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How to include homes in the age pension assets test

(Following the article by Anthony Asher on possible inclusion of the family home in the pension assets test, a reader who is required to remain anonymous by his employer demonstrates the inequity he feels).


Here’s the boldest idea the government’s inquiry into retirement incomes should consider but might not: no longer exempting all of the value of each retiree’s home from the pension assets test.

The test would merely exempt part of the value of retirees’ homes. The change would free-up funds to support other retirees who are struggling because they have to pay rent.

It’s an idea with an impressive lineage.

The Henry Tax Review suggested exempting only the first A$1.2 million. The bit above $1.2 million would be regarded as an asset and subject to the test.

Henry Tax Review

The review said it would hit only 10,000 retirees. The $1.2 million figure was in 2009 dollars, meaning that if the change came in today the review would want it to cut in at a higher dollar figure.

The Grattan Institute suggests a lower cut in at $500,000. The first $500,000 of each mortgaged home would remain exempt from the pension assets test, the part above $500,000 would be regarded as an asset. Grattan says it would save the budget $1 to $2 billion a year.

The Australian Chamber of Commerce and Industry agrees, as does the Actuaries Institute.

The idea scares homeowners

Who could object?

The Combined Pensioners and Superannuants Association says asset testing the family home would be “massively unfair”, targeting the vulnerable. But people with high-value mortgage-free homes aren’t normally thought of as vulnerable.

Labor’s treasury spokesman Jim Chalmers says it would push more retirees “off the pension, out of their homes, or both”. He is right about the former, but wrong to think the retirees who suffered a cut in their pension or lost their pension would be badly off.

The worst off retirees, as recognised by a Senate Committee, are those without homes making do with grossly inadequate rental assistance.

Right now it is possible for a single person owning a $1.3 million mortgage-free home and $260,000 of other assets to get the full age pension.

Assuming that person draws down on those other assets at the rate of 5% per year, he or she can spend $37,000 per year and pay no rent.

Yet homeowners do well

A non home owner with $785,000, or half the assets, would be denied the pension. Like the much-richer homeowner, that person would be able to draw an income of about $37,000 per year, but half it will have to go on rent.

It’s hardly fair. It encourages retirees with homes to stash more and more of their assets into them in order to get the pension (and pass something valuable on to their children). Retirees with lesser assets miss out and have to rent.

But fairness is in the eye of the beholder. The problem is that a ceiling on exemption from the assets test that seems fair in one part of Australia might not seem fair in another where home prices and perhaps the cost of living is higher.

Our suggestion could be sold as fair

In order to make more equal treatment seem fair to all retirees with homes I and fellow actuary Colin Grenfell have worked up an option that would use the median (typical) price for each postcode as the cut off point for exemption from the assets test.

It would happen postcode by postcode, updated every year using council valuations and as the median prices changed. Only the owners of homes who values were atypical for the area would be affected, and only that part of the value of their home that was atypical would be included in the assets test.

Its key selling point is that it wouldn’t threaten homeowners with values at and below the average for their area.

The funds freed could increase the overall pension, but would probably be better applied to lifting rent assistance.

It’s important to treat retirees in the same financial circumstances the same, regardless of whether they own a mortgage-free home, and fewer and fewer retirees are owning mortgage-free homes.

It would have the added benefit of reducing the pressure on our parents and grandparents to own houses with bedrooms on the first floor that are never opened, not until they die and their houses are sold.

The Conversation

Anthony Asher is Associate Professor at University of New South Wales.

This article is republished from The Conversation under a Creative Commons license. Here is the original article.


(The following note from a reader is published on condition his identity remains confidential. He has identified himself to us but his employer requires him to remain anonymous).

Hi Graham

It’s frustrating the retirement review can’t consider recognising the family home for the age pension.

My friend and I have a retirement plan of living in neighbouring townhouses. With our wives, we’ll have a very convenient support and social network, especially as we age further and mobility issues set in or we can no longer drive.

When we get to age 67, we’re estimating, in today’s dollars, that his townhouse will be worth around $1.2 million in Sydney while our house in Albury will be $400,000. His and his wife’s super will be around $700,000 while my wife and I will be around $1.5 million.

So, we’ll both be worth the same, but because of the home exemption from the age pension he and his wife will get a part pension and all the benefits that flow from all three levels of government and anywhere that offers pensioner discounts.

