PENSION – PILLAGING TAXPAYERS MONEY

Would you ever give your money to another person to live on when they have their own money already?  In fact they could have more money than you.  Taxpayers’ money is being paid in the billions every year across Australia to pay for people who can afford to fund themselves.

A couple has $1 million in assets and has 10 to 15 years to live.

Do you:

  1. require the couple to draw down $50 to $70 thousand per year from their own assets to fund themselves; or
  2. require that the couple borrow $50 to $70 thousand per year from a Bank or loan provider and repay those funds at the end of their lives from the sale of the couples assets; or
  3. pay the couple from your own assets $35,000 per year effectively providing the couple an interest free, non refundable annual gift so the couple has income; or
  4. pay $20,000 per year from your own assets and require the couple to pay $20,000 per year towards their living expenses from their own funds.

Without seeking to insult your intelligence, the answer is clearly a) and the next best answer is b).  Would you ever give money to someone who already has adequate money to fund themselves or has assets which provide the potential to repay you funds that may have been loaned to them.

Unfortunately, incredibly, ridiculously and insultingly, the reality is that that pension system is operating exactly as shown at answers c) and d).

Under options C & D, you – the taxpayer are providing a couple who clearly has assets to cover their living expenses with an interest free, non refundable gift over 10 to 15 years of $200,000 to $525,000.  This amount will NEVER be repaid.]

The aged pension system is the most significant of the payments made within the Social Security and Welfare payments representing $50 billion of taxpayers’ funds and is projected to grow to $67 billion by 2018.

The pension was introduced in 1909 to support the elderly who were destitute who were over 65 when the life expectancy was 55.

Now over 100 years later the pension [or part pension] is paid to over 2.4 million people [85% of people over 65] and is described by the government as “basic income support for those Australians who are above retirement age but are not able to support themselves with their own means.”

It is no longer paid solely to the destitute but to the vast majority of elderly Australians.  It is no longer basic income support as pension payments are paid far in excess of the level best described as basic income.

The vast majority of pensioners own their own homes.   The median house price in Sydney is $900,000 and in Melbourne is $650,000.  This would suggest on the face of it that a significant percentage of people in those cities receiving the pension have assets exceeding the lifetime pension and yet they seek to rely on the pension as their primary source of income.  Despite their asset wealth they will never repay one cent of the pension received.  Whilst pensioners own house does not produce income, it is a store of value from which funds can and should be repaid on sale.

2 simple examples demonstrate this atrocious use of taxpayers’ funds

EXAMPLE 1

A couple own their own home worth $1 million.  They have no other assets.  They receive $33,500 per year for 17 years totalling $569,500 [A pension starts at age 67.  Life expectancy is 84 and increasing.  A pension can be expected to be paid of 17 years and will continue to lengthen as medicine and technology increase life expectancy]

On passing and sale of their assets, no funds are ever repaid to the taxpayers.

EXAMPLE 2

A couple own their own home worth $600,000 and have $300,000 in savings/superannuation.  They earn 6% per annum on their savings or $18,000 per year.

The government doesn’t worry about the actual income received by the couple in determining pension levels – they “deem” that the $300,000 generates $9,306 and ignore the actual income.

The government then decides that the $9,306 that this couple receives tax free from superannuation will only reduce the pension by $961 from $33,500 a year to $32,539 [The first $7,384 a pensioner couple earns does not reduce the pension level at all – and then it reduces by 50 cents for every dollar earnt].

Over 17 years this couple will take from taxpayers $553,163.  This couple has an after tax income of $50,000 per year which is higher than the median family income in Australia.

No funds are ever repaid.

You must find this incredible.  We collectively as taxpayers must be idiots for accepting this.

I am happy to open this paper to discussion, comment or criticism and would welcome you writing to me at pensiondisgrace@gmail.com.  There must be something that can be done to correct this. Please do not say that you paid your taxes all your life so you are entitled to a pension.  Taxes are not paid for that purpose.

By Robert Hill