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Adopt a universal

National Seniors Australia is calling for a universal pension, allowing the complications of retirement planning to be removed.

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A universal pension would give everyone a basic pension.

It would eliminate means testing, doing away with deeming and taper rates, which complicate retirement planning of millions of retirees.

Under a universal pension, retirees would earn as much as they like from their investments or from work but still get a pension. They would simply pay tax to fund their entitlement, making the system sustainable.

They would only pay back the pension when they earned sufficient income in a given year, giving all retirees access to a year-on-year safety net.

As a first step, we are calling on the federal government to commission a full cost benefit analysis of adopting a universal pension. 

Support our campaign for universal pension by signing up to the campaign or by sharing this page with your friends and family.

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Benefits of a universal pension

Under a universal pension, retirees would:

  • be rewarded for saving more for their retirement
  • have no incentive to overinvest in housing simply to gain the pension
  • not have to deal with Centrelink
  • not have to constantly report the value of their investments and income to meet means testing rules. 

The most important benefit of introducing a universal pension is certainty.

Because a universal pension gives everyone a year-to-year safety net, they would know they would be able to meet any income shortfalls in times of economic crisis or later in life when their capital (and income) is reduced.

According to Dr David Knox:

“If we gave them [retirees] more certainty and said ‘here’s an income, it’s going to be payable for as long as you live’ … then in fact, retirees have got less risk, and they’d probably go and spend a bit more. And that of course would be good for the economy.”

What's the catch?

A universal pension would create an incentive for government to fix the tax system so that it was fair – an outcome that all Australians ideally should support.

The Federal Government would be required to enact tax reform, to ensure that those with adequate income paid back the pension when they didn’t need it.

So, rather than create an up-front barrier to the pension through means testing, government would instead recoup the cost of a universal pension through the tax system.

There are of course different ways to do this.

In Canada, for example, a pension recovery tax is used to recoup the cost of the universal pension. Currently, a Canadian pensioner starts paying back the pension if they earn above $81,000 (AUD) in a year.

In New Zealand, tax is applied to earnings so that the cost of the universal pension is repaid by those with adequate incomes.

If you support a universal pension, please join the Fairness in retirement income campaign and join National Seniors today.

You can read more about a universal pension here.

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