But our plan will see me and my wife also using this age pension concession and joining the gravy train as well.

  • If the family home was included in the age pension calculation, with an offsetting increase in the assets test, we’ve discussed the idea of moving to a regional coastal town. That would be a better lifestyle for us, and if enough retirees did the same it would help housing affordability and congestion in Sydney.
  • The family home concession favours people in Sydney and Melbourne over other capital cities, who are favoured over large regional centres, who are favoured over people in smaller towns where house prices are generally lowest. It’s the reverse of all other tax systems where the wealthiest pay the most.
  • Not including the family home also ends up for many as an increased inheritance handout to children of retirees. If my parents downsized, they’d lose their age pension and all the other benefits. Uncles and aunts will either lose or see a reduced age pension if they downsize. So the older generation helping each other and my generation are helping to keep everyone in their home as long as possible as we get more money as a family.

Taking me and my friend, if we both moved up the coast and bought neighbouring townhouses we could end up in a scenario where we have exactly the same wealth in our homes and in super/personal names, but the other couple gets a part age pension and all the handouts and we don’t.

I am happy for you to share these ideas.


** we will load some of the comments received in the survey to the comments section of the article **


June 29, 2020

I can see two very significant shortcomings in the "postcode approach".

Firstly, take many regional areas in the country where new land is opening up for people to build yet there remains much old stock, particularly modest and ageing dwellings built in the immediate "austerity" post war period during the late 40s and early 50s especially. The medium house values might reflects a massive variety of stock from brand new homes on recently purchased land right down to large numbers of houses of fibreboard or wood veneer construction which are perhaps only worth half as much. Yet the land prices are of course the same. So this "postcode" policy automatically puts people at a disadvantage if they are merely so audacious as to wish to build or purchase a brick veneer home versus purchase a much older, massively less energy efficient home. I can give many examples of regional towns and cities where this would be the case but would prefer not to (here at least) because I do not want to be seen to denigrate a city or town merely on the basis of the quality of the construction of its dwellings.

The second problem: what if someone who lived in a capital city then sold their home and downsized into a regional area. I would want them to benefit fully from their decision to downsize. By that I mean they invest or otherwise consume the excess cash from the downsize. They would likely even have downsized in the first place because of anticipation of the previous house being counted in the asset test. But with the "postcode" approach, they are not reaping anything like the benefit from downsizing that they would have if there were a simple "hard" asset test threshold. They thought they were "escaping" the threshold by downsizing, only to find they are victims either way. Lesser victims yes, but not much less. Afterall, their cash is now an asset too, as well as the new modest home they downsized into.

But perhaps I can at least offer a modification on the "postcode" proposal. and that is to work out a "median" value by postcode based on the rated value of the council land it is located on to which is added to which is the median construction cost of a brand new single storey 4 bedroom, double garage home of around 20 squares (just as an example). That way, people who build new homes are not disadvantaged if the area they are building in contains a lot of very old stock such as the fibro and wood dwellings I mentioned earlier, or even far less energy efficient homes built years ago yet are still brick veneer. Obviously the formula would have to be "tweaked" but the aim would be to eliminate the variability of the value of houses themselves simply due to the quality of existing stock in the area and the availability or otherwise of new land to build on. And obviously the more modest the area, the more the house itself affects the overall value of the asset. With my proposal, the dwelling part of the equation simply seeks to arrive at an "average" value of a typical brand new home built in that area. In this way, only those who seek "opulence" rather than "a basic standard of living" have to pay the price in their respective postcode so to speak - and I think that is only fair, especially when people have already downsized as it is in anticipation of homes being counted in the asset test (as I have).

November 10, 2019

Age pension for all age qualified eliminates need for income or assets test.

Dead simple and eliminates much administration cost.

Set = Commonwealth Budget allocation to age pension / Number of pensioners.

November 10, 2019

NZ can do it, why do we penalise people who have been responsible and not wasted assets? Wasting savings opportunities in life are real choices that people make. Those choices have consequences that the tax payer should not be underwriting.

Reader Response
November 06, 2019

Include UCV of land that you own in Asset Test. This is set every 3 years by the Valuer General in Canberra regardless of what is constructed on the block.

Reader Response
November 06, 2019

We do NOT get a Govt Pension. However our earnings from working full-time were less than average, we went without and saved for our home and retirement rather than spending our money on Overseas trips and other extravagances. Why should only people that spend their money on a Home be penalized?

