Pension asset test changes a 'kick in the guts' for pensioners at Christmas

The traditionally happy season was rudely interrupted by a letter from Centrelink saying changes to the pension asset test meant their payments would be cut in part or in full on January 1.

Kooringal part-pensioner Robyn McPherson said she was sick to her stomach when she read the letter.

“My pension will be significantly reduced,” Ms McPherson said.

“This is a big kick in the guts to those people who were fortunate enough to be able to save for their retirement.”

The idea behind superannuation, according to Ms McPherson, was to enable people to help fund their retirement, which in many cases involved drawing an income from investments. But with interest rates at record low levels, retirees would struggle to find safe investments they could live off.

Under the Abbott-era changes, which were backed by the Greens, single homeowners with more than $542,500 in assets and couples with $816,000 would lose their pension entirely.

While they may seem like large amounts, Ms McPherson said, a 3 per cent return on $542,500 was only $16,275 per year, which meant retirees would have to spend their savings and further reduce their income each year.

Member for Riverina Michael McCormack defended the changes, saying more than 90 per cent of all pensioners would either be better off or unaffected, but he conceded the timing was tough.

“I appreciate that for some the letters are tough but we need to make sure the pension is sent out to those who most need it,” Mr McCormack said. “There’s never good timing, no matter when it’s done, but there’s always something the media and the opposition will criticise the government about.”

Wagga Labor figure Tim Kurylowicz said the changes were part of a tax cut for businesses at the expense of pensioners.

“They’re expecting to finance their largesse to big business on the backs of pensioners,” Mr Kurylowicz said.

“This appears to be a disincentive on saving and it will feed directly into the housing affordability problem because it’s a disincentive to downsize.

“It will leave the frail in houses they can no longer look after, houses that young people won’t be able to buy.”

Mr McCormack pointed out the Labor party said it wouldn’t reverse the changes before the July federal election.

“They might talk big now, but we have to make sure we’ve protected the family home whilst having the money to spend on infrastructure to ensure we can look after people in their latter years,” he said. “We don’t want to saddle the future with even more drastic changes.”