We already know from National Seniors own research of the enormous positive contribution that caring and grandparent care has on the economy. However, consumer spending by older Australians, particularly those relying on income from investments, is also critical to the health of the economy.
On the eve of the release of the report of the Retirement Income Review, National Seniors has joined with its partners in the Alliance for a Fairer Retirement System to raise important issues facing retirees impacted by the COVID-19 pandemic.
We have written to the government and opposition outlining the impacts of the COVID Financial Crisis (CFC) on retirees with investments, highlighting the very real risks that investors face as a result of the poor design of the retirement income system. The paper also puts forward a number of potential reform options to assist retirees in this critical phase of the recovery.
The Alliance paper argues that there has been limited attention in the media about the very real impacts on retirees’ current and future incomes. With some commentators claiming that retirees should pay more for the cost of the recovery, this has heightened the risk that the government will seek to withdraw support for retirees.
However, as the paper argues, there are good reasons to support retirees through the crisis, not least because of the risk to consumer confidence and consumption.
With around 3.8 million Australians aged 66 and over, it is important to understand the enormous contribution this section of society has on the economy. Retiree spending, and willingness to spend, will have critical impacts on the economy in any post-stimulus recovery phase.
Just think, for example, of the enormous impact that 'grey nomads' have on the economy. Whole industries have emerged to manufacture and sell caravans and other items. Then there's the huge financial impact these travellers have on regional towns and communities as they wind their way around the country.
However, under the current market conditions there is a risk older Australians will further withdraw from the economy, slowing the recovery. Retirees may not have the confidence to spend if they continue to face significant impacts on their income.
Conversely, if older consumers have confidence in the economy and in their personal finances, they will spend more than they save, helping the recovery.
The Alliance has put forward several options to support retirees through this tough time, these include:
- Automatic revaluation of assets by Centrelink to account for falls in the market
- Further reduction of deeming rates
- Further reduction of the Pension Loans Scheme (PLS) interest rate and wider promotion of the scheme
- Reduction of the high Assets Test Taper Rate
- Widening of the eligibility to the Commonwealth Seniors Health Card (CSHC) and promotion of the card
Many of these options are some of those that have already been discussed in submissions to the Retirement Income Review, however it is critical that the government look at these and other reforms in the short term to assist the recovery.
Read the Alliance's full submission to the Treasurer here.
National Seniors will continue to engage with our members and supporters on reform options and have been doing so by inviting guest experts to write articles in our weekly Connect newsletter. If you haven't already done so, you can subscribe here.
We are also raising broader reform options in the media to create a healthy debate about what we can do to make the retirement system simpler, fairer and more sustainable.
You can show your support and add your voice to the cause by joining our Fairness in retirement income campaign.
If you haven’t done so an are interested in sharing your views on the ‘way out’ of COVID, click here to fill out our brief survey. Hurry, survey closes 22nd June.
Right now, National Seniors members can get a 10% discount on Pension Boost's Pension Loans Scheme (PLS) application service. Learn more here.
Please note: Pension Boost has a free eligibility calculator, however their service is paid.