Reader Response
November 06, 2019

We work all our life to own a home just as we are about to retire. Leave it out of all pension calculations otherwise you are penalising those of us that have been thrifty all through our working life. Any changes should not affect those on a pension now. Grandfathering must apply otherwise it is a matter of changing the goal posts after we have planned for our retirement. We can't make any changes to our financial plans once we have retired so changes must have a lead-in time so people can plan retirement based on the new rules. Leave pensioners alone and go after social security rorts if you are serious about funding pensions in the future.

Sandra Phillips
October 13, 2021

I am not of age pension age but have retired. I am still paying off my home and will be for a while yet. I am living on my superannuation but as years go by it will diminish and will rely on an age pension assists. As I have worked hard since I was 15 years old and also studied over my life time to get a university degree as well as saved and budgeted to be able to purchase my home, I feel that it would be extremely unfair if my home is included in the asset test. If others haven't been as frugal and self disciplined why should I be penalised for a life time of working hard and making my goals and dreams come in to fruition.

November 05, 2019

Unfortunately, all the above comments are perfectly valid, and merely serve to illustrate the lack of strategic planning by successive governments, hell-bent on making a budget surplus the sole measure of their economic competence, all the while neglecting their principal role in providing coherent responses to the social, environmental and economic issues that will ultimately dominate the future of all Australians, whether working or retired.
The issue of appropriately funding the needs of an ageing population was clearly identified by governments from the 70's and 80's onwards. Some of these governments showed great forethought and implemented radical, structural reforms to help reinforce the funding of a future generation of retirees.
Yet in recent years we have seen various governments squander the benefits of many of these initiatives, encouraging a range of electoral giveaways (think, first home-owners grant, stamp-duty waivers) all of which became de-facto handouts to developers as they merely served to push property prices every skywards. In recent years there have been a continuous stream of snouts in the trough as we experienced reviews of; financial services, banking, tax, aged-care and retirement, yet in spite of these reviews little has been achieved, primarily because of the fundamental lack of political will that exists in order to address controversial and core issues, such as the inclusion (in some way) of the family home within the means test. Why not?
Maybe we should just commence the debate and see what interested parties and lobby-groups get involved in the discussion.

November 03, 2019

I am retired and live in a regional area, but I am not wedded to it as family live in various areas of the state and interstate. If the postcode area idea was initiated I would move to the nearest big city or beachside area and buy a far more expensive house.
And other perfectly compatible couples wedded to a region might divorce or separate and each buy a house surprisingly close to each other.
The strategies might not work for someone older but for people in retirement planning mode or earlier retirees it would be very attractive.

November 03, 2019

Why should any of us bother to struggle with working, often in physically demanding jobs, paying taxes, raising families etc. and just live off the 'system' eventually being entitled to the full age pension and the perks along the way?

There seems to be an attitude that we all just happened upon our homes. No - we worked darn hard - scrimped and saved and went without to put a roof over our heads.

It is very easy for those who failed to save, and it is difficult for all of us at varying stages throughout life, to turn around in later years and declare 'oh - you shouldn't be entitled to xyz because look at what you have'.

Politicians are a disgrace and its high time their lifelong benefits were abolished - that would save the bottom line (and us taxpayers) millions of dollars every year that could legitimately go into our schools, hospitals etc. How dare anyone believe a persons home - paid for in after tax dollars - be subject to assets/income tests in determining any pension a person rightfully is due on retirement.

Perhaps our politicians should not have closed down the pension system that we all paid into prior to the implementation of the superannuation guarantee system. Where did all that money go - into general revenue of course!

SMSF Trustee
November 04, 2019

Yeah EB, except that every time we sold and bought a new family home we didn't have to pay any capital gains tax, and we didn't have to pay any tax on the rent we paid ourselves as the owners. (And that's exactly what's happened. We are two people - the home owner and the home occupier. The latter pays rent to the former. We just don't enter into our income statements because we haven't had to.)
The point being that others who chose to invest in, say, a share portfolio have had to pay taxes on income and capital gains and now that gets included in an assets test whereas the investment others chose to make in a family home doesn't get included. It's about equity and fairness, not emotional arguments about how hard we worked to get whatever investments we chose to make. I'd be quite happy to have my family home included in such tests.
As for the politicians and their 'lifelong' benefits, those actually disappeared a while ago and they pay into an accumulation super fund like the rest of us. The PM gets some lifelong benefits, in lieu of the sort of salary the leader of the nation should get, but scrapping that wouldn't help many hospitals.
In brief, more factual analysis and less emotion would be useful.

