydney."

The asset test proposal was submitted to the Commission of Audit by the Business Council of Australia. BCA president Tony Shepherd is also the head of the commission.

"On the expenditure side, there may be a need to question whether it remains appropriate for the family home where it is of considerable value to continue to be included in the age pension assets test only at a low notional value," the BCA submission stated. Mr Shepherd will appear before the Senate inquiry in Canberra today.

Mr Dastyari said he would demand Mr Shepherd rule out the proposal from his own organisation. "People have cause to be concerned. The Commission of Audit is being chaired by Tony Shepherd, who is the president of the BCA," Mr Dastyari said. "The secretariat is run by Peter Crone, who is the policy director of the BCA.

"The BCA makes a submission to this inquiry, being chaired by its own president, calling for the family home to be included in any means test to determine if someone is eligible for the pension.

"I will be calling on the commission to rule it out - currently they are saying everything is on the table, well this shouldn't be.''

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The terms of reference for the commission explicitly state that _nothing_ is off the table. I am not sure you can just go changing the terms of reference that easily.

 

There was a boring series of "Nothing is off the table? But Abbott said GST would not be changed so how can that be on the table" which went on for about 15 minutes. Not even re phrased. Just the same thing over and over.

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The terms of reference for the commission explicitly state that _nothing_ is off the table. I am not sure you can just go changing the terms of reference that easily.

 

There was a boring series of "Nothing is off the table? But Abbott said GST would not be changed so how can that be on the table" which went on for about 15 minutes. Not even re phrased. Just the same thing over and over.

 

Like the GST itself, it was off the table after the first attempt's failure but then it came back until it was introduced.

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It has not taken long for the wheels to start falling off the Abbott campaign promise wagon. One of the major promises made was the ironclad guarantee that no adverse changes would be made to superannuation in the first term of the new government.

An adverse change in the way that superannuation pensions are treated by Centrelink is now being introduced by stealth.

Buried in a bill introduced into the House of Representatives on November 20 was legislation that will, among other things, change the way superannuation pensions are counted by Centrelink.

Read more: http://www.smh.com.au/business/broken-promise-alters-application-of-centrelink-income-test-20131201-2yjlz.html#ixzz2mGkMjeGw

 

 

 jesus, so  withdrawing capital from ya pension will be deemed as income!  man things have to be  bad if we're f*cking old people over like this...  oh wait if you're already  getting a pension you're good.  it only applies to    onrs that comence payment after 2015.  ,,, oh wait thats US

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Sydney homeowners have just made a lazy 12% on an median house price of 600K. That's 72K in 12 months. (conservative estimate) I know were all relying on the wealth effect to save the economy but surely a little piece of that action for the taxman is not a big ask?  :wine:

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NEWS: Raise pension age to 70 'or greying will cripple economy

What a load of nonsense! We live in the machine age not the stone age. An Economic problem was what Rome had in 200 AD with a population of 100 million they couldn't feed adequately. A third of the Aussie workforce is "under employed", plenty of room there. Today man has so much material wealth he doesn't know what do with it, yet he wants more!

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