Retirees demand young Australians shoulder COVID-19 hit

We are beginning to see incessant lobbying from retiree groups demanding greater taxpayer support in the wake of COVID-19.

Over the weekend, Fairfax published this special pleading from the Alliance for a Fairer Retirement System:

Older Australians say the retirement system is in crisis and leaving them financially vulnerable, forcing them to call on the Morrison government to consider changes in areas such as the age pension, deeming rates and access to the Commonwealth Seniors Health Card.

The Alliance for a Fairer Retirement System, representing millions of retirees and older investors, has written to key finance and welfare ministers urging reforms including to measures previously introduced to take pressure off the federal budget…

Retirees are facing a string of inter-related hits to their finances. Company dividends are being slashed… Falling interest rates… Income from rental properties have also collapsed… The alliance said it all meant many retired Australians’ incomes were being stripped away by the impact of the coronavirus and the situation “could extend for years”.

…the alliance wants the government to… [implement] another cut in the deeming rate.

It also wants an automatic revaluation of assets used by Centrelink to determine the pension accessibility for retirees…

The alliance has also called for the government to re-think the taper rate changes it introduced in 2017 that helped save billions in pension payments. The alliance says those changes now mean that couples who may have almost $900,000 in assets are up to $1000 a month worse off in income compared to a couple with $450,000 in assets…

It wants all retirees to have access to the [Commonwealth Seniors Health] card and for the government to promote its availability.

ABC news posted similar:

Sydney couple Barry and Jess Roberts are a case in point.

Until March, the couple lived comfortably mainly off the dividends, including franking credits, paid by a number of Australian companies in which they have invested, including banks.

“I guess you could say we probably enjoyed a net income of $80,000 per year, which easily covered our living expenses and allowed us to go on holidays,” Mr Roberts said…

But, when $250,000 was wiped off the value of the couple’s shares a few weeks ago and they were told their dividends would either be significantly reduced or disappear altogether, they decided to take drastic action and sell up…

Since then, the couple have been living off their savings and, for the first time, have applied to Centrelink for a part pension…

Ian Henschke of National Seniors Australia said it was clear the pandemic had had a massive impact on many self-funded retirees, especially those who depended on share dividends, and that group needed to be looked after.

The group is calling for a range of additional measures from the Commonwealth to support self-funded retirees during the pandemic, including a lowering of the Pension Loan Scheme rate that would encourage more people to use the program to top up their pension.

It is also calling for a further reduction to the deeming rate — the rate that retirees are “deemed” to have earned for the pension income test — and widening the eligibility criteria for the Commonwealth Seniors Card.

The federal government has already racked-up hundreds of billions of dollars of debt to steer the economy through COVID-19, which will need to be repaid by younger generations. Younger Australians have also been hardest hit by job losses:

 

Now retiree groups want to throw billions more onto the debt burden of younger generations so that they can enjoy their retirements in undiminished comfort.

A young reader on r/AusFinance offered some solutions (albeit sarcastic) to retirees crying poor:

  • Getting a job, or a second job;
  • Cutting back on the smashed avo and $4 coffees;
  • Flatsharing;
  • Consider moving to regional Australia where living expenses are lower; or
  • Learning to code.

Seriously though, the burden of COVID-19 must be shared throughout the community, not hoisted on younger Australians shoulders. Retirees must also bear some of the pain.

Leith van Onselen
Latest posts by Leith van Onselen (see all)

Comments

  1. Refund all the taxes that retirees ever paid to the value they would be if invested in a weighted index of Australian property since they owe society nothing and all that

    • All young people need to do is ignore government, go out everyday and meet on mass, herd mentality, gov couldn’t stop them, it would surely cure the old people issue as many would simply not exist within months of mass gatherings. I think the old forget that it’s the young sacrificing their youth to stay locked up when for most COVID doesn’t affect them, and the young if pushed could just say to hell with you all. On top of that its the baby boomers who voted in governments around the world that allowed for western European countries to sell out their rising youth for cheap labor in China, while at the same time importing cheap labor in the form of skilled workers and students, which from China lead to importing a deadly virus. The old should stay home drink tea, watch TV and not rock the boat. If Oz/NZ get to hostile to the young many may up and leave and you may not like who replaces them.

      • There is plenty of blame to share around. You are overlooking the fact that younger voters outnumber the baby boomers by more than 2 to 1. See

        https://www.populationpyramid.net/australia/2020/

        All of the neoliberal politicians would be long gone if younger people numbered all the party boxes and put them last, even if the baby boomers voted for them as a bloc (and they don’t).

        I suspect that the vast majority of the people who are voting for the neoliberal parties, old and young, are voting against their own interests. Those famous baby boomer rorts essentially benefit the top 10% with a little bit for the next decile down. We have one of the least generous old age pensions in the OECD

        https://data.oecd.org/socialexp/pension-spending.htm

        Remember that half the population has an IQ below 100. They get their information from the mass media owned by our oligarchs, who can therefore shape public opinion and manufacture consent, as well as owning the best politicians that money can buy.