Helen Olivieri
November 28, 2020

A home isn’t a ‘choice, like a share portfolio. Everyone needs a roof over their head, and for most of our history the only viable way to get one is to work for it and buy one, rental laws not being designed for long term tenancy in this country. AND yes, most work hard for the homes they have bought.

I object to homes being re-defined as merely an asset class, and pensions being re-defined as ‘welfare’; people want to be able to pass on their homes to their children, they want to be able to access a pension they have paid into the taxpayer kitty for, and why shouldn’t heh be able to? Better to ask about those large corporations who pay less tax than workers do, proportionately, sometimes no tax, and then apparently can raid the public purse when there’s a crisis. Banks, and mining companies, I’m looking at you.

I don’t care how ‘emotional’ you think this is, it’s an equally valid position, and the choices governments make about who to go after for more tax and who to subsidise with tax money are political choices, not ‘rational’ or necessarily equitable.

November 03, 2019

Allow retirees to continue living in their own home and receiving up to the full age pension, if they choose, with Centrelink clawing back this 'reverse mortgage' from the estate.

November 08, 2019

Also mention the high rate of growth on property, not just "hard work", due to catastrophic lending through the 90s and 2000s, and don't forget that the aging population will want ever better medical and aged care at no extra cost no doubt, based on the tax being paid by a smaller number of workers, on lower wages, less likely to have the full-time jobs of our parents and grandparents generations ...... Realistically current retirees have spent the last 20 years in investing largesse. The homes should be downsized and shared with your family to provide deposits, user-pays for health care. We are living in a pyramid scheme and its just a matter of time before the house can't be an endless source of sheltering money. I like the idea of the median price for a 2 bedroom unit as the fair value to exclude, and if this forces some family homes being wasted with empty rooms to be released onto the market and filled with young families, so be it. Extra supply might even bring the prices down so some people can afford to have one person as a 'stay at home parent'.

November 03, 2019

And how will the family home be valued ? An “estimate” by the owner or a physical valuation by a registered valuer at a few hundred dollars a pop ?

November 03, 2019

The move towards having the family home means tested is already happening with the family home being included in the test for aged care residence.

I don't mind the home being included in the assets test, but bet I am not alone in my feeling that as long as it isn't my home.

November 02, 2019

Best to live where you want in the house you want and save enough that you never need the pension. Keep the government out of it. They stuff everything up anyway.

November 02, 2019

Of course the main residence should be included in the assets test! Why should someone with $1M in super lose the pension whilst another with a $1M house does not? However, the government needs to offer all homeowners the option to trade some of their equity for a pension, so that they are not forced to sell their home if they are cash poor. If done properly, this would allow both homeowner and renter to receive an identical disposable (after rent) pension, and end their lives with a similar level of assets to pass on to the next generation.

Hans Bossert
November 01, 2019

The home is clearly an asset and the full value ought to be included in the assets test. All other methods are unfair. The assets test threshold needs to be adjusted to account for the inclusion of the home. It is only a matter of time until our Government reaches a bilateral agreement to implement some change that includes the home in the assets test, but this won’t happen any time soon.

November 01, 2019

It will happen, mark my words; for Gen-X and after.

Your house will be worth well over a million in most cities by the time that Gen-X retire in 20 years, and there'll be the cachet of "ooh, you're a millionaire". We also had superannuation, so the attitude from the Government will be "you don't need a pension" and "Your house is worth a million dollars, can't you live somewhere cheaper ? Computer says 'no' " if you want a pension, If you even DO qualify and if so, you won't want it anyway (if there is even such a thing when we retire) because it'll be poverty line wages.

November 01, 2019

I think it's a bad idea.

On the postcode solution, this is a very city centric view / solution. Not all of Australia has a postcode that covers one or even a few suburbs. For regional Australia, some postcodes cover vast areas (and some postcodes have areas that are not even connected). So it's a poor solution on this basis alone.

