Posts Tagged “jobs for 50 plus”
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
After hitting the age of 45, David Kazachov started having trouble getting work.
“It is even worse at the age of 50,” he says.
When we say baby boomers are not good with technology and Generation Y don’t have enough experience, it becomes a self-fulfilling prophecy.
Associate Professor Leanne Cutcher
Despite extensive experience in the finance and IT industry, Mr Kazachov was surprised to be asked if he had a laptop after making it to the final stage of a recent job interview.
Well, of course he did, but there seemed to be an assumption behind the question that he was too old to be savvy with computer technology.
But as it turns out, ageism in the workforce is built on a faulty premise, according to leading Australian researchers of intergenerational employment.
Associate Professor Leanne Cutcher from the University of Sydney Business School is about to publish a new study that has found that contrary to stereotypes and assumptions, the most innovative companies are the ones where the age of employees does not matter.
One health engineering company that had a young chief executive officer appointing 65-year-old workers to new roles leading projects was among companies the researchers found to be the most innovative.
The multinational company, Siemens Healthcare, recognised that people had valuable experience to offer at all stages of their career.
Michael Shaw, the company’s chief executive, said Siemens “takes the best people for the job”.
“Personally, for me it’s not important if the person is in their 20s or in their 60s, I am simply looking for the best minds with the best attitude”, Mr Shaw said.
Associate Professor Cutcher said the company had recognised that the idea that younger people lack experience and older people have too much of it “is a nonsense” and “stifles” the exchange of innovative ideas.
“Where age doesn’t matter, there is more innovation,” Associate Professor Cutcher says.
“When we say baby boomers are not good with technology and Generation Y don’t have enough experience, it becomes a self-fulfilling prophecy.
“Because people who have good ideas then don’t share them because they have been told they are too old.
“But you are just going to replicate the same ideas where you start labelling people as either too old or too young for a role. Where that is happening, it is stifling knowledge exchange.”
Associate Professor Cutcher said younger workers were positive about learning from older colleagues.
“We have this false idea that only young people can innovate and our research has found it has really big implications for the effectiveness of the organisations.”
“While there is robust evidence that older people can be part of a sustainable solution to job market challenges, existing and inaccurate perceptions of the Baby Boomer generation detract from the value of employing the over-50 population.”
Another new study to be released on Thursday by the Australian Seniors Insurance Agency reveals that age discrimination in the workplace is rife.
It found that close to half the Baby Boomer respondents claimed they have been turned down for a job since they turned 40.
The agency’s spokesman, Simon Hovell, said the study of 1200 people across Australia found three in five people over 50 said that they faced substantial obstacles in attempts to find a job.
More than two in five respondents said they felt stuck in rut because they felt a career change, opportunities or promotions were limited.
Baby Boomers said it took longer than six months to find a new job when making a career move. One in six said it took them five years or more to find a job.
Mr Hovell said Generation Y was costing up to $2.8 billion more than Baby Boomers a year to the Australian economy.
“Baby Boomers typically take three days sick leave on average per year, which doubles for Gen Y’s at an average of six days,” Mr Hovell said.
The research also found that more than three quarters of Baby Boomers adapt well to technological innovations, and 73 percent are actively seeking training opportunities.
“The findings point to what many organisations, academics and economists have known all along – Baby Boomers are a real asset to the workplace,” said Mr Hovell.
Anne Shaw* and her husband love going on cruises, finding ocean travel to be the perfect holiday. But there’s another benefit for the grandmother of four: “It’s a way of escaping without having to say no to requests to look after grandchildren,” she admits.
Shaw isn’t alone: as much as they adore their grandkids, many of today’s nannas and grandmas feel that looking after grandchildren encroaches on their lives or is physically exhausting. Yet most of these women aren’t telling their grown-up offspring how they really feel.
Looking after the grandchildren can be a fraught issue; a complex web spun from conflicting emotions including love, guilt, joy, fear and obligation.
