"Simon Cowan, CIS research fellow and Target30 director
'The [pension] means test is unfair to people who don't own their own home, and those people are the poorest people in society. The pension means test currently excludes the value of the family home, other than a small amount that is incorporated in different means tests. But the family home is where pensioners' wealth is.
'What it really means is that there are people on the same rate of pension with very different net worth. Full-rate home owners have nine times the net worth of non-home owners. That is to say, nearly $500,000 in net worth compared with less than $50,000 for those who don't own their home. That is a very significant difference in the ability of those two groups to support themselves in retirement, but they receive the same pension payment.
'The advantages of home ownership have led to a massive overinvestment in housing assets, particularly amongst retirees. More and more people are using superannuation balances to increase their investment in housing ... By excluding the family home from the assets test, that test has no correlation to people's net worth.
'There's a significant advantage for pensioners in downsizing their homes, moving to more age-appropriate housing and releasing that income to support themselves in retirement. The problem is the entire system is rigged to ensure that that doesn't happen.
'You've got a pension age means test that excludes the family home, but if you sell the family home and get cash for that home, it then goes into the means test. You've got a system of stamp duty and land release restrictive development applications that are massively increasing house costs, which mean that even if you wanted to downsize from your three-bedroom home to a two-bedroom apartment, you're not actually going to receive a significant advantage from doing that.
'I'm a big fan of reducing some of the government barriers to people moving out of their home, moving to more appropriate housing, selling up and getting some income from that.'"
so you want to promote equality by making everyone poor.
That's a really crappy plan, wouldn't it be better to help more people to own their own home, now that you have proven that renting is a sure fire way to poverty for most people?
Quote:
'The [pension] means test is unfair to people who don't own their own home, and those people are the poorest people in society. The pension means test currently excludes the value of the family home, other than a small amount that is incorporated in different means tests. But the family home is where pensioners' wealth is.
'What it really means is that there are people on the same rate of pension with very different net worth.
Does this guy know that non-home owning pensioners get a higher pension? Surely he should know that the above statement is incorrect. What sort of a goose is he.
But anyway, what we obviously need is more government assistance to help people buy homes and keep them out of poverty.
Quote:
That is to say, nearly $500,000 in net worth compared with less than $50,000 for those who don't own their home.
Yes absolutely - we need to encourage these people who don't save and plan for their retirement, to make a greater effort. They are holding back the rest of the community because of their lack of endeavour. Perhaps we should punish them in some way for becoming a financial burden on the rest of society.
Thanks for bringing this group of underachievers to our attention Paul. We'll have to get them to lift their game.
Any expressed market opinion is my own and is not to be taken as financial advice
Simon Cowan, CIS research fellow and Target30 director
' ... moving to more age-appropriate housing ... '
Small minded dictatorial lifestyle controlling little bugger is what Simon sounds like.
Like who's to determine what "age appropriate" is ... Not bloody him I'd surely hope.
Example of a 3 bedroom 2 car garage home being quite happily and 'appropriately' utilised by an aged couple follows:
Bedroom 1 - Main bedroom used as such by the couple.
Bedroom 2 - 'Guest' bedroom - At least some old people do have friends and family visit and stay over - Sometimes even for lengthy periods; Also doubles as a storage room for a life time of accumulated 'treasures'
Bedroom 3 - Mum's arts and crafts room/music room - Given that she doesn't get out that much these days but is a bit creative and enjoys doing such stuff. Especially now she has time to.
Two car garage - Yep, they've downsized to one car; The other bay has their two mobility scooters parked in it.
And what if the old boy wants a shed in the backyard where he can tinker with whatever/make his home brew/do a spot of carpentry or whatever else - Given he grew up in an age when your thumb wasn't primarily viewed as existing on your hand to tap a spacebar with - He won't get one of them in the "age-appropriate" two bedroom apartment Simple Simon would 'encourage' him into hey! (Or a greenhouse and garden for Mum. To potter in. Because she likes doing that as well.)
CIS sounds like a bunch of bloody dictatorial dills to me.
peter fraser
25 Aug 2015, 02:20 PM
Thanks for bringing this group of underachievers to our attention Paul. We'll have to get them to lift their game.
He's done that alright.
I've always previously just accepted that they exist. And we get to pay for their existence. And that's life.
But since encountering ThePauk, I've started to VERY seriously question my attitudes in regard to same.
I've always previously just accepted that they exist. And we get to pay for their existence. And that's life.
But since encountering ThePauk, I've started to VERY seriously question my attitudes in regard to same.
To be fair there are people who just don't have any luck in life and no matter hoe hard they try it just doesn't work out for them. I'm quite happy to pay extra taxes to look after those people, there but for the grace of God go I.
But taking houses off people who have sweated and saved to pay for them to fund the retirement of other individuals who couldn't be bothered saving anything is just not on in any fair minded society.
Any expressed market opinion is my own and is not to be taken as financial advice
To be fair there are people who just don't have any luck in life and no matter hoe hard they try it just doesn't work out for them. I'm quite happy to pay extra taxes to look after those people, there but for the grace of God go I.
But taking houses off people who have sweated and saved to pay for them to fund the retirement of other individuals who couldn't be bothered saving anything is just not on in any fair minded society.
Taking house away? What crap.... Someone who lives in a home with a VG more than $750K, and they are outright owners, can afford a slight reduction in their pension to make those who are in need get more.
No one is suggesting, apart from you, of taking anyone's home away.
Taking house away? What crap.... Someone who lives in a home with a VG more than $750K, and they are outright owners, can afford a slight reduction in their pension to make those who are in need get more.
No one is suggesting, apart from you, of taking anyone's home away.