It's also very unfair to those older retirees who have been retired for some time. They may have bought a house in a modest location a long time ago and have never sold. They never had the chance to utilise the superannuation system before they retired. They may live near services or family. To remove or reduce the age pension from these people is clearly unfair. Also forcing them to sell and locate to a cheaper postcode would also be unfair.

If something like this was to ever have legs, it would need to be phased in over time, as per the changes to the age pension age. This would at least allow people to plan for this change and not affect people already retired on the current set of assumptions.

Gen Y
October 31, 2019

It's got to be paired with a government backed reverse mortgage scheme to have any chance of being palatable to the electorate (and even that is a stretch). Keep your age pension payments but if your house is worth more than postcode median (or $1.2m or $500k, whatever is chosen), those pension payments are repaid to the Govt upon sale of the house or death.

The comments in this article, as well as the comments in pre election articles about giving up the sacred franking credits show this generation is not prepared to give up anything.

November 01, 2019

Hi GenY there is already a Centrelink pension loans scheme which uses the home as security - so that base is covered.

October 31, 2019

The family home certainly is an asset and should be included in incomes and assets assessment for eligibility for the government pension.
My home is valued at $200,000 and I am not eligible for the age pension.
If I moved up market and bought a more expensive house (reduced my assets) I would be eligible for the pension
The current system is unfair, it favour people living capital cities.

October 31, 2019

Leave the home ALONE. Retirement is based on previous planning not knee jerk reactions to try and make things equitable. Just remember all the sacrifices we have made through our working lives to ensure we have a mortgage free home on retirement - no overseas trips, no luxuries, no extended holidays, no new cars every couple of years etc etc. You can't make it equitable for all - those that work hard deserve to keep that which they have budgeted for throughout their working lives so why should they have to make sacrifices to advantage those who have not bothered to plan.

October 31, 2019

I think there are possibilities here, and that there should be incentives to allow older people to downsize if that's in their best interests with regard to freeing up capital, but if you're living in a $2M home, through basically luck, and you want to downsize it to something more modest - say $1M - $1.5M, then the stamp duty - a state government tax - will take a large chunk of your "winnings" immediately - and that probably gives people pause on the concept.

And "incentives" can be both positive and negative.

Bill W
November 01, 2019

Geoff, under the existing rules a pensioner can "downsize" to a larger and more expensive house. If on a government pension this may affect the assets and the pension entitlement. It would be a brave government who introduced means testing the family home, no matter how logical that proposition might be.

Reader Response
October 31, 2019

Normalising by postcode isn't that feasible. Some postcodes in Australia cover massive areas. I also don't think it's fair that an elderly couple, who never had the opportunity to save super, but have a house in what was once a working class suburb but is now a sought after location, should be forced to sell the house they may have lived in for a long time in order to access the age pension (which they never had the opportunity to avoid through superannuation in the first place). You can't just change the goal posts for people who retired long ago with a completely different set of goal posts. If any changes are to be made to this, then phase them in aka the current pension age extensions.

October 31, 2019

Yes. Leave the family home alone. People worked hard to build it, to give their children a comfortable place to live n to live in comfort in their old age.
Any big, negative changes to the pension system should not affect existing retirees.
Retirees live in fear of treasurers n so-called "experts" who are forever trying to hurt pensioners, e.g the Grattan Institute n the Chamber of Commerce. I bet these guys are on fat salaries n wont have to worry about living on a small pension. 

Reader Response
October 31, 2019

There should be no assets test, only income test on financial assets. Pay for it by taxing pension mode super at 15%.

Reader Response
October 31, 2019

Your principal residence should be excluded if it provides no income to the owner/s.

Reader Response
October 31, 2019

Raising the qualifying age and the frequent changes to income and assets tests [to exclude more people from qualifying for the pension) has devastated the retirement planning of many who planned their retirement under the old rules (and those who forced to retire due to poor health, accidents or retrenchment/offshoring). No more changes.

Reader Response
October 31, 2019

Many older people in their retirement depend quite a lot on the support group of local friends that they have established during their lifetime. Most did not initially choose to live and remain in a location because the value of their house would increase beyond their wildest dreams as has happened to some. If they have significant health problems as do my wife and I and have had a protracted period where neither of us had a driver's licence for a some months, our life in a small country town 3 hours drive from our capital city and 30 minutes from any substantial shopping centre, our existence would have been significantly difficult had it not been for the generosity of our many long time friends. Why should we be forced to downsize into a cheaper town or suburb where we would have few, if any, immediate friends that we could rely on, if need be. One cannot earn any income from an asset such as one's home to offset any part of a pension lost because they live in a house that has grown substantially in value through no fault of theirs.

