NEWS ANALYSIS BY JOHN McNAMEE
A report recently released claims retirees are feeling more confident about their retirement income as a result of improving returns from their superannuation.
And more people are reporting a higher level of satisfaction with the way the Federal Government is handling health spending.
The 2nd Seniors Sentiment Index released by National Seniors and commissioned by Challenger, gauged 2000 older Australians’ views on different aspects of their life as well as their views of society as a whole.
The overall Seniors Sentiment Index increased from 66% in 2012 to 72% in 2013, reflecting growing positivity from seniors about their finances, health and social wellbeing.
National Seniors Australia chief executive Michael O’Neill said the number of retirees who were confident that their superannuation would be adequate in retirement increased from 44% in 2012 to 61% in 2013.
“This is a result of sustained recovery in equity markets and a rising share market producing better returns,” Mr O’Neill said.
But while confidence in retirement income had increased in the past 12 months, senior Australians were not so optimistic about their financial wellbeing over the next five years.
“It’s hard for retirees to have long-term confidence in their super when so much of it is at the mercy of share market cycles”, said Challenger Chief Executive of Distribution, Product and Marketing, Paul Rogan.
“Government and industry must work together to deliver better super outcomes for our people once they’re retired and living off their savings.”
In the social wellbeing stakes, the report found a notable increase in satisfaction with the Australian political system, with those ‘at least somewhat satisfied’ increasing from 21% to 30%.
“This may be attributed to the survey being conducted within two months of the federal election and the result of a change in government but overall it is noticeable there is still considerable dissatisfaction with our political system”, O’Neill said.
The proportion of seniors who felt ‘very’ or ‘somewhat satisfied’ with the government’s level of spending in the health system increased from 17% in 2012 to 24% in 2013 which also reflected small improvements in satisfaction ratings in being able to get a doctor’s appointment when necessary.
The 2nd Seniors Sentiment Index follows the inaugural Seniors Sentiment Index which was released in December 2012.
Meanwhile, “grey nomad” residents across the country are breathing a sigh of relief after the Australian Tax Office (ATO) announced it had scrapped plans to charge extra GST on mobile homes.
The ATO reported that it had considered comments on its original draft ruling and decided not to change the GST treatment of moveable home estates.
Recently, National Seniors led a campaign calling on the ATO to reconsider the impact of imposing the 10 per cent GST charge on mobile homes.
Michael O’Neill said mobile home residents would be welcoming the recent decision.
“We are glad to see common sense has prevailed here and that this idea has been scrapped,” Mr O’Neill said.
“We had some very concerned members telling us this plan had been causing a lot of anxiety amongst residents including many vulnerable pensioners who would have been facing rent rises of up to 10 per cent.”
But National Seniors are report older Australians were opposed to the Assistant Treasurer Arthur Sinodinos’ reversal of consumer protections introduced under the Future of Financial Advice reforms (FOFA).
“Financial advisers are being given a free lunch pass on the back of consumer savings,” Mr O’Neill said.
“Once consumers realise what they’re paying in fees and charges, they won’t tolerate it,” he warned.
‘What this says is that consumers do not have support for ensuring basic accountability for the services financial advisers are paid to provide”.
In particular, National Seniors is concerned about proposals to:
* Remove the opt-in requirements so that advisers no longer need to seek their client’s agreement every two years.
* Remove the retrospective application of the fee disclosure requirement, so that advisers will not need to provide fee disclosure statements to clients who entered into a fee arrangement before the mandatory 1 July 2013 commencement date of FOFA.
“These amendments are being pushed through without proper consumer consultation,” said Mr O’Neill.
“If cutting red tape means creating a murky environment in which the hard-earned savings of working Australians end up in the hands of financial advisers, you can leave it,” he said.
Research conducted by Rice Warner Actuaries in 2013 found that the FOFA laws would boost private savings under advice by $144 billion by 2027; and reduce the average cost of financial advice from $2,046 to $1,163 by 2026/27.
But in not so welcome news, new figures out recently show that the vast majority of older workers with chronic health conditions are on low incomes and cannot afford to retire.
The second study for National Seniors Productive Ageing Centre (NSPAC), headed by Professor Deborah Schofield of the University of Sydney, showed 80% of those aged between 65 and 74 with ongoing health problems are earning $500 a week or less. Only 2% earn more than $1,500 per week.
This is in sharp contrast to the 54% in the same age group but without chronic health problems who earn $500 a week or less and the 12% who earn $1,500 a week or more.
Mr O’Neill, said the new report: Working beyond 65 – what’s realistic? backs up existing evidence that it’s in the interests of both governments and individuals to have older people working longer – —- if they are willing and able to do so.
“Staying in the workforce past age 65 lightens the load on taxpayers,” Mr O’Neill said.
“It also helps older people enjoy a higher standard of living in retirement and gives them the social interaction of the workplace which has its own mental health benefits.
“If they have chronic health conditions but can manage to keep working, they will be better able to afford the medical care and equipment they need.
“Unfortunately, many older people in poor health but still working believe they will never be able to afford to retire.”
Flexible working hours or workstation modification may help an arthritis sufferer stay at work beyond the traditional retirement age of 65, he said.
“But further preventative measures for a range of health problems are perhaps the best solution to keeping older people at work so they can better fund their own retirements.”
Other findings include:
Men were almost three times as likely to be employed past retirement age as women.
- Arthritis was the largest single contributor to the loss of full time employment, and those with other conditions including back problems, diabetes and heart disease were twice as likely to be out of the workforce than those people with no such health worries.
- Nearly half (49%) of those with a chronic health condition said they had no plans to retire, compared with one quarter (23%) of people without a chronic health condition.
NSPAC also released a report in November last year containing research headed by Prof Schofield.