Government Punishing Saving Retirees
Melbourne QC Jack Hammond and former Treasury official Terrence O’Brien released a paper this week illustrating that recent changes to the government’s age pension qualifications, and tighter superannuation rules this year, will mean that couples are potentially better off financially with only $400,000 in super than with $1,000,000 in savings.
The paper goes on to state that as of today (1st July 2017) "regardless of whether you saved $600,000 or $800,000 or even $1,000,000, you cannot secure more (in income) than what you secure with $400,000, until you have at less $1,050,000 in super”
As a result of the changes, a home owning couple would be relying solely on their savings from super with no eligibility for the aged pension.
The Australian newspaper goes on to outline these changes in more detail in this article.
It is clear that retirees have been conned by these changes made by the Australian federal government, of whom are now being punished for saving for their retirement. Additionally, stricter pension asset test rules were announced by the Coalition government in the 2015 budget and came into effect in January this year.
The Sell and Stay concept can potentially protect retirees from recently changed pension asset test rules, as well as other impacts instilled by similar changes in government policy.