And the reality of doing it regularly – that it’s hardly all bliss and contentment – is such a taboo subject that all the grandmothers interviewed for this article asked not to have their identities revealed.
Baby boomer grandmothers know their Gen X sons and daughters are under significant financial strain. Dual-income families, demanding jobs, expensive childcare and the high cost of living mean mums and dads are turning to their own parents to help out with their kids while they work.
Grandparents provide childcare for almost one-third of children of working parents, according to 2015 data from the Australian Bureau of Statistics.
“In Australia, grandparents are the largest source of informal childcare after parents … Many households could not function without the unpaid input of grandparents,” write Barbara Pocock, Natalie Skinner and Philippa Williams in their 2012 book, Time Bomb: Work, Rest and Play in Australia Today.
This is no secret. What’s less well known is how these grandparents feel about and respond to requests for care – especially grandmothers, who usually take the lead in the grandparenting arena (research shows that even when grandfathers and grandmothers provide care together, grandmothers are more likely to take on routine or repetitive tasks such as bathing and feeding).
Janet Gibson*, a grandmother of 10, is frank: “When my first grandchildren were born, it was a pleasure to look after them. It never felt stressful.” But that was more than 20 years ago. Now in her 70s and suffering from arthritis, caring for the grandchildren is very different.
“I love the children but I’m physically unable to do what I used to do,” Gibson says, referring to the fact that it’s painful for her to pick up her baby granddaughter. Despite the difficulty, Gibson and her husband regularly look after the baby so their daughter can work. They’ve never told their daughter the extent of Gibson’s health issues.
“Because I feel it would be unfair,” Gibson sighs, referring to the fact that she was very involved in caring for her older grandchildren and wants to treat her children equally.
This desire to help each of their children equally was mentioned by other grandmothers. Although understandable, it complicates the grandparenting experience, especially in large families, because more grandkids means more time and energy from grandparents who are only getting older.
Anne Shaw agrees – over the years her feelings towards grandparenting have changed. “I was so looking forward to becoming a grandparent,” she says. Before her first grandchild was born, Shaw reduced her paid employment from full-time to four days a week.
“I couldn’t give my kids money, so looking after my granddaughter was my way of helping out,” she says.
But 11 years and four grandchildren later, Shaw notices that she gets tired more easily and doesn’t have the patience that she used to. Still, she never says no to requests to look after her grandchildren because she “absolutely loves” seeing them. “I don’t admit it when I’m tired,” she says. “I just get on with it and do what needs to be done.” Now retired, this grandmother says she can simply catch up on sleep if she needs to after the kids leave.
But not all grandparents have this luxury: many juggle care of grandchildren with paid work, leaving them with little downtime.
The number of older women in the Australian workforce has significantly increased over the past few decades.
In the early 1980s, just 10 per cent of Australian women aged 60 to 64 were in paid employment, according to the Australian Institute of Family Studies. By 2009-2010, their presence had quadrupled to 41 per cent. (There has also been a small increase in the workforce participation of women aged 65 and over during that same period, from 3 to 7 per cent.)
Jill Westbrook*, in her mid-60s, is a working grandmother of two. For her, the issue of caring for grandchildren is more about how it restricts her income than the physical exhaustion. “I tend to say no to extra paid work because the grandchildren come first, but I’d like to say yes,” she says.
The combination of paid work and care also means Westbrook doesn’t get many free evenings. She wishes she had more time so she could play bridge, go to the theatre or the movies.
So why doesn’t she just say no when she is asked to look after her grandkids?
“Because I love my children and don’t want to see their lives any more difficult,” says Westbrook. “Too much financial pressure can strain a marriage, and if I can ease that I’m very happy. I’m divorced and want my children to be with their partners forever.”
Helen Andersen* is in her early 60s and regularly cares for three of her grandchildren. Of all the women I spoke to, Andersen is the only one who has initiated honest conversations with her children about her grandparenting role.
