Include the family home in pension assets test - economists

Well finally economists are coming out with something worthwhile to rave about. And it's about bloody time. 

Why should a pensioner with nothing, having to pay private rent, get the same amount of the pension as someone who owns their own home and hasn't even got a mortgage anymore?

I don't want to hear this bullshit "Oh I'm being punished for working hard all my life and being responsible" bla. Well so did fuckin I. The opportunity to buy my own home escaped me at about the same time Sydney housing prices started their negative gearing bubble of 30 years or so. Now one bedroom units in eastern Sydney are going for a half million $. This is a failure of gov, not me. I worked my fuckin ass off for 30 years, paying tax and rent through the nose whilst bringing up my daughter and supporting my ill wife. 

Yet now, through the luck of the draw, someone in their own home with no rent or mortgage to pay, can keep their home separate from the assets test and get the same pension money as me. How is this fair? No wonder some of these pensioners can afford to give to charity. I'd consider myself a bloody charity.

CIS modelling shows that reforming the pension could deliver income gains of more than $5,900 a year to almost 98% of pensioners. These reforms would also reduce the cost of the pension by $14.5 billion a year. 

"With four out of every five retirees on the pension, and pensioners with over a million dollars in assets getting the same payment as those with almost nothing, the pension clearly needs reform," says Simon Cowan, research fellow and co-author of the report,The Age Old Problem of Old Age: Fixing the Pension. 

"The way to boost pensioner living standards lies in unlocking the savings in the family home -- not in continually increasing pension spending. 

"As the population ages the pressure on the pension will only get worse," Cowan says. "The answer is for government to count the family home in the assets test, boost take-up rates for reverse mortgages and including that income in the pension income test. 

"Australians are continually told they don't save enough for retirement, but there is $625 billion in pensioner housing assets that could be raising pensioner living standards. The potential benefits are enormous," Cowan says. 

Co-author, research fellow Matt Taylor agrees "Reverse mortgages let pensioners access the equity in their home, boosting their standard of living, but still allowing them to own their home and to stay there. By creating a government backed reverse mortgage annuity, lenders can offer lower rates and make higher payments to pensioners - who can borrow knowing that they can't lose their home." 

"By including reverse mortgage payments in the pension income test, pensioners with lower mortgage payments will automatically get a higher pension. This allows the government to focus on the truly needy. 

"As wealthier pensioners access the equity in their home to boost living standards, government can afford to increase support for non-homeowners. Our reforms include an increase in the full rate of the pension for both couples and singles, as well as substantial increases in rent assistance," Taylor says. more