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Tax-free super drives the politics of envy

The Labor Party has announced a policy that will deny the cash refund of excess imputation credits, and Bill Shorten said that people who do not pay tax should not get a tax refund. The subtext issue here, the one that working taxpayers (especially Gen Y) complain about, is that many retirees receive their superannuation benefits tax-free.

This debate will not progress further until the anger and envy is confronted. Even if we could educate the population on the merits of imputation credits (and that is unlikely) retirees would still be guilty in the public mind of not paying enough tax.

The real issue is the zero tax paid on pension income

Since 2007, super withdrawals (pensions and lumps sums) have been tax-exempt to retired members over the age of 60 (subject to caps introduced in July 2017). This was done because little tax was collected from this source and it coincided with a much more generous assets test for the age pension.

Many see the changes in 2007 as overly generous. Its lasting legacy is that it has led to the inter-generational politics of envy where the older (retired) generation pay little or no tax and the younger (working) generation pays progressively more tax as they earn more.

To working taxpayers, it seems incomprehensible and terribly unfair. Those who are old enough will remember:

  • Before 2007, people paid tax on their superannuation pension at their marginal rate. Because this was money derived from super, they were also entitled to a tax rebate of 15% which was compensation for the 15% tax they paid on their contributions during their working life. Most important, this tax only applied to the proportion of the pension which was derived from the concessional (pre-tax) contributions in the fund. The after-tax proportion of a pension was tax-free as it was seen as the return of the contributor’s own money. That system still applies to people who draw a pension from their super before the age of 60.

  • People whose contributions are limited to (pre-tax) employer contributions and salary sacrifice soon discover they never accumulate a large super balance from which to draw a pension. People only achieve large super balances at retirement by making large after-tax contributions. Before 2007, when taken as a pension, the larger that portion, the less tax was collected. Since 2007, it is all tax-free after 60 anyway.

  • The combination of the higher tax-free threshold for retirees and the tax-exempt portion of pensions meant that few people paid much tax on their super pensions before 2007. This meant that Costello could appear to be generous but the actual cost to government revenue was quite small. It meant considerable political gain with little economic cost.

  • There was no limit on after-tax contributions before 2007. That explains why some SMSFs have more than $10 million. Of course, the facility to make large after-tax contributions was limited after 2007 and since 2016 was only $100,000 per year. It is now impossible to make non-concessional contributions when super exceeds $1.6 million per person.

At present, about 50% of the population over the age of 65 depends on the age pension (which is $23,500 for a single person and $35,500 for a couple) for all their income needs. Another 25% or so receive a part pension because their assets and incomes are below the upper limits of the incomes and assets tests. Given the way these tests work, it is almost impossible for a couple on a part pension to earn more than $50,000. The AFSA standard for a comfortable retirement as a couple is $60,000.

Only 25% of the senior population is self-funded and that proportion declines with age as retirement savings, including super, are depleted. Of course, there is no way of knowing from Centrelink data if a self-funded retiree has failed to qualify for a part-pension by only a small amount or if they have $100 million at their disposal. But because there is no data this is often treated as a homogenous group, so they are all considered multi-millionaires.

Retired people have always paid little tax

No age pensioner pays tax on their pension and most part-pensioners do not pay any tax because of the Senior Australian Pensioners Tax Offset (SAPTO). Many self-funded retirees paid little tax on their pensions before 2007 and access tax-exempt pensions from their super funds now.

No government since 2007 has tried to undo the concession that allows tax-exempt withdrawals from super after age 60, to the chagrin of many workers and commentators and so the politics of envy continues. The $1.6 million cap on super in pension phase went some way to limiting the benefits.

In response to that confusion and envy, the blunt instrument proposed by Labor will cause much collateral damage. For all taxpayers on low marginal tax rates (especially retirees), the tax paid on dividends from Australian shares will be higher than other sources of income. As this increased tax will lower their income, this will distort investment decisions.

While the tax-exempt payments from super remain unaffected, this policy harshly affects the fund that pays a super pension, especially an SMSF where many self-funded retirees hold their retirement savings. Depending on the asset allocation to Australian shares it would mean a reduction in the fund’s income of up to 30%. A lower investment return due to a tax increase means super balances will be depleted sooner. A reduced capacity to pay retirement benefits to their members will place greater pressure on the age pension which is already under strain. It is difficult to see how this is good policy.