“I come home from a day looking after the kids and every bone in my body aches,” she says. “I don’t have the energy I used to, and I don’t know if the younger generation appreciates that fatigue.”
Since having that conversation, Andersen’s daughter treats her mother more gently and is more considerate. And Andersen is certain that’s a good thing. “When you’re honest, it’s such a relief,” she says. She believes it’s vital for grandmothers to let their kids know they’re not superwomen, instead of always insisting they’re fine and happy to look after grandchildren.
Andersen also acknowledges how difficult it is to refuse requests for grandchildcare: “You always push yourself because it’s your child,” she says. “The hardest thing to do is say no because we’re programmed to help and love and care and to give support over resting our aching bodies.”
Myra Hamilton, a research fellow with the social policy research centre at the University of NSW, says: “Because grandchildcare is tied up with love, family history, culture and shared experience, setting boundaries around care becomes difficult.”
Dr Briony Horsfall, a sociologist at Swinburne University, agrees there are great expectations on Australian women to be constant sources of care-giving. “These grandmothers are nurturing multiple, intergenerational relationships. It’s quite subversive to say no because there’s a risk of being seen as a ‘bad’ grandmother and a ‘bad’ mother [to adult children].”
Another complicating factor, particularly for paternal grandmothers, is the fear of decreased access to grandchildren if they decline care, especially if it’s a daughter-in-law making the request. Sometimes, it’s easier to play it safe and just lie – as does one grandmother who pretends she is feeling unwell, or says she’s going out.
Of course, it’s not all bad: caring for grandchildren can provide enormous joy and satisfaction. When I asked each grandmother what their ideal care scenario would be, not one elected to opt out of caring for their grandchildren. Rather, grandmother utopia involves fewer care hours; or to spend more time having fun with grandchildren, for example taking them to the park or the beach; or to have extra paid help to do the more physically demanding jobs, such as cleaning and other domestic duties.
A 2015 study, Grandparent Childcare and Labour Market Participation in Australia, commissioned by National Seniors Australia, found there is a tipping point after which providing care becomes less enjoyable: grandparents who provide 13 or more hours of care a week are less likely to enjoy caring for their grandchildren, and more likely to feel the effects on their work and retirement decisions.
But often it’s not so easy for grandparents to reduce their care hours, says Myra Hamilton, a co-author of the report. “The fewer options that adult children have in terms of work flexibility, childcare options and financial security, the harder it is for grandparents to say no to requests for grandchildcare.”
A survey commissioned by the Australian Seniors Insurance Agency found that 58 per cent of grandparents have had to sacrifice their own lifestyle and recreation, and 30 per cent have had to alter their work arrangements in order to care for grandchildren, while 23 per cent said they’d like to look after their grandchildren less often than they do.
Becoming a grandparent is supposed to be the gold medal for surviving the hardships of parenting; the ultimate love affair. But the truth is more nuanced.
“My friends secretly comment about the mind-numbing boredom of grandchildcare,” says Andersen.
“You are dealing with children with brains the sizes of peas. Lots of us held high-powered jobs, were successful businesswomen, so however much you love those sweet babies … how many games of Eye Spy can you play without wanting to rush back to your fabulous novel and a quiet cup of coffee?
“We feel wanted, satisfied with a job well done, loved and delighted in the love we get back,” she says. “But it comes with issues no one discusses and that men never even think about.” •
*Names have been changed.
- In 2013, the average age of becoming a grandparent was 58-60; in 1953, it was 54-56.
- In 2014, 837,000 Australian children were cared for by their grandparents in a typical week.
- In 2014, more than 97 per cent of grandchildcare was unpaid.
Sources: ABS, McCrindle Research
Younger workers in the early years of their career are expecting to retire at the age of 52 – 15 years before the federal government has decided they should stop working.
Across all age groups, the expectation of having a job for life no longer exists for more than two thirds of Australian workers, a new national survey has found.
Deloitte Access Economics surveyed 1400 people around the country across a variety of professions and ages and warned that growing confidence in younger generations needs to be balanced with more realistic expectations.
