Thursday, 22 December 2016

Changes to the pension

start in the New Year and were in the paper again this morning. The government is saying "most" pensioners won't be worse off. The paper is saying 5,000 in this state will lose the pension altogether and17,000 will be worse off. 
As usual the reality is probably somewhere in between. It will be hard to sell anyway.
It will be hard to sell because the government is setting about this entirely the wrong way. It is punishing people for doing one thing and rewarding people for doing  another thing.
Take A and B. They left school together. They went to work in the same company at the same time. They stayed there and, fifty years later, they leave the company. During that time they have been paid exactly the same amount. They have married. A's wife has worked part-time. They have two children. B's wife has worked full time. They have no children. A doesn't get the pension but B does.
How does that happen? 
It's simple. A has been careful. A has bought a house and saved for retirement. Holidays have been rare. Outings are an occasional treat. They entertain people simply at home, often using their own garden produce.
B rents. B has gone on several expensive cruises and a grand tour  to Europe. B goes to the footy each week and they go to the pub for Sunday lunch. They are off on a trip around the country towing their van next March.
These are lifestyle choices. A is being punished for doing what many people would see as the "right" thing. B is being rewarded  for the "wrong" thing. B is actually "double dipping".
I've simplified that and it is an extreme example but it explains the problem. It simply tells us that people who have made an effort to provide for their old age are not being acknowledged for their efforts. They hoped for a slightly more comfortable old age. 
Spend your savings they are told - and yes, they will. A will worry as savings dwindle. Will they have enough for when they can no longer care for themselves?
Perhaps it can be argued that B is stimulating the economy- but something doesn't seem quite right to me.


Jodiebodie said...

It isn't fair on so many levels...
This government keeps on going on about "budget repair" and about making "savings" to get the budget into "surplus" but it is trying to get money from those who can last afford it and are too vulnerable to fight it. Meanwhile the politicians' own fat cat salaries and all the fringe benefits remain unaffected while small households, disability and aged pensioners and unemployed are being sent to the wall while economists are saying the budget is in a worse shape now than when this government took over.

Jodiebodie said...
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