Reader Response
October 31, 2019

Definitely don’t like the median by post code idea. Depending on house value someone could be popping in and out of age pension eligibility year by year - a nightmare to manage and budget. While I understand the equity arguments, remember that generally one's home does not generate income and it is no little thing to sell and leave a lifetime home, which has simply gone up in value without intention over years.

Reader Response
October 31, 2019

Grattan level triggers a reduction in pension with sliding linear scale gradually reducing the pension to zero if home value is $2M or higher.

Reader Response
October 31, 2019

I think a portion of the family home (up to say 25% of its value) could be paid back to the government on the passing of an age pension recipient. Alternatively, the government could have a claim on an estate of say say 25% of age pension benefits paid out over the pensioners lifetime (from age pension age). For example, someone receiving $15,000 per annum over 20 years would receive $300K benefit. The government to have the right to claim $75K back from the estate secured by a RAD, PR or any gifts over 30K in the prior 5 years before death.

Reader Response
October 31, 2019

Why should someone in a ten million dollar mansion receive the Centrelink pension??

Reader Response
October 31, 2019

Income Test ONLY. Not Family Home. Old person living at home, that owns their own home outright, that lives in their local community should NOT be forced to move house because their house passes the value from below the threshold to above the threshold and hence the person goes from receiving (possibly their only form of income, the age pension, to no income) due to a rise in the asset value of their home. This would most affect those people that are in their latter years of life as their home increases in value, and their savings are depleted. I also believe that the administration, and disagreements between the 'values' of houses would be horrific. The true value of a house is never realized until sold. Until then it's a guess. Even if every house was valued, it would be an 'estimate' and would be in disagreement.

Reader Response
October 31, 2019

As it is, it's not fair that mega-millionaires can still draw the pension. I am a self funded retiree.

Reader Response
October 31, 2019

More importantly, there needs to be an actuarial approach which enables people to continue with a pension whilst living in their more expensive home, but having some of their pension receipts being repaid on their deaths and sale of the property.

Reader Response
October 31, 2019

I think there are a number of reasons not to include the family home. For elderly Australians on low pension incomes, the family home can be considered as a form of insurance for the time they may need high level care in old age, the costs of which are often horrendous. This will offset the costs to government at that time of life rather than through a potentially reduced pension income which creates hardship. Also the family home is not an asset which is income producing to offset any pension payments. Many elderly Australian pensioners have seen significant growth in their homes over many years, but not as an active investment strategy; rather the result of market forces beyond their control. Why should they be punished for that?

Reader Response
October 31, 2019

If the family home is included in the pension assets test and a person starts drawing down on the equity in the house at age 67 at say 5%, if that person then needs to enter assisted care say 15 years later will there be enough equity left in the value of the family home to enable that person to fund the cost of entering assisted care?

Reader Response
October 31, 2019

If you worked to pay off a house then you should not be punished for being fiscally responsible.

October 31, 2019

I'm sick to death of government and the other bodies that keep on pushing this idea as applicable to current homeowner and retirees. Having navigated the multitude of changes to superannuation through my working life, saving hard to pay off my mortgage and also have enough to retire on, now they want to disadvantage me again. By all means look at introducing a more equitable scheme down the line but leave us retirees alone.

Reader Response
October 31, 2019

Enough with the changes unless they only affect new, younger persons entering the workforce with 40 plus years ahead, so as they know what to expect when they retire and can plan accordingly.

Reader Response
October 31, 2019

Those that forego consumption today to prepare for the future, continue to be penalised, whilst those that consume today, knowing that most of their future requirements will be met by others, continue to be rewarded. People willing to save and prepare for the future, via whichever legal mechanism and method, should be encouraged and incentivised to do so.

Reader Response
October 31, 2019

And on top of that Govt needs to stop retirees blowing lump sums and lining up for pensions. Not a simple issue but will need some policy around it which will save the country going broke in the future.

Reader Response
October 31, 2019

The only logical way to set a not counted threshold is to use the median or average rates valuation depending on postcode. Simplistically, otherwise all the people in capital cities will get nothing and all the country people will get a full pension.