There has been insufficient consideration of the signals and incentives this policy sends, or the likely behaviour changes it will usher in.

Update as Labor announces a policy variation

In response to the public outcry, Labor has announced that pensioners and part-pensioners will be exempt from this policy. This extends the cynical approach of maximising political gain without too much cost to government revenue. To receive a full pension, a home-owner couple must have assets below $380,500. For a part pension, the limit is $837,000. It is unlikely that these non-home assets would all be invested in fully franked Australian shares. But if this were the case, for the couple on the full pension, the dividend (earning 5%) would be $19,025, the imputation credit refund is around $8,000 plus they would also receive the full pension, giving them an income of $62,600.

For the home-owner couple with $837,000, the dividend would be $41,850, the imputation credit refund would be less than $18,000 giving them a total income of almost $60,000, but those assets would reduce the age pension to zero. Note that more assets deliver a lower income. Refunded imputation credits are really the refund of tax already paid, but politicians seem to believe that any money handed back by the ATO is a tax concession. Even seen in that light, the cost to government revenue here is $18,000, but this couple saves the taxpayer the cost of the age pension which is now $35,500 for a couple.

SMSFs in pension mode pay zero tax on income or capital gain so they are clearly the target on the policy (although SMSFs with at least one pensioner member as at 28 March 2018 will also be exempt). To see how this policy plays out, take a SMSF in pension mode with two ‘non-pensioner’ members, and the fund’s balance is $1.4 million earning 5% from fully franked Australian shares. This couple have saved hard to be self-funded retirees, but the fund balance is well short of the $1.6 million per member currently allowed. The fund’s income from dividends is $70,000 and the imputation credit refund is $30,000. Since 2000, excess tax credits have been refunded in cash and this couple’s income from their SMSF is $100,000, and that is a comfortable retirement by any definition. The cost to government revenue is $30,000 but this couple has also saved the taxpayer the cost of the age pension of $35,500. Under this policy the members of the SMSF are ineligible for the age pension because their assets exceed the limit, but the income they draw from the fund has been cut by 30% from $100,000 to $70,000.

The couple with $1.4 million in their SMSF now has an income of $70,000. This compares with the couple on the full age pension, having saved $380,000 who has an after-tax income of $62,000. Similarly, the couple on the part-age pension has saved $837,000 and has an after-tax income of less than $60,000. It does not seem such a great return for all that sacrifice to save to become self-funded retirees! The question many members of SMSFs will be asking is: “Why would anyone bother?”


Jon Kalkman is a former Director and Vice President of the Australian Investors Association.

Steve Roberts
April 04, 2018

The key is in the conclusion. Self funded retirees with $1.4 m in a SMSF are no better off than a couple on the full pension with $380k in savings. The self managed retirees have to also pay to manage their fund and receive no health benefits. Moral of the story spend rather than save and rely on the government to fund your moderate retirement.

Andrew Rafty
April 03, 2018

I'm sorry but I have to disagree with a major point (I am being polite). The lost revenue from tax free super in 2007 and other changes (such as the 10 % tax rebate on Defined benefit unfunded pensions and funded defined benefit pensions becoming tax free) is not a small amount. It was huge. My conservative estimates in 2006 were 4-6 billion per annum. And that's not counting 'collateral ' cost of many thousands of HNW retirees becoming recipients of the commonwealth seniors health card. Costello was responsible for this fiasco and the current Coalition government nearly lost office trying to rectify. The irony now is that it is just as or even more complex.

April 02, 2018

Except that by claiming the credits, pensioners are draining the public purse.

Peter Gellert
April 01, 2018

Yep this alp policy makes less sense than most lnp ones and that says a lot.

Allan Jennings
April 01, 2018

As if retirees havent paid enough tax in their 40 odd years of working. Both sides just keep moving the goal posts.

April 02, 2018

With the greatest of respect, that will be everyone, including Gen X, Y, Z. Boomers don't have the monopoly on paying tax

April 02, 2018

Not to mention the market. The banks keep changing interest rates!

Of course, governments should be forced to be inflexible so that they loose money rather than individuals and businesses.

