It’s the economy stupid! Let’s get things rolling


Are retirees really important to restarting the economy? You bet, and here’s how.

There are more than four million retirees heavily invested in the economy. Half of them are either fully or partially self-funded. 

They have a key role to play in the recovery, given their high levels of wealth and disposable income. 

Did you know?


The average weekly disposable income for households over 65 was $848 in 2017-18.  

If the Treasurer thought he could ignore them, then National Seniors Australia, on your behalf, is telling him to seriously think again as he prepares the Federal Budget to be brought down in October.

National Seniors Budget Submission – your voice


Our Budget submission has been recast in the shadow of the pandemic and urges the government to make the most of the contribution that older people offer. 

Seniors aren’t looking for a hand-out, they are looking for leadership and an opportunity to help.  

To do this, they need confidence in the economy they are heavily invested in and from which they draw their retirement income.

Power to spend


Older Australians appreciate that without good health it doesn’t matter if you have maintained your wealth. 

However, as the sharemarket, term deposit rates, and the housing/rental markets take a hit, there is no doubt this will have long-term impacts on incomes and spending.  

Retirees can play a crucial part in the economic recovery, in part through their power to spend … but only if they have confidence to do so. Only government can give that confidence.  

Key issues


  • Asset rich, income poor

Many retirees have significant wealth tied up in the family home but cannot use it to provide income without significant penalty. 

  • Safer investments

Retirees are increasingly concerned about finding safe returns on their investments - without that, they may be unwilling to spend. 

Our recommendations


These issues can be overcome with the following Budget recommendations, which will encourage spending and investment.

You can view the full submission here.

1. Lower the Pension Loans Scheme (PLS) interest rate


The average retiree’s super balance will last only 10-15 years, leaving many with inadequate income or reliant on the pension. Health and aged care costs will increase. There will be a poverty gap for many.  

Accessing the Pension Loans Scheme (PLS) is available to all eligible Australians of pension age who own property can now use their equity to generate additional income. It provides access to up to 150 per cent of the Age Pension paid fortnightly, with the loan repayable at any time, or on settlement of an estate.  

The PLS provides a perfect pathway for retirees to voluntarily gain access to the equity in their home.  

Being backed and administered by the Commonwealth makes it a simple and trusted way to maintain and increase spending.

However, while the PLS interest rate was dropped from 5.25 per cent to 4.5 per cent in January 2020 (after lobbying from National Seniors), it is still far too high.  

The government must drop the rate to better reflect the low risk involved and the fact that government has access to very low interest rates on debt.

As the Reserve Bank Governor recently stated, now is the time to use government debt as a means of stimulating the economy. We agree.

2. Provide safer investment opportunities for older Australians


Another recommendation in our Budget submission is for government to facilitate opportunities for retirees to invest in the recovery. 

The economic crisis caused by COVID-19 has exposed the risks to retirees. Many feel they have been forced to consider volatile and riskier areas as traditional, safer investments such as bonds and term deposits give lower returns.

With the volatility and uncertainty in the present climate, retirees are crying out for access to safe investment options that can help to rebuild the economy.

At the same time government needs to ramp up spending on infrastructure projects to stimulate the economy.

There is an opportunity to match government and consumer need by creating new and innovative infrastructure investment options. However, current rules generally preclude individuals from investing in infrastructure projects. So, there is a need to examine ways to allow individual investors to participate in the infrastructure investment market.

Snowy Hydro 2.0 Green Bonds

One option is to offer seniors an easy way to invest in infrastructure projects that provide stable returns, and intergenerational, social and environmental benefits, such as Snowy Hydro 2.0. 

Government could allow older Australians to invest set amounts in Snowy Hydro and provide a return slightly above regular bond rates in recognition that older Australians need a diverse portfolio that helps manage liquidity and longevity risks. 

As opposed to regular bonds which require financial advisors or brokers to purchase through the ASX, investing in Snowy Hydro 2.0 should be as simple as depositing money into a bank or building society. 

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