The report says an increase in confidence after the global financial crisis may be “creating unrealistic expectations”, particularly in younger people with less than five years’ experience in the workforce.
“Our survey shows that, on average, early career employees think they will retire at the age of 52,” the Deloitte report says.
“Given the increasing costs of retirement, the smaller workforce and pressure on government budgets, this seems untenable. Policy makers may need to adjust the expectations of younger workers to this reality.”
More than half younger workers also believe their qualifications are not very relevant to their work.
But the survey also found higher education qualifications were increasingly transferable. About 40 per cent of university education employees have a degree outside their primary areas of work.
The study, Future of Work: How can we adapt to survive and thrive?, found that 60 per cent of people surveyed expect to change roles or industries in the next 10 years. And 67 per cent expect their existing job will no longer exist, or require a new skills set, within 15 years.
Almost one third of employees said changes in technology are most likely to drive job change.
Two in five said they were uncertain or nervous about their employment future, with most feeling positive or excited about change in their careers.
Of those looking to change jobs in the next 10 years, three in five expect to work in a different industry or role.
“A job for life just doesn’t have a place in our modern society,” declared Lee White, chief executive officer of Chartered Accountants Australia and New Zealand, which commissioned the report.
“Each of use needs to recognise that our skills set, if left un-nurtured, will quickly become obsolete.
“Individuals need to ask themselves what skills they’ll need to succeed in an automated society.”
Mr White also questioned whether school curriculums were up to the task of teaching “transferable skills and a different mindset about the future world of work”.
Michael Warren, the national training manager for Landscape Solutions in Sydney is among employers taking the re-skilling of workers into its own hands with in-house training in how to use the latest in technology. Employee Paul Scurfield was recently trained in how to use technologically advanced plant equipment for commercial landscaping.
“Generic training about plant equipment is available but we had to retrain our operators to use the new technology in the specific context of commercial landscaping,” Mr Warren said.
The new survey also found that the development of specialist versus generalist skills varied from industry to industry.
However, a generalist set of skills may be more useful in a rapidly changing labour market.
“The question then becomes: should these generalist skills be emphasised more in the formal education system, or can they be imparted in the workplace?,” the Deloitte report says.
“Such questions and the nature of skills development more broadly will become an increasingly important consideration for employees in the future as the interaction between skills, employment and careers becomes more fluid.”
Source: The Age
For Christine Snelling, love is enough.
For almost 40 per cent of grandparents, though, it’s not. They believe they deserve to be paid for looking after their grandchildren.
Ms Snelling – a 69-year-old retiree – spends her days chasing after an energetic six-year-old grandson. She packs lunches, does the morning school run, makes afternoon tea and then dinner.
Her daughter is a single mother, for whom paid childcare is out of reach.
Ms Snelling doesn’t mind stepping in and last December moved into a granny flat on her daughter’s Gisborne property, north of Melbourne, to make things a little easier.
“It’s what I’m here for,” she says.
For a long time, that’s how most baby-boomer grandparents have felt.
But it seems love only goes so far for the generation whose retirement dreams have been hindered by their family ties.
Two in five Australian grandparents believe they should be paid for taking care of their grandchildren, new research shows.
One in four would like to provide less care than they do.
On average, grandparents are caring for each of their grandchildren for 16 hours each week.
Most say their lives revolve around their childcare commitments: 75 per cent of grandparents live closer to their children to help take care of the grandchildren; 58 per cent forfeit recreation; 42 per cent sacrifice travel; and 30 per cent change their work arrangements.
A survey commissioned by the Australian Seniors Insurance Agency shows more than 37 per cent of grandparents believe they should be paid for taking care of their grandchildren.
But it’s likely that number is even higher, ASIA spokesman Simon Hovell said.
“There is a stigma around asking for money,” Mr Hovell said. “It’s reasonable to assume that there is a percentage of grandparents who would like to be paid, but feel uncomfortable asking for it.”
