Comment
Government faces renewed fight on super policies for older unemployed
In the lead up to the Federal Budget and the election later in 2001, the Government is facing a renewed fight on the means testing of superannuation. Council on the Ageing deputy director, VERONICA SHEEN explains.
In the first Budget of the Coalition Government in 1996, a new policy was introduced. If you are 55 and over, receiving a Centrelink payment (not the age pension) for 39 weeks then whatever superannuation you have is included in the social security means test.
The Government’s reasoning was that people who had their money tied up in super should be treated the same way as people who had their money invested elsewhere such as a bank account or in shares. While there is some logic in this, there are also a lot of problems. COTA has identified quite a few.
If you are unemployed, 55 or over, and receiving Newstart Allowance or Mature Age Allowance for 39 weeks, and you have some superannuation over the asset test threshold — $133,250 for single homeowner and $189,500 for a married couple homeowners — then you lose your payment altogether.
While sums of this amount may sound a lot, if you trying to prepare for a retirement of many years (the life expectancy for women is now 82 and for men it is 75 and rapidly rising) then these are not such great amounts – especially if you wish to have some independence and a reasonable standard of living.
In order to live, however, when you lose your Centrelink payment, you will need to tell your superannuation fund that you are retired and request release of the funds to cover your current living costs — even though you may wish to continue to work and may be actively looking for work.
In addition, you will then be unable to make further contributions to the fund should you subsequently find a job.
COTA believes that many people are financially very disadvantaged by this policy in the long term because it cuts across the advantages that could be gained by maintaining and adding to their savings in the superannuation fund until retirement.
The highest level of compounding interest for a superannuation fund occurs in the immediate pre-retirement years. The policy however reduces opportunities for people to get the best final superannuation entitlement, with a result being long-term dependence on government income support in retirement. It is also an incentive for early retirement — surely all the things that a Government with an ageing population should be trying to avoid!
2001 will surely be a dynamic year with a large number of state elections and the Federal Election towards the end of the year. COTA will be keeping all politicians – whatever side of politics — on their toes for the interests of older Australians.
