NEWS ANALYSIS WITH JOHN McNAMEE
Let me get this straight.
For the past couple of decades successive governments have been urging workers approaching retirement age to stack up their super and savings as the safest long-term investment strategy.
So, thus forewarned, employees in their late 50s and early 60s dutifully began to salary sacrifice and boost their superannuation nest egg.
Some pared down their living expenses as much as they could to get as much as they could safety tucked away in the nice big safe super schemes or term deposits.
OK, now as we begin to feel the impact of the latest Hockey Budget reforms, we’re getting the feeling we’ve been conned.
It seems that now the more super you have as you pass into the retirement pasture lands, the more you’re going to get caned.
OK, so the extra-wealthy have been making the most of the age pension concession card loophole while they sit on bulging bags of cash squirreled away in super and deposits.
But for the average wage earning couple who have religiously bumped up their super as the safe option, are now in danger of having the pension card taken from them.
Previously a retired married couple who live in their own family home and with a total amount of $1.15m in assets including super, qualified for the part-pension.
The Australian Council of Social Services then called for that asset threshold to be lowered to around $800,000, but excluding the family home.
In today’s terms, that’s not alot of bread, as they say. Over a normal 40-year working span, couples could quite comfortably reach that investment figure.
We were promised that the family home would remain sacrosanct and thankfully that’s the case.
But do you get the feeling that the senior population of Australia is under intense scrutiny and the Government is looking at ways of further raiding their nest-egg security.
The savings extracted in the Budget reach an estimated $1 billion.
Meanwhile the RBA’s continual slashing of the interest rate down to record lows of 2%, proved another blow for older Australians who rely on term deposits for investing thei r often limited savings.
It was the second rate cut in 2015 and the 10th consecutive reduction since November 2011.
National Seniors Australia chief executive Michael O’Neill said the continuing run of interest rate falls was bad news for those on limited and often fixed incomes.
“Many pensioners and self-funded retirees rely on term deposits because of the security and peace of mind they bring,” Mr O’Neill said.
“Another rate cut just adds to their worries about basic expenses as well as those little treats such as a coffee with friends or a trip to the movies.”
Older Australians would receive even less if the federal government implements its proposed bank deposit tax, O’Neill said.
Banks have already said they would pass the tax onto consumers, providing them with even less return on their hard earned savings,” he said.
In another development, a proposal by the Centre for Independent Studies to reverse mortgage the family home could leave many elderly people without roofs over their heads.
“The centre is proposing the government include the family home in the pension assets test and encourage people to take out reverse mortgages,” Mr O’Neill said.
“The proceeds of the reverse mortgages would be included in the income assets test for the Age Pension and according to the Centre, slash $14.5 billion from the cost of the pension each year,” he said.
“But reverse mortgages can be complex financial products and many people do not understand how they work,” he said.
“Pensioners could risk losing their homes when the principal, interest and so-called ‘break fees’ to discharge the loan total more than the home is worth.
“This could mean many older people would be forced to sell their home and would become even more reliant on the tax-payer-funded Age Pension,” Mr O’Neill said.
The proposal was contained in the Centre for Independent Studies’ report The Age Old Problem of Old Age: Fixing the Pension, released in May.
It said that four out of five retirees were on the pension and almost 98% of pensioners would benefit from reverse mortgaging their home if the government counted it in the assets test.
Seniors groups also say Australia’s first government survey of workplace age discrimination confirmed what older people have long known – that finding and keeping a job when you are over 50 is tough.
The National Prevalence Survey of Age Discrimination in the Workplace, conducted by the Australian Human Rights Commission, revealed over a quarter of over-50s had experienced age discrimination in the last two years and 80 per cent of those said they had suffered negative impacts.
“It’s no wonder a third of people who have run up against this kind of prejudice from prospective employers have given up their job search,” Mr O’Neill said.
“Almost half said they have been forced into early retirement and to living on their super.
“That is never going to be good for the economy or for the individual, whose financial security, family life and mental health can be severely impacted.”
Mr O’Neill said National Seniors’ own research had also shown that those on lower incomes were particularly affected but too often they had little or no access to opportunities for retraining and upskilling.
“Older Australians will play an enormous role in driving economic growth over the next couple of decades.
“This study is a wake-up call for policy-makers and employers.
“It’s time Australian businesses addressed the fact that discrimination prevents us from realising the full potential of our ageing workforce,” he said.
Mr O’Neill said senior Australians admit while the ‘Willing to Work’ inquiry will shine light on workplace discrimination, the bigger issues were its relevance to the current pension and retirement income debate and the importance of Australian business responding to the nation’s changing demographic.
The inquiry, headed by Age and Disability Commissioner Susan Ryan, came at a time when the nation’s attention was again focusing on pensions and concessions.
“Sustainable employment for people in their 50s is one of the keys to limiting the cost of the pension, as is ensuring people maximise their superannuation and retirement income.
“We should understand that people who lose their job in their 50s take the legacy of time out of the workforce – limited savings and reduced superannuation – with them for the rest of their lives.”
Mr O’Neill said it was a long standing issue and limited progress had been made.
“Ultimately, the key to the issue was for business to include mature age employment as an integral part of their model – to reflect the changing demographic of the work force, consumers and the nation generally.”
In New South Wales, for example, it takes an average of 94 weeks for a person aged 55 or older to find work, he said.
“This is more than twice the time – at 45 weeks – which younger job seekers spend out of work.”
Mr O’Neill said the barriers to older people getting and keeping a job were often masked by a vocabulary of exclusion, with those attending job interviews often fobbed off with lines such as ‘you are over-qualified’ or ‘lacking in energy levels’ – code for ‘you are too old’.
“Older people bring lifetimes of experience to the workplace and often the ability to mentor their younger workmates,” O’Neill said.
“Mature age workers have also been shown to be reliable and have less absenteeism.
“It’s time to forget the birth certificate and focus on the resume!”