Baby Boomers braced for bleak retirement, poll finds
Australians approaching retirement age are braced for declining living standards under a system in which the rich have done better from superannuation rules, leaving the rest with insufficient savings or languishing on inadequate age pensions, a survey has found.
Many now back “root and branch” reform to address the problem, including calculating the family home in the age pension asset test and reducing the generous tax concessions for superannuation contributions by the well-off.
As the Turnbull government prepares to unveil its first budget, a survey of over 4000 Australians aged between 50 and 70 found this critical group of voters is profoundly nervous about the future, unconvinced about financial security and more inclined to reform than previously thought.
The online survey, conducted by the YourLifeChoices website, received 4004 responses to its 21-point questionnaire, conducted in the shadow of the politically pivotal 2016 federal budget to be tabled on May 3.
The results suggest the nation’s 5.5 million Baby Boomers are not the fixed conservative bloc that is sometimes assumed, and that worsening financial circumstances mean many would back policy options previously ruled out.
Among the findings is that 60 per cent of respondents either agreed or strongly agreed that a family home, if valued above $2.5 million, should not be excluded from the pension eligibility assets test.
“Perhaps the most surprising result in the survey, and contrary to expectation, is that the family home is no longer considered sacrosanct when it comes to the age pension assets test,” said publisher Kaye Fallick.
There is also support for changes to superannuation rules, suggesting super is not the political kryptonite it had been, as Boomers worry about the system’s financial sustainability and the need to protect fairness.
While many want a moratorium on changes, two-thirds of respondents believe reform of the superannuation system is required to wind back generous tax concessions, because they provide a disproportionate advantage to high income earners who are able to channel significant amounts of pre-tax income into their super accounts at a greatly discounted rate – thus costing the budget billions of dollars.
“Older Australians are not averse to change nor overly protective of all retirement assets and tax advantages, as much current ‘generational warfare’ hype might lead us to believe,” Ms Fallick said.
Sixty-seven per cent described changing the concessional rules on the accumulation phase of superannuation as something with which they either agreed or strongly agreed. Just 15 per cent classified the issue as not very important to them or not important at all.
The survey result suggests Labor is on to a winner with these voters with its policy of doubling from 15 per cent to 30 per cent the rate at which super contributions are taxed for those earning more than $250,000 a year. Currently the 30 per cent rate kicks in on contributions for those earning above $300,000.
Fairfax Media has reported that the government was considering going further than Labor in its pre-election budget by reducing the threshhold for the 30 per cent to $180,000, but that plan looks to have been dumped in favour of the $250,000 threshhold.
Underpinning the survey is a strong concern about the adequacy of the retirement system generally, with 82 per cent agreeing or strongly agreeing that the “root and branch” review is necessary.
By contrast, last year’s budget decision to continue pushing out the pension eligibility age from a projected 67 in 2023 to 70 by 2030 attracted strong opposition at 68 per cent.
But while Labor was onside with older voters on more heavily taxing super contributions for the well-off, its proposal to tax super earnings at a concessional rate for earnings above $75,000 in a year was not favoured – despite its negligible impact on all but the wealthiest superannuants.
Sixty-eight per cent disagreed or strongly disagreed with taxing earnings at all.
With negative gearing set to be centre stage in the election contest, respondents were locked at 41-41 on Labor’s policy of limiting the tax concession to apply solely to newly constructed homes.
Source: The Age
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