Still, the vast majority of Australian grandparents – 84 per cent – say they care for their grandchildren “out of love”.
The survey shows many Australians believe grandparents providing childcare free of charge is a “normal part” of how a family should operate. The older generation in particular feels that if their parents were able to “make do” in their day without pay, so should they.
It’s just as well, because around 937,000 children in Australia are currently receiving care from their grandparents.
It’s saving the country $127.4 million each week in childcare costs.
That figure, however, is calculated at a rate of $8.50 an hour – a fraction of what the vast majority of parents are paying for childcare.
Some countries pay grandparents to look after children in the same way nannies are paid, or allow the transfer of paid parental leave entitlements to grandparents so new parents can return to work earlier. In the UK the issue was addressed years ago, with the creation of special welfare payments for grandparents who care for a child under the age of 12.
Last year, the Australian government’s National Commission of Audit recommended grandparents be eligible for a childcare payment.
The proposal was also raised by independent senators Glenn Lazarus and Jacqui Lambie as part of a crossbench wish-list in exchange for supporting the federal government’s $3.2 billion families package.
But the suggestion was rebuffed by Treasurer Scott Morrison who said: “For those who are doing the normal thing like my parents do and a lot of peoples’ parents do then, no, the government isn’t considering that.”
THE GRANDPARENT TRAP
37% Want t obe paid for caring for their Grandchildren
23% Don’t want to look after their Grandchildren as much as they do
75% Live closer to help take care of their Grandchildren
58% Say they have to sacrifice their lifestyle and recreation
42% Say they have to sacrifice their travel and holiday plans
30% Say they have to alter their work arrangements
One-third of Australian pensioners live in poverty, according to a report by the OECD, Photo: Greg Newington
More than one-third of Australian pensioners are living below the poverty line, making the country among the worst performers in the world for the financial security of older people.
The findings of the OECD report, Pensions at a Glance 2015, compared Australia to 33 other countries.
Australia was ranked second lowest on social equity, with 36 per cent of pensioners living below the poverty line, which the report defined as half the relevant country’s median household income.
Australian pensioners fared better than their counterparts in South Korea, where 50 per cent live below the poverty line but performed poorly against the OECD average of 12.6 per cent.
The report, released last month, found the Australian government contributes less to old-age benefits than other OECD countries. The Australian government spends 3.5 per cent of GDP on the pension, below the OECD average of 7.9 per cent.
The findings are backed up by the Global Age Watch Index 2015 report card which rates countries by how well their older populations are faring.
It ranked Australia lowest in its region on income security, due to the high rate of old age poverty and pension coverage which is below the regional average.
Paul Versteege, senior research and advocacy adviser with the Combined Pensioner and Superannuants Association, said the base Australian pension rate was low compared to median household incomes.
“In Australia there is quite a large group that has to subsist on the age pension as its only source of income. In spite of pension reform and recent increases to the pension, the base pension is still quite low for singles.”
The annual payment for a single person is about $22,000 and $34,000 for a couple, with 2.25 million Australians claiming the pension.
Council on the Ageing chief executive Ian Yates said the report challenged perceptions that the entitlement was too high.
“Claims that the age pension is somehow too extravagant and unsustainable do not bear out,” he said.
“We have always argued for progressive improvements to the pension but at the moment an increase to the pension is highly unlikely and more focus ought to go towards building superannuation contributions.”
Chief executive of Vision Super Stephen Rowe said he was “staggered” by the findings of the OECD report, saying it painted a bleak picture for many older Australians.
“Are we generous enough with the pension? I don’t think so.”
He said that Australians retiring now have not received the full benefit of compulsory superannuation contributions, introduced in 1992, but were grappling with rising living costs.
“The basic cost of living in Australia is quite high, compared with some other OECD countries,” Mr Rowe said.
Chief executive of National Seniors Michael O’Neill said the pension had gone backwards in real terms and many older people had not accumulated enough superannuation to supplement the benefit.