March 29, 2018

Thanks for the article Jon.
As Jon stated, why bother saving and sacrificing so hard if you can be financially better off on the part or full pension? As Bill Shorten state “we are the party for pensioners” – but they clearly are not the party for those who are self-funded retirees!
In both examples above, receiving the pension card is accompanied by numerous valuable benefits which are worth significant monies in addition to the annual cash payment e.g. discounts on rates, utilities, insurance, car, travel, theatre etc., plus receive the commonwealth health card which can be extremely valuable if you are unwell – these cards can give discounts eg $10- $20k plus. In addition, pensioners get carers packages and nursing home discounts (or free); I am aware of a situation whereby an elderly lady was required to sell her family home and paid in excess of $500k for a nursing home position whereby her neighbour in the exact same nursing home situation paid $0 as she had no assets. The pensioner, in contrast to the self-funded retiree, has CPI built into their pension and has no market risk.
Many retirees put NCC monies into SMSF or super via the sale of their family home, or inheritance, or divorce settlement, or/and was a low-income earner not receiving huge or any tax discount. Some paid super surcharge tax (30%), and the baby boomer generation paid very high taxes (61.5% top rate) and huge montage interest rates (18% at one stage), facts which should be mentioned to give balance to the discussion.
If I have $830k of assets I am deemed by the Labour party to be a “poor pensioner” and labour will dance to my vote and take care of me, but if I have e.g. $1.3m in super I feel that I am demonised as a mega-wealthy multi-millionaire tax evading bludger, despite the fact that my income (and especially when you consider the numerous discounts from the pension cards in addition to pension income) will be less than if I was on the part pension. The government states their aim is to get retirees to be self-funded – for this you need at least $1.6m (as Liberal confirmed by setting both the $1.6m cap and saying $830k is too low for a living standard); both parties encouraged prospective retirees to save for our super, and we did so under the rules set up by both parties, and I am sick of governments now demonising aspirational people who have saved, risk, invested, and toiled for over 40 years with the aim that they do not drain the public purse.
I note that the deeming rates and $1.6m cap was based around earning capacity, and if this is lowered then the deeming rates should be decreased and the cap increased.
If my husband and I are on the full pension plus the value of the imputation credits and cards which total worth at least $70-$80 pa, plus the cost of free careers packages and nursing homes – over 20 years this may cost the government maybe up to $1.5- $2m+ and more if I live longer. I certainly will never receive this amount of tax deductions! I do understand the feelings of Gen Y and feel that Labour has done all to obfuscate the facts to incite division. I think that Gen Y and all those who seem so opposed to self-refunded retirees being given some incentives so as not to drain the public purse, need to ask the question as to if it is good for the national budget if retirees decide to go on the pension in lieu of being self -funded, and who will be paying for these ever-increasing pensions.
I simply do not believe Labours statistics; I read that Labour’s example was of a SMSF of $2.5m in pension phase and was an extreme example of imputation credit returns – this date is prior to the 2017 changes of $1.6m cap on tax free pension phase.
What we need is a proper full discussion based competent superannuation and taxation policy – not ill-considered piece-meal lazy populist discriminatory pork-barrelling; this policy proposal is in my mind is as close to buying votes as I have ever seen with total disregard to its real long term impact. It is discriminatory as it hits the poorer SMSF retiree with less than $1.6m but allows those with many millions to be unaffected as they will have tax offsets so will be able to use the imputations. It gives to pensioners but takes from those in SMSFs, and the situation of allowing those on the pension to have a higher income than those who are saved and worked so are self-funded is just plain dumb not to say totally disincentivise to ever save. It hits mature large super funds whilst not effecting growing super funds – allowing the accumulation phase members to benefit from the imputation credits received by those in pension phase. I cannot see how any of this is fair? It does not touch the over generous tax paid public servants super pensions; meanwhile the hypocrisy is that the politicians have a generous tax funded super system with its own rules. This policy is designed to target SMSF of which Labour is opposed to, and will support the large industry funds who are large donors to Labour.
I (along with many) saved and sacrifice for decades in a way that I think some Gen Y have no understanding of – right now I am regretting this, for if I lose imputation credits I will have a lesser income than if i was on the part pension and had the aged pension discounts and commonwealth seniors card.
We need to demand more from our governments that this type of policy?

April 05, 2018

Well written, Toya,

Those who have made the effort to build wealth are being unfairly targeted with Shorten’s proposed policy. Saving and building wealth take commitment, sacrifice and dedication over many years. This proposal is a slap in the face to those who have made an effort to fund their own retirements, prompting the question, why not take it all out, buy a beautiful home with the funds and go on the pension......