Your beloved Grattan Institute (Saul Eslake's mob) want it set at $200 K.
You tell porkie pies ThePauk.
A Professional Demographer to an amateur demographer:"negative natural increase will never outweigh the positive net migration"
Taking house away? What crap.... Someone who lives in a home with a VG more than $750K, and they are outright owners, can afford a slight reduction in their pension to make those who are in need get more.
No one is suggesting, apart from you, of taking anyone's home away.
Paul you are rewarding failure and mediocrity rather than excellence.
What you propose simply lacks common sense and will stop people trying to be self sufficient.
Why you can't see that puzzles me.
Any expressed market opinion is my own and is not to be taken as financial advice
Paul you are rewarding failure and mediocrity rather than excellence.
What you propose simply lacks common sense and will stop people trying to be self sufficient.
Why you can't see that puzzles me.
I suspect I've got a handle on what's going on here.
The highlights:
* Growth based on debt, in and of itself, just doesn't seem to be driving the desired levels of growth in the economy these days (for whatever reasons)
* So it's time to start attempting to force those who've acquired assets to spend them - Into the economy - To help drive growth
* And even better, redistribute a sizeable portion of the value of those assets to the ne'er-do-wells - As they certainly WILL spend it (with that often being one of the primary reasons they are ne'er-do-wells) - Into the economy to help drive growth
* Dress it up as Egalitarianism in Action (which must always unquestionably be seen as 'good' by all 'fair' minded people of course) and Hey Presto, you've got your sales pitch even
* Albeit a pseudo-Socialist sales pitch being made by the Capitalist proponents of a struggling Capitalist system, to keep their beloved and necessary growth happening.
So Saul Eslake hasn't actually gone all pinko at heart. (And remains a Capitalist trying to get growth happening in a Capitalist Economy - And a consumption based one these days - By whatever means. [With the "consumption based" bit being a pretty important point].)
And the IMF (who've never historically given a rats about 'the poor' or 'equality of income distribution' - I'd wager?) also now come across as having gone rather pinko at heart. (Though they've not actually I'd also wager.)
Plus yes, any businesspeople flogging crud products that there isn't a particular demand for from people who've worked for their money and saved it and value it, will love the whole idea of empowering rather potentially less discerning and rather more 'easy come easy go' types, to give those businesspeople money (albeit other peoples money that's been re-distributed to said ne'er-do-wells) for said businesspeople's said crud.
So Peter, seems the idea is losing momentum...not!
Inclusion of family home in assets test gains popularity
"Forcing pensioners to fund more of their retirement by unlocking the $700 billion tied up in family homes has emerged as a point of consensus among experts working on retirement income policies. But the Abbott government doesn't like the idea and the children of Baby Boomers, many of whom are expecting big property inheritances, would probably resist. At last week's National Reform Summit, free-market and progressive think tanks agreed the value of the family home should be taken into account when assessing whether somebody is eligible for the age pension. They want the government to put reverse mortgages – which allow homeowners to borrow money using the equity in their house as security – at the centre of retirement income policy.
Centre for Independent Studies economist Simon Cowan said a 20 per cent jump in house prices in recent years meant the total value of pension equity was likely to have reached $700 billion, and could be as high as $750 billion. More than three-quarters of pensioners own their home and for older age groups 75 per cent of all net wealth is held within the family home. Mr Cowan said a government-based reverse mortgage scheme would allow the release of some of that value to boost pensioners' living standards while easing pressure on the pension. "While the pressure on the budget has only increased in recent years, particularly as forecasts of a quick return to trend economic growth look less likely, the store of pensioner-home equity has increased rapidly," he said. "As a potential avenue to increase living standards, this cannot continue to be ignored."
Expansion of scheme The left-leaning The Australian Institute is also sold on the idea of reverse mortgages. It wants the existing Pension Loan Scheme expanded so that asset-rich retirees are forced to spend down some of the equity in their homes. Only retirees whose wealth or income makes them ineligible for the full age pension can access the scheme, which pays the equivalent of the full age pension on a fortnightly basis. The money is borrowed from the government and secured against the value of property owned by the recipient. The loans are repaid either on the sale of the property or on the death of the recipient. But there are only 40,000 such loans nationwide. The Australia Institute says take-up could be dramatically increased by extending eligibility to everybody of pension age. A Grattan Institute report found that including owner-occupied housing in the calculation of a retiree's eligibility for the age pension would contribute about $7 billion a year to the budget. The 2013 report said the change would also encourage people to downsize to housing which may be better suited to their needs, enabling more efficient use of the housing stock. Politically difficult "We're suggesting, one, why not advertise that scheme more but, two, extend it to those who are eligible for the pension and then you get around this asset-rich, income-poor problem," the institute's executive director, Ben Oquist, said. "It's politically difficult, but so is raising the GST." According to the Institute of Actuaries of Australia, many retirees hold on to their houses to fund aged care or to pass wealth on to their children. But the fact the family home was exempted from the pension assets test encouraged people to remain in inappropriate housing, said PwC partner Catherine Nance, who heads the Actuaries Institute's housing working group. She said one possible solution was to allow a portion of the equity in a home or proceeds of a sale to be exempted from the pension assets test. Ms Nance said the problem many retirees had when trying to downsize was getting a bridging loan. This was because banks liked to lend to people who could prove an income. "The world is changing," Ms Nance said. "These days, not every borrower is working but it doesn't mean the loans aren't safe and secured."
Social Services Minister Scott Morrison has ruled out including the family home in the age pension asset test. "The idea that this government would put the family home in the assets test for the pension is just not under consideration," he told the ABC in February.
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