“In terms of sustainability, the report confirms that Australia spends substantially less than the OECD average on pensions,” he said.
“In fact, our pension spend has dropped and plateaued since 2000. Against other countries, our proportion of pensioners living below the poverty line is startling.”
The latest scary figure, produced by the Association of Superannuation Funds, is $58,784 per year. That’s how much it says a 65-year-old couple needs to live on in order to enjoy a “comfortable” retirement.
At the risk of stating the obvious, after tax and rent or mortgage payments most working Australians couldn’t afford such comfort.
It’s absurdly high. The fine print shows such a couple would spend $40 a week on alcohol, $80 a week on dining out, almost $200 a week on food and groceries, $136 a month on the phone and internet, $4000 a year on holidays within Australia, and $14,000 every five years on a holiday abroad.
Plus this: the best part of $250 a month on new clothes and shoes, $80 a month on hairdressing, $54 a month on pest control and/or an alarm service, and $350 a month on private health insurance.
At the risk of stating the obvious, after tax and rent or mortgage payments most working Australians couldn’t afford such comfort. How did such a figure come to be defined as the gold standard used to justify steady increases in compulsory super contributions and to attack plans to tax them properly?
Part of the answer is that the super industry really doesn’t care about the living standards of Australians who are working or about the extra tax they have to pay because super funds aren’t. Its chief concern is the $2 trillion in funds it has amassed to date, and the tens of billions of dollars of it that stick to its fingers each year in management fees.
Its so-called “comfortable” retirement standard was originally called “comfortably affluent but sustainable”. That’s right, the word “affluent” got edited out along the way. The University of NSW team that built it never intended it to apply to the bulk of retirees. For them they created a second standard, “one which affords full opportunity to participate in contemporary Australian society and the basic options it offers”. They labelled it “modest but adequate“.
The word “adequate” has also disappeared along the way, leaving the false impression that what’s affluent is normal and that anything else isn’t adequate.
It’s needlessly scaring us. A new survey by State Street Global Advisors finds that before retirement most Australians believe they won’t have enough to live on, but that after retirement most are happy: two-thirds say their standard of living is no worse and a significant minority say it is better.
The truth is that living costs plummet on retirement. Most retirees no longer face a mortgage, a saving of 30 per cent. Most no longer pay tax, no longer have children living at home, and no longer habitually save up to 10 per cent of each pay packet. They also no longer incur the substantial costs of heading out of home and going to work: petrol, parking, work clothes and the temptations of the office cafeteria. And they have more time to shop and cook, meaning they get better value and pay less for food. So comfortable are retirees spending far less than the industry says they need to, that most actually save.
In his earlier incarnation as social services minister Scott Morrison revealed that in their first five years in retirement 57 per cent of pensioners either build up their savings or keep them steady.
In their last five years 67 per cent do so. A Productivity Commission survey released last week finds that only 5 per cent of retirees stop saving when their income drops on retirement. But outrageously inflating the cost of living for retirees is only the first of the industry’s tricks. The second is to imply that all of it has to come from super.
The astonishing truth, outlined by Morrison in a speech as Treasurer last month, is that super accounts for only 15 per cent of the assets of Australians over the age of 65, and only 20 per cent of their income.
As the Grattan Institute put it in a recent report: superannuation is the least important part of the retirement incomes system. Retirees have much more invested in real estate than super, and “at all ages, incomes and wealth” more invested in other financial instruments than in superannuation.
“It is unreasonable to expect superannuation savings alone to fund a comfortable living standard in retirement,” the institute says. It follows that it is unreasonable to believe that the super system needs to grow or stay as it is in order to provide decent retirements. Labor is blind to evidence when it comes to superannuation.
In thrall to the legend of Paul Keating and the myths propagated by the industry he helped create, it wants to lift compulsory contributions from 9.5 per cent of salaries to 12 per cent. Morrison is more clear-eyed.