March 29, 2018

If this change went through there would be even greater pressure on the property market. Retirees would do all they can to access the age pension by ploughing more money into their home, which is the only large asset left that is exempt from the age pension assets test. $1 of pension will become more valuable if you can get imputation refunds plus all of the concession/health benefits of a pensioner card. Either that or self funded retirees will avoid SMSF's or Australian Shares etc. Stupid policy all round - either keep imputation credits and apply across the board to all tax entities or do as other countries have done (eg Singapore) and get rid of imputation at the same time that you make a substantial reduction to the company tax rate. Main issue in all of this is that we need to re-introduce a tax on all funds drawn down from super (as per almost every other OECD country) to fund the tax imbalance that will exist with a large portion of the population (baby boomers) paying no tax at all. And I say this as a baby boomer self funded retiree.

March 29, 2018

The way I read it, anyone getting a pension after 26/3/2018 won't get the cash for franking credits. So new pensioners with shares will not get the same income as pensioners before that date, given identical investments.

March 30, 2018

Pauline, the way I understand it is that all pensioners and part pensioners will get the usual franking credit refund on their normal income tax, but those who were pensioners at 28 March 2018 will also be entitled to a refund of the franking credits on their SMSF.

Although I am sure there will be plenty of other backflips and amendments before (and IF) this ever sees the light of day.

March 29, 2018

It is my understanding that most pension plans in other countries have a different taxation regime to ours in Australia. In those countries, no tax is levied on the contributions or earnings during the accumulation phase but the recipient of the pension during the draw-down phase is taxed on the income received, at their individual marginal rate. It is very important to understand the effect of compounding when one is saving for retirement. In order to take advantage of compounding too maximize the return to the investor, it is essential to minimize the ongoing taxes and fees over the 40 years or so that the pension is accruing in the accumulation phase. For reasons that I can't fathom, Australian Governments of all political persuasions, decided long ago that Concessional Contributions would be taxed when contributed to superannuation. Furthermore, an earnings tax was applied to the earnings in the accumulation phase. This taxation impost is the worst thing possible when attempting to maximize the positive effects of compounding interest. The fee structure has also been ridiculously high for the management of superannuation by fund managers. The government was in a perfect position when mandatory superannuation was introduced, to legislate low fees for wealth management companies who manage people’s superannuation. The government finally realized the error of its ways three years ago when it introduced the “My Super” entity which fund managers could only invest in if they restricted their management fees by the legislated maximum amount in the “My Super” regime. The tradeoff to the superannuation recipient for the taxation on the Concessional Contributions and tax on earnings, was the carrot of tax free pension payments to the individual after they retired from the workforce and had reached the age of sixty. Now the government and opposition have decided to break the trust or compact between itself and the public by retrospectively changing the rules, firstly by forcing anyone with excess funds over $1.6 million by making them place the excess funds back into an accumulation fund thereby causing the funds to be taxed at an earnings rate of 15%; and secondly taxing the recipient’s pension by way of denying franking credits (ALP latest proposal). These two actions are a fundamental breach of trust between the government/opposition and the Australian public. It is my understanding that Australia is the only country in the world that has legislated to tax superannuation three times; on contributions, on earnings and on drawdown! This fundamental breach of trust is reason enough in my opinion to not allow this latest proposed change to go ahead.

Finally it should always be remembered that the changes that have been introduced and proposed, do not affect the parliamentarians and public servants who propose them.

April 02, 2018

"the changes that have been introduced and proposed, do not affect the parliamentarians and public servants who propose them."

Only half right, this is a tired myth that gets perpetuated about rank and file public servants being on some kind of gravy train.

It is ONLY the politicians who are on the old DB pension scheme and guaranteed 75% of their final salary, indexed for life, everyone else who joined after 1983 - including their staffers - is on the CommSuper or StateSuper schemes, which are DC (Defined Contribution) and rely on how much you put in and how well it did over your working life in whatever it was .

Rick Turner
March 29, 2018

Frankie needs to look at the age based factors that force superannuants to draw down their funds, these see little left in super once you reach average life expectancy, a problem for longevity risk which Labor's policy increases

Gen Y cant win the argument that super may mean you don't draw the pension so don't burden the young, so introduces health costs, but if you maintain private health insurance your burden of the young is premiums due to community rating not tax. Is Gen Y advocating euthanasia to get rid of this burden?

