Budget March 2022 for older Australians
Click here for information about the October 2022 budget delivered by Jim Chalmers
After weeks of leaks and speculation, the Treasurer presented the Federal Budget 2022-23 in parliament last night. There are wins and losses for older Australians in this year’s budget. Here is our summary of what you need to know and how and when such changes might affect you. The budget still needs to be passed by Parliament however the Opposition has already said it will support these measures so it is extremely likely they will be pushed through quickly. Our Editor James Coyle also offers commentary on whether this budget is a positive step forward for Australians either in retirement – or planning to be so in the next few years.
Cost of living cash payments
A one-off $250 ‘cost of living’ payment will be made to all Australians who hold a Pension Concession Card (PCC) on March 29. So this benefits anyone on a full or part Age Pension. It is also being paid to holders of the Commonwealth Seniors Health Card (CSHC) and some other groups receiving Centrelink benefits. People receiving the Age Pension or holding the CSHC as at the 29th March will automatically receive this payment. The payment will be made sometime in April and is a welcome acknowledgement of rapidly rising household expenses. The ABS will also issue a CPI update for the March 2022 quarter on April 27 and this is expected to be in excess of the 3.5% increase in calendar year 2021, which will mean that the recent Age Pension indexation did not cover the household cost of living increases.
Not sure if you are eligible for the Age Pension or the CSHC? Want to check? Find out in minutes here
Pension drawdown reduction extended
If you have reached preservation age and activated your superannuation drawdown, either through an Account Based Pension (ABP) or a Transition to Retirement (TTR) account, you will be aware that the minimum drawdown from your account was halved back in 2020 as a measure to help those juggling retirement income during the early days of the pandemic. For example those up to age 64 had their minimum drawdown of 4% halved to 2%. This measure was due to expire in July, 2022 but has now been extended until July 1, 2023. We will further explain superannuation withdrawals, the percentages for all age groups, and how Transition to Retirement works in the next two issues of our weekly enews – keep an eye on your inbox for all the details.
Unsure about your own super drawdown? This involves big decisions, so it may help to speak with one of our experienced advisers. It’s easy to book a consultation and set your mind at rest?
If you are a taxpayer – and many retirees are – you may be receiving a $420 tax offset on July 1. This offset is aimed at low to middle income earners, thus the term LMITO. It applies to those earning less than $120,000 per annum. If you already receive the LMITO ($1080), the extra offset means that you could receive up to $1500, or $3000 for couples. The measure is in place for one year only.
Fuel excise relief
This is not just a benefit for car owners or drivers, but for all those who pay for motor transport such as taxis and Ubers. The current 44.2 cents government petrol and diesel excise is being halved for six months, which means in the next fortnight or so, petrol prices should ease by 22.1 cents. The passing on of the lower prices will be monitored by the Australian Competition and Consumer Commission (ACCC). The saving on an average tank of fuel, according to budget papers, is $11. Whilst this is of clear benefit to those who are paying elevated prices to fill their tanks, it has been pointed out that when the price goes up again in six months, it will go up by the full 22.1 cents which will cause a serious leap in household expenses – and CPI.
James’ Opinion – Sugar without substance
There was clearly some good news for older Australians. The additional $250 in support for age pensioners and concession card holders is very welcome. People with Account Based Pensions will also enjoy the extension in the reduction to minimum withdrawal rates. This affords them additional flexibility in managing their retirement finances.
The budget forecast very low unemployment and we are already seeing labour shortages in some industries. We were very disappointed therefore to see there was nothing new done to encourage older Australians to remain in, or re-join, the workforce. There are in fact disincentives for some older Australians to work which hurt us all. The social connectedness of work, not to mention the additional income, can make a huge difference to older people whilst we all benefit from their skills and experience. Some simple changes could include:
- A further increase in the income thresholds for the Age Pension and Commonwealth Seniors Health Card
- A more generous work bonus
- Reducing the 50c of Age Pension lost for every dollar earned above the income threshold
All these measures could have encouraged greater participation in the workforce by older Australians and – given the forecast low unemployment – a real opportunity was missed here.
What do you think?