Some retirees are genuinely poor. They are the ones paying rent. The Productivity Commission says they typically have to dole out $240 a week and are vulnerable to eviction. Shamefully, when Kevin Rudd lifted the age pension in 2009 he all but ignored the finding from his pension review that rent assistance was far too low. It remains unindexed at $120 a fortnight.
There may well be other Australians for whom retirement is uncomfortable, notwithstanding the pension of $20,498 for singles and $30,903 for couples. But for most it’s OK, no worse than working. There’s no need to hand a $2 trillion industry tax concessions in order to help them.
Association of Superannuation Funds boss Pauline Vamos wants at least a three-year lead time for major changes to super or pension policies. Photo: Jeremy Veitch
Treasurer Scott Morrison has put ordinary Australian workers on notice that they should no longer expect to receive an age pension from the government when they retire.
Meanwhile, the very wealthy have been warned generous superannuation tax breaks are set to be reined in.
In a wide-ranging speech on Friday, Mr Morrison outlined the government’s vision for an overhaul of the country’s retirement income system designed to ease pressure on future federal budgets: by both reducing expenditure on welfare payments, and limiting the amount of revenue forgone through tax concessions.
The Treasurer said government would act next year to alter the Superannuation Act to clarify that the purpose of the country’s compulsory savings system was to enable most Australians to enjoy the “worthy prize” of an “independent retirement”.
“Becoming a self-funded retiree, I think, is one of the most important objectives of any Australian … it means you have choices and control over your life and your care,” Mr Morrison said.
Currently most people can expect to receive at least a part age pension payment from the government when they retire, with their super savings providing a top-up.
But the age pension should not be regarded as an entitlement for all, but rather a “welfare payment for those who do not have the ability to save enough to fund their own retirement”, Mr Morrison said.
More than twenty years since compulsory superannuation was introduced the system is not yet efficient enough at meeting its objective to “supplement or replace” the age pension, he said.
Mr Morrison said the age pension should remain “as a safety net”, and that people who take time out of the workforce to raise children or perform carers duties should not be left behind.
Enshrining a definition of the purpose of superannuation in law, to better focus future policy changes,was a key recommendation of last year’s financial system inquiry led by former Commonwealth Bank boss David Murray.
The inquiry found that 10 per cent of Australians receive 38 per cent of super tax concessions, more than the combined benefit to the bottom 70 per cent of Australians.
Crackdown on super tax cuts for richest
“Super was never designed to be an open-ended vehicle for wealth creation.”
He floated the idea of placing a limit on how much money people can put into super at the discounted tax rate of 15 per cent.
Mr Morrison also pointed to Mercer research that suggests the super tax concessions should designed to enable an income in retirement of 70 per cent of pre-retirement earnings. Opening the door to limiting tax concessions on super has drawn criticism from lobby groups for self-funded retirees.
The move represents a major u-turn, under Prime Minister Malcolm Turnbull, on a core policy promise made by his predecessor Tony Abbott and his cabinet.
Mr Abbott, his former treasurer Joe Hockey, and former assistant treasurer Josh Frydenberg all repeatedly pledged earlier this year “no unexpected or adverse changes to super taxes”.
Mr Morrison downplayed the backflip.
Perception of fairness politically important
“A number of the changes [to super laws] that occurred under the last [Labor] government were egregious, and undermined stability and certainty in the system, and that is why we, in this term of government, have been so hesitant about making any changes in this term,” he said.
Mr Morrison said retirees, and older workers approaching retirement, deserved stability and certainty.
“And yet we must also balance that right with the goal of shaping the superannuation system so it provides opportunity for more Australians, because until tax concessions in the super system are perceived to strike the right balance of fairness there will continue to be calls for more tinkering and changes”.
The Treasurer made the comments during a speech to the Association of Superannuation Funds of Australia (ASFA) conference in Brisbane on Friday.
ASFA chief executive Pauline Vamos said she supported the idea of restraining access to super tax concessions for the most wealthy and developing policies to encourage more people to save towards a self-funded retirement.