March 29, 2018

As a result of labor's latest amendment to allow pensioners to receive cash for franking credits, we now have the following anomaly. For a couple with one dollar below the upper asset pension level of $837,000 and thus a part pension, this is a good outcome, but for those with one dollar above, it is completely unfair and discriminatory. Assuming all of the $837,000 is invested in shares with across board dividend of 4%, an income of $33,480 can be obtained, plus an extra income in franking credits of $14,348. So the couple $1 below will end up with an income of $47,828 and the couple $1 above will end up with an income of $33,480. To my mind, this is total discrimination.

In fact to get the same income as the person with $1 below $837,000, one would need another $358,000 of shares, bringing the total requirement to nearly $1.2m.

Further more with the announcement that 'Self funded super funds with at least one pensioner or allowance recipient before 26/3/2018 will be exempt from these changes'. This implies that anyone who becomes a pensioner after 26/3/2018 or any super fund member unlucky enough to fall on bad times and end up with assets of less than the pension higher limit will not benefit from the same exemption as those pensioners enjoying cash back for franking credits before this date. This then leaves future pensioners worse off than those already under the pension umbrella. Once again, total discrimination for people with exactly the same assets.

I do not consider we are 'rich'. We have saved for our retirement as encouraged by earlier Liberal and Labor governments. In fact twenty years ago, Labor along with Liberal voted to allow the payment of cash for franking credits to help people save more money for retirement so they didn't end up on the pension. Now, we are just made to feel selfish and greedy, because we did save. Eventually, with the increase in draw down percentage on our super as we age, increase in cost of living and cash for franking credits being eliminated, we will no doubt eventually end up on the government pension. But the punishment for having the cheek to save will continue, as we will still be ineligible for any cash back for franking credits, unlike those pensioners before 26/3/2018, who will continue to enjoy them.

Of course, Shorten constantly likes to use examples of couple retirees with $3.2m in SMSF to ram home the idea of how unfair the present situation is to the younger generations, without making it clear that most retirees do not have that kind of money in their Super. It would be interesting to reveal some details of the numbers, but of course it is most likely convenient to Labor's cause to keep these facts hidden. I suspect that most of those who do not qualify for the pension fall nearer the pension asset upper limits than nearer the $1.6m or $3.2m for couples in Super. Young people or even older people in the workforce, as evidenced by ABC's 'Four Corners Super Risk' program aired on 25/3/2018, do not understand super, how it works and in some cases how much they have in it. When told cash for franking credits will be eliminated to take from the 'rich' and give to the 'poor', it sounds like music to their ears. But of course, they don't realise that they may also lose out, if not now, but when they retire. And I very much doubt that any proposed change in personal tax levels will fully compensate them for their loss.

So this proposed policy is all smoke and mirrors to obtain votes for Labor, backed by the Unions. And who will be losing out with this policy? At the moment mainly those retirees with SMSF's invested in shares, above pensionable upper limit and below the $1.6m. Eventually it will affect all working people as they approach retirement. Those above $1.6m will have means of adjusting their investments and thus use franking credits to their advantage and none of this will ever affect people in union backed industrial funds or those on defined pensions. How lucky they are!

My question is, what are the Liberal party doing to bring the consequences of this policy to the attention of voters? I have heard very few opinions about this issue from Scott Morrison or Malcolm Turnbull. Most, especially the young do not have a clue as to how they will be affected in the future. People about to retire, using SMSF's will find their income less than anticipated, new pensioners will have less income than other pensioners with the same assets. As you point out, the policy stinks of discrimination against retirees with SMSFs, with less than$1.6m per person and not on a government pension. People should be made more aware of this unfair and greedy policy.

March 29, 2018

The younger workers should be taking a keen interest in the retirement debate as they will eventually need to provide for their retirement if they want to avoid going on the pension. If the system becomes trashed, as appears to be happening, then they will be the eventual losers. They have a lot to gain by building their assets in a stable super system.

March 31, 2018

Wiliiam, I understand the concern you raise.