    • yeah poor Barry & Jess!! they sold right at the bottom and lost $250K out of their million dollar share portfolio… gotta feel for them, but my advice to Barry & Jess is as above:

      •Get a job;
      •Cut back on the smashed avo and $6 coffees;
      •rent one of their 7 spare bedrooms out on AirBnB;
      •Consider moving to regional Australia where living expenses are lower; or
      •Learn to code.
      * Learn how to manage your investments

  2. Add this to the options – charge babysitting duties for what was free child-minding grandkids, increase inflows from loan repayments to the bank of Mum and Dad.
    This economy is set-up for the boomers. Superannuation is their baby – especially the defined benefit kind the Federal and State Governments haven’t funded.

  3. Jumping jack flash

    “when $250,000 was wiped off the value of the couple’s shares a few weeks ago and they were told their dividends would either be significantly reduced or disappear altogether, they decided to take drastic action…”

    “Now retiree groups want to throw billions more onto the debt burden of younger generations so that they can enjoy their retirements in undiminished comfort.”

    Nice. Getting rich from someone else’s debt. Round 2.

    Obviously the first round of getting the kids to take on debt to hand over wasn’t enough.
    One could argue that the resulting 2.4 trillion dollar pile of debt we call an economy from that first endeavour is making all these investments very shaky, and resulting shocks to the system seem to be getting more frequent and of greater intensity.

    So of course the answer is more debt. MooooooarrrrrrRRRR!

  4. Unimaye Mayematus

    Let’s introduce the CCP virus en-masse into the boomer populace. That should go some way to levelling out the financial burden shared between old and young.

  5. I love it how retirees asking for government help still refer to themselves as “self funded”.

    That said, this is a fair point and one which the govt could change in a second:

    including a lowering of the Pension Loan Scheme rate that would encourage more people to use the program to top up their pension

    The rate should be about 2.5% but is actually 4.5%.

  6. It’s kinda hilarious, it was these lobby groups who rallied hardest against the franking credit changes which may have led to their members being more diversified and forced them to get off the dividend teat.

    Instead, they got their victory, held onto about 12 stocks and got royally smashed with the dividends being cut.

    • Retirees can sell any type of shares for cash. They all pay very little dividend now. Might as well have shares that will go back to paying plenty of dividends eventually.

  7. Everyone wants something for themselves, no more so than when Gubmint is handing out free money.

    Demand your share! Poor old Barry and Jess, they think they have a right to be kept (by younger generations) in the lifestyle to which they’ve become accustomed. Every self-respecting retiree should have one $20,000 European trip a year (what would the neighbours say, if not. The horror!).

    Well, Barry and Jess, ya shoulda worked and saved harder, eh? And WTF are you doing staying invested in the riskiest part of the cap structure in retirement? Who advised that!

  8. Given the massive sacrifices by young retail, hospitality and construction workers to ensure Covid19 did not decimate its prime target, old people, old people should probably just keep quiet, stay indoors…and plan the next cruise.

  9. ““I guess you could say we probably enjoyed a net income of $80,000 per year, which easily covered our living expenses and allowed us to go on holidays,” Mr Roberts said…”

    Well, they can’t go on holidays anyway with no flights or cruises, so what are they whining about? Suck it up and #stayhome.

  10. Narapoia451MEMBER

    Always makes me laugh when boomers talk about any other generation being entitled. They had more govt supports, access to education and affordable housing with job prospects that current generations can only dream of. And they just rolled them all up behind them when it was their turn to pay for these same things for the next generation – and now they are telling these same people to sacrifice more so they can keep going on holidays while they are retired instead of living off their savings.

    That’s before you factory in the cost of the environmental degradation they have caused and blocked action on as they age.

    • DominicMEMBER

      To be fair to most of the Boomers, they simply don’t understand how it is they’ve benefitted – you kinda need to understand the system to understand how it’s benefitted you. I’m fairly certain 99% haven’t the first idea.

      That they think the younger generations are bludgers tells you all — certainly, my mother-in-law hasn’t the first idea how the system has given her her leg up.

      • Narapoia451MEMBER

        Being Ignorant and entitled is not virtuous, but it is more palatable than the people that do understand it and keep stacking the deck in their favour I guess (plus telling people to just work harder or get better jobs or cut down on whatever frivolity they’ve read about in their newspaper)

  11. What a ridiculous system. Rich people who make crappy financial decisions (i.e. selling up all their shares during a rare market slump, or even just failing to diversify their income streams) seriously expect someone to keep them in the lifestyle in which they are accustomed? Suck it up work harder or learn to live on less, they have no idea what reality is. Never want to face the music yet they probably have no problem telling their own kids that life isn’t fair.

  12. oh yeah, we had to go into a lockdown to save elderly … because world will never be the same place again …

    cut welfare for young and give more to BBs so they can import more $100+ per bottle dry wine

    • to save elderly

      To save the sick actually. Nearly everyone who died had some chronic condition. The elderly are just more likely to have a chronic condition.

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