“At the one end of the spectrum super should not be treated as a wealth creation and estate planning vehicle, while at the other we must have a social safety net for the most vulnerable”.
Ms Vamos said the government should provide at least three years notice of any future changes to the rules to allow people time to plan, and that special allowances may need to be made for those already in or closely approaching retirement.
ASFA has called for a lifetime cap of $2.5 million on the amount of money people can accumulate through super.
“While limiting the tax concessions on those very high super balances would only affect about 70,000 people today and not ring in a huge amount of revenue for the government in the short term it would set us up for a fairer and more sustainable system over the next 20 to 40 years,” Ms Vamos said.
Criticism from Labor
Other groups have called for much lower caps.
The Grattan Institute this week proposed limiting pre-tax annual contributions to superannuation accounts at $11,000 per person and taxing investment earnings in retirement, drawing the ire of the self-managed super industry.
Earlier this month Deloitte called for the government to scrap annual limits on how much money workers can tip into their super at the reduced tax rate of 15 per cent in favour of a lifetime concessional contributions cap of $580,000.
On Friday Mr Morrison said there “needs to be more flexibility” in the rules to allow people, especially women, with broken work patterns to catch up – indicating the government is open to scrapping annual caps on contributions.
The government plans to consult more widely on possible changes next year.
Opposition spokesman for Financial Services and Superannuation Jim Chalmers accused the government of peddling a rhetoric of wanting to improve retirement outcomes for ordinary workers, while simultaneously pushing ahead with previously-announced policies that would make leave them worse off.
“While it was good to hear Mr Morrison talking about improving the adequacy of superannuation system, all he offered were thought bubbles,” Mr Chalmers said.
“Meanwhile the government is pushing ahead with plans to abolish the low income contribution scheme by 2017, it is stalling on raising the super guarantee, and has laws before the parliament to weaken penalties for employers who do not comply with their obligations to pay workers’ super.”
Labor’s plan is to introduce a 15 per cent tax on earnings from super in retirement, which are currently tax-exempt, once a person has drawn more than $75,000 a year.
Source: The Sydney Morning Herald
A federal government program designed to get older Australians back into work has been branded a dismal failure, with only 1700 people joining the scheme meant to benefit 32,000.
Department of Employment documents reveal just 1735 people took advantage of the Restart scheme in its first year of operation – about 5 per cent of the government’s target.
Announced with much fanfare in the 2014 budget, the program provides a wage subsidy of up to $10,000 to employers who give jobs to people aged over 50 who have been unemployed for more than six months.
Labor said the program is clearly missing the mark. Advertisement “It’s the government’s program that needs a restart as it’s proving to be a dismal failure,” opposition spokesman Brendan O’Connor said. “No amount of rhetorical flourish from the Prime Minister can hide the real reason the program doesn’t work – there simply are not the jobs available.”
But Employment Minister Michaelia Cash said the government remains “firmly committed” to the program, which is part of a $1 billion investment to establish a single wage subsidy pool.
She said the program has now helped a total of 2500 mature-age workers, including those helped since July 1. “Restart is a demand-driven programme and the government budgeted for a maximum uptake of 32,000,” she said.
Nonetheless, Ms Cash has announced changes designed to improve uptake. The subsidy will now be paid over 12 months rather than 24 and other measures have been taken to reduce complexity and red tape.
Older workers face significant barriers to entering the workforce. On average, they spend 61 weeks on the unemployment queue, compared to 37 weeks for all other people.
“That is why Restart was developed, to give an added incentive to employers to hire a mature-age worker,” Ms Cash said. Both major parties have long struggled to encourage employers to hire mature-age Australians. Indeed, just 230 employers took advantage of a $1000 annual subsidy under the two-year life of the Rudd/Gillard government’s Experience+Jobs Bonus scheme, which was also designed to get over 50s into work. It was meant to benefit up to 10,000 employers.
Source: The Age/Adam Gartrell