However, I do have a problem with the suggestion that younger workers will be the eventual losers. This suggestion assumes the super system as we know it today will outsurvive the baby boomers. This system, from its inception, has been built by baby boomers for baby boomers. In the next 20 years, the last of the baby boomers will have retired from full time work and the Gen Ys and Millenials will occupy leadership roles within government and thus control the power base. As leaders, self-interest will ensure that their generation will not be losers. By then, the ageless self-funded retiree from 2007 would have enjoyed 30 years of tax-free earnings in pension mode (no guarantee that this concession will last this long). If the budget cycle dictates raising taxes, no better cash cow to raid than the super nest egg compiled by their parents generation (at the moment, the raid only occurs on death of the retiree). All of todays motherhood statements associated with out super system (e.g. taking pressure off the pension system) count for nothing in the future. Rather than class warfare, the system as it currently stands is likely to generate generational warfare in the year to come. The only question is whether the future leaders will choose to raid the income or capital of todays pension funds.

Gen Y
March 29, 2018

Hi Jon, you are true that retired people have always paid little tax, but the generation reaching retirement now is:
1. The first to do so en masse with significant assets, due to many years of prosperous times, modernisation of the financial system and continual supporting government policy.
2. The largest cohort of retirees in history.
3. Due to the marvels of modern medicine are expected to live their retirement for longer than any generations before them.
4. As this generation didn't generally have huge families, a shrinking pool of tax payers is available to support them in the years when they will be the highest drain on the tax system (health).

If Costello's changes were to 'appear to look generous but the actual cost was quite small', then Treasury failed in their modelling by taking a backwards rather than forward looking view. Blind Freddy could see the impact on the budget & society of the above 4 points.

March 31, 2018

Gen Y look again at your point 4 which completely destroys your own argument.

SMSF are not a drain on the tax system and in fact most collect ZERO pension and pay fully for their health care.

Is it not Labors' policy to increase immigration so as to pay for future pensions ? Another giant policy failure by the Labor party of envy.

Tell me Gen Y how this has already impacted wages growth, housing supply and cost, Et cetera.....rhetorical question.

April 02, 2018

Shylock - not if they don't have a SMSF and are going on the pension or SKI it all away. There's something fishy about someone who has the vast majority of their wealth tied up in their own house that is in the middle of a capital city, yet cries poor.

SMSFs ARE a drain on the tax system (which is why the boomer generation are being targeted), because the imputation tax refunds went from half a million when it was first brought in, to over $500 million (Source: ABC Radio). All that negatively geared property too that makes a 'loss', don't forget that too.

That money has to come from somewhere...where ? It's unsustainable to pay out a rising tide (thanks to the weight of money going into super) and someone has to pay....guess who ? (Answer, not the boomers and not big business)

March 29, 2018

Thanks, interesting article but like other articles that focus on income in retirement, it places no value on either spending down your capital that was heavily tax advantaged or placing a value on the resulting bequest.

March 29, 2018

Frankie. If you could only tell me when I am going to die, it would make it a whole easier to plan to run down my capital so that the last cheque I write is to the undertaker and I can make sure it bounces.
Without that information I need to plan for the 95% likelihood that I or my surviving spouse will live into our nineties. With that longevity risk, it is simply prudent that I go on living on my income and preserving my capital for the inevitable increases in health care and age care costs and any other unforseens in old age
The age pension might always be there, but will it be worth anything if all the retiring baby boomer demand their entitlement and the politicians chase their votes?

Pete Rawle
April 03, 2018

Firstly let me say that I agree with your comments. Perhaps the best strategy is to have enough capital invested in your principal place of residence that doesn't count as a Centrelink asset leaving say $380,000 investments to supplement the pension over four years or more. This will maximise the pension and not be restricted by the ever changing superannuation legislation landscape.
Obviously this strategy will need to be reviewed in three years time, but so will every other strategy, given the propensity of Governments to change the rules, let alone the economic environment and other personal issues that will inevitably arise.
The increase in the value of your home is tax free and also Centrelink exempt and can be sold at an appropriate time to supplement income requirements. Remember most Australians sell their house every 5 years anyway. I have never seen a hurse with a towbar so we can't take it with us when we die.

April 04, 2018

Pete, that's the problem. When Gen X, Y and Z come to retire, the value of your home will be taken into account under the pension means I literally would "bet my house on it".

It'll be like this - someone at Centrelink will say "But your house is worth over a million dollars, you're a 'millionaire' " (with all the faux cachet that accompanies it) "why can't you sell it, pocket the money (n.b. which might not still be CGT free by then) and live somewhere cheaper, or rent ?"


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Lenders use Residential Mortgage-Backed Securities to finance mortgages and RMBS are available to retail investors through fund structures. They come with many layers of protection beyond movements in house prices. 



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