Sunday, 22 February 2015

Getting the Pension

There has been a lot of talk about pensions lately and who should get it.

For instance the ever excellent Grattan Institute have produced two reports This one on the Budget  and this one on the Wealth of  Generations. The first one you have to read the recommendation ( start at p 64) and the second one is worth a whole read.  I don't agree with everything. Just one thing for example. We do not have good economic growth at present!

The pension is welfare. People should only get it if they are in need. If people are asset rich then as a general rule they shouldn't get it. ( Thinking about this it couldn't last long. It is costly to maintain a house that is worth a lot of money. At some stage any person living in such a residence would have to sell it simply to have the money to live on.)

However let us get one thing straight. The pension is not the problem in the short. medium or long term. Health costs are. Restricting the Health care card would be of more use than imposing stricter tests on the pension.

A better way of taxing superannuation would help as well. If we treated superannuation the same as income and thus only taxed it at the benefit stage and at the person's marginal tax rate then this would help most people to have more self funding in retirement.

I will be interested how Scott Morrison treats all this.