Reader Response
October 31, 2019

Somewhere between Henry and Asher but if Henry it would need to be indexed. Either would need to be phased in and/or include grandfathering to avoid cruelly disrupting the aged.

Reader Response
October 31, 2019

We should all get a pension to stop the ducking and diving that goes on as people near retirement.

Reader Response
October 31, 2019

State governments need to give duty relief for downsizing.

Norette Polster
October 31, 2019

Yes I agree with that. When you 'downsize' you lose thousands in commission on sale and thousands again on stamp duty on repurchase. Not to mention removal costs.

Reader Response
October 31, 2019

Yes - the Asher level is most appropriate of the lot above - but I would just say anything that is more than 25% above the average for each state (perhaps with a regional/city split) should be included..So if you are in Sydney and average price is $1m - you get hit if house worth more than $1.25m.

Reader Response
October 31, 2019

People can downsize and free up cash if they are asset rich and cash poor. Makes no sense for tax payers to fund them.

October 31, 2019

I have a novel suggestion! Make the pension available to everyone who qualifies with rules similar to those in England. It is my understanding that Paul Mc Cartney and the Queen receive the pension. Correct me if I'm wrong, but that system seems so simple compared with the convoluted system we have here.
I will declare some self interest in my suggestion, because I worked hard and saved all my life, now i"m not eligible for anything included in the current retirement system. That seems iniquitous to me.

Reader Response
October 31, 2019

I like the idea of linking the exemption amount to local home values, but I think median is too low. 60th or 75th percentile would be less likely to cause problems to those whose wealth is almost entirely in their home.

Reader Response
October 31, 2019

It would potentially disadvantage residents of Sydney & Melbourne v rest of country as their home value is so much higher but at the end of the day a 3 bedroom house is a 3 bedroom house whatever the location.

Reader Response
October 31, 2019

Something has to be sacred in our country, and surely the family home shoudl be it. People shouldnt be allowed to spend all their super on retirement living it up and then end up on the full pension because the squandered what was meant to sustain them!

Reader Response
October 31, 2019

Family homes worth in the millions, say $2M+ definitely should be included so as to 'even the playing field', the sale and downsize by such owners can fund substantial lifestyles, compared to, say, those with low value properties (think Hackham West in southern Adelaide). Many inherit high value properties, and not 'work for it all their lives', as a lower socio eco person might. Those luckier folk should be adjusted accordingly.

Reader Response
October 31, 2019

We should adopt the BC Canada approach as well and essentially allow older people with low incomes living in big expensive houses to defer council rates until property is sold.

Reader Response
October 31, 2019

A home is the last refuge from aged care.

Reader Response
October 31, 2019

It's an asset that shows your wealth, like everything else.

Reader Response
October 31, 2019

Should use reverse mortgage if need the cash.

October 31, 2019

If the family home is included in the pension assets test and a person starts drawing drawing down on the equity in the house at age 67 at say 5%, if that person then needs to enter assisted care say 15 years later, will there be enough equity left in the value of the family home to enable that person to fund the cost of entering assisted care noting that the cost to enter assisted care for a couple can be in excess of $500K?

Also are the funds from the draw down in value of the family home going to be provided by the Government as a repayable loan on sale of the premises or provided by financial institutions in a similar form to reverse mortgages? It has been reported that it is now cases of elderly persons who took out reverse mortgages a decade or more ago who have no or very little equity left in their family home due to compounding interest costs on the debt.

While the inclusion of the family home in the assets test may reduce the cost to the Government in pension costs, it also has the potential to significantly increase the cost to Government for provision of aged care.

October 31, 2019

I think the whole concept is abysmal for old people. Just looking at Sydney, in your example, it means that in order to get the full pension one would have to live in a house/ apartment for under $850,000. Sydney does not provide very many abodes for under that price unless one is prepared to live in a very small one, or if you are lucky, a two bedroom apartment or a rabbit hutch! Not to mention the further reduction of assets from moving costs and stamp duty by being forced to move in order to eat. Personally, though in retirement, I am fortunate that my husband and I do not rely on a pension - yet, but I have great sympathy for anyone of my age who under this proposed terrible scheme is forced to move to a very restricted abode, no doubt, in an area away from family and friends just to put bread on the table. Older people can not take stress - I know! And as for the Grattan institute recommending a limit of $500,000, they must live in an unrealistic bubble. They are the most unempathetic group I know. A shame on them.

