Products – The Centre for Independent Studies

The Age Old Problem of Old Age: Fixing the Pension

Matthew Taylor, Simon Cowan
03 May 2015 | Research Report 3
The Age Old Problem of Old Age: Fixing the Pension

In this TARGET 30 Research Report CIS modelling shows that reforming the pension could deliver income gains of more than $5,900 a year to almost 98% of pensioners. These reforms would also reduce the cost of the pension by $14.5 billion a year.

“With four out of every five retirees on the pension, and pensioners with over a million dollars in assets getting the same payment as those with almost nothing, the pension clearly needs reform,” says Simon Cowan, research fellow and co-author of the report,The Age Old Problem of Old Age: Fixing the Pension.

“The way to boost pensioner living standards lies in unlocking the savings in the family home — not in continually increasing pension spending.

“As the population ages the pressure on the pension will only get worse,” Cowan says. “The answer is for government to count the family home in the assets test, boost take-up rates for reverse mortgages and including that income in the pension income test.

“Australians are continually told they don’t save enough for retirement, but there is $625 billion in pensioner housing assets that could be raising pensioner living standards. The potential benefits are enormous,” Cowan says.

Co-author, research fellow Matt Taylor agrees “Reverse mortgages let pensioners access the equity in their home, boosting their standard of living, but still allowing them to own their home and to stay there. By creating a government backed reverse mortgage annuity, lenders can offer lower rates and make higher payments to pensioners – who can borrow knowing that they can’t lose their home.”

“By including reverse mortgage payments in the pension income test, pensioners with lower mortgage payments will automatically get a higher pension. This allows the government to focus on the truly needy.

“As wealthier pensioners access the equity in their home to boost living standards, government can afford to increase support for non-homeowners. Our reforms include an increase in the full rate of the pension for both couples and singles, as well as substantial increases in rent assistance,” Taylor says.

 

Buy Hardcopy
Latest Publications

Mind the Gap: Understanding the Indigenous education gap and how to close it
Glenn Fahey
24 June 2021 | RR41

Indigenous educational disadvantage remains among the most pressing and persistent public policy challenges in Australia. Despite bipartisan and intergovernmental commitment to ‘Closing the Gap’, has done little to move the needle in education outcomes. Dispiritingly poor education outcomes persist despite the best of intentions, considerable investment of resources, and countless programmes and initiatives of policymakers. This research examines sources and…

READ MORE
Dollars and Sense: Time for smart reform of Australian school funding
Glenn Fahey
01 December 2020 | RR40

Australia is among the world’s highest-spending countries on schooling. Yet, the educational return on this investment for parents, taxpayers, employers, and students, has deteriorated — despite the expectation of policymakers that increased funding would inevitably improve educational outcomes. It’s true that money matters when it comes to schooling, but how money is used is what really matters, not how much…

READ MORE
Overcoming the Odds: A study of Australia’s top-performing disadvantaged schools
Blaise Joseph
18 March 2019 | RR39

Students from disadvantaged social backgrounds perform worse on average academically than more advantaged students. This study investigated Australia’s top-performing disadvantaged schools in terms of literacy and numeracy results, with the aim of finding any common policies and practices which have led to their success. Nine top-performing disadvantaged schools were visited by a researcher for this study, involving interviews with school…

READ MORE
Dying with Their Rights On: The myths and realities of ending homelessness in Australia
Carlos d'Abrera
12 December 2018 | RR38

The orthodox understanding of the causes of homelessness promoted by the ‘homelessness industry’ over emphasises the role of economic and social structures. Solutions based on structuralist explanations – such as increasing the supply of affordable social housing – are insufficient to reduce rough sleeping. Such approaches minimise the need to address assertively, the individual characteristics, choices, and behaviours of rough…

READ MORE
Why childcare is not affordable
Eugenie Joseph
29 August 2018 | RR37

Childcare fees and out-of-pocket costs in Australia have been growing above inflation in recent years, at the same time that more parents are using formalised childcare to support their participation in the workforce. Childcare has been subject to growing and evolving regulation for many years, culminating in the introduction of the National Quality Framework in 2012. However, the quality regulations…

READ MORE