October 31, 2019

I think people who have worked all their lives get a raw deal now without taking the place they live into account people renting get a rent subsidy to help pay their rent owning a house does not add to a pensioners income and the more expensive the house the higher the annual rates then there is also the cost to the pensioner of trying to maintain that house someone renting does not have to pay property rates nor do they have to pay their full water rates only what they use. They don’t have to pay property repairs they just bill the owner, the person owning their property has to pay the sewer rates and often parts of water usage if they are renting a property to someone, also a person renting does not have to pay body corporate fees on an apartment either nor if they are renting in a retirement village do they cop the garden maintenance and other associated fees if the bloody politicians can end up with non means tested pensions at extremely high rates as they do with all their added perks and can still earn millions without it affecting their pensions why should anyone on a pension that has worked consistently for 10 yrs or more have to be means tested let pensioners who are physically able and want to earn money for some added luxuries like annual trips overseas, a holiday place etc be allowed to do so add their pensions onto their earnings and have them pay annual taxes so they are also helping contribute to their pensions and cut the bloody politicians exhorbitant pensions down to more realistic amounts as we presently have so many retired politicians that the money we pay them way out ways what is being payed on pensions, and politicians vote themselves in CPI indexing on both their earnings as politicians and on their pensions the ordinary people forced to vote them into power never get to refuse their increases but they get to tell the rest of Australians they can’t have increases, a pensioner on a full pension be home owner or renter don’t get paid even the basic wage amount so why on earth would you arseholes want to penalise them further and they say communism sucks but isn’t this just another form of communism where the rich get to live really well at the expense of the Aussie battler. I’m eligible for retirement in a couple of years and I look around at my friends who are already there and see how those among them home owner and renter alike struggle to live at a comfortable level. I have one couple as friends that have their own home plus a home in the country that they rent out that live mainly on cheap mince meat dishes, and think a lamb shank is a luxury item out of their means presently their income from the second property doesn’t put them at a level where they reach above the tax free threshold, there already doing it tough what you are suggesting could be enough to push them into an early grave. I think anyone who agrees with this obviously has already more income than they need and obviously won’t have to depend on a pension as an income in old age or you wouldn’t be thinking this is a reasonable idea. Why is it the wealthy want to take from the poor pensioner who has struggled all their life to have a little luxury if their lucky in old age and if you look at the cost of moving into nursing homes in Sydney now to get into one that might treat people reasonably costs over $800,000 for one person to get into not a couple as the idiot in one of these comments above seems to believe so without their homes how are people who have no families going to be able to afford care when they can no longer look after themselves, and I know this as a couple of my friends trying to place his mum who was now very demented and beyond their ability to care for her, this was the cheapest in the area they live, within a reasonable distance to visit her could be found, to get into one at $500k you would have to send them to the country, even then I’m not sure you would be able to get into one at $500k these days.

A reader
November 03, 2019

Cheryl makes a number of good points. Further, there is no fairness to changing the rules for those already living out their 'planning', whatever it may have been. Changes such as those discussed need a long time period for implementation and consideration of potential unintended (usually negative) results.

October 31, 2019

Housing has become a tax dodge, contributing to the high cost of real estate and the problem of young people needing a mortgage that will only be paid off when they retire, probably with their super payout.

October 31, 2019

The suggestion in this article may have the unintended consequence of people moving into suburbs/postcodes with a higher median price so that they can continue to qualify for the age pension.

Perhaps an alternative may be to calculate the national median house price for the entire country and if one lives in a home with a value above this and receives age pension, the age pension is paid back to government on death/sale of the property, a bit like a pensioner loan scheme.

October 31, 2019

Actually the best way to do this fairly is to include the FULL value of the house in the assets test and if the person would meet the income test (ignoring deemed income from the value of the house) then they would still get the pension, but it would be deducted from the value of the family home (amount paid as a pension over and above entitlement would be indexed like HECS debts) when the home is sold. Having different values for different postcodes is just as bad and unfair as not including the value at all.

October 31, 2019

Yeah I have made this same suggestion in my comment on 03 October 2019 on Graham Hand's article. It is much fairer to include the home in the assets test, with some allowance for the median price where the person lives. Just as importantly it encourages efficient use of housing resources, so that elderly people aren't disincentivised to downsize.


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