The Retirement Income Review: Will there be changes to the treatment of the family home?
The Federal Government is currently assessing the report of the Retirement Income Review and their response could have big implications for Age Pensioners. The review is looking at a number of factors that contribute to what is sometimes described as the three pillars of our Retirement Income System. Assistant Superannuation Minister, Senator Jane Hume, has emphasised in The Australian recently that a good retirement outcome is not driven solely by one’s super balance, It’s about the other pillars as well: the Age Pension and voluntary savings outside of super, including the home.
The idea that the family home should be included in the system in some way is not new. Some people have multi-million dollar homes yet can still qualify for the Age Pension. Many people have strong views on whether this is fair. Chris Richardson from Deloitte Access Economics has argued that while the politics are terrible there is a good case for the home to be included in the assets test. Other people who have worked hard to pay off their home will have a very different perspective.
The Productivity Commission Report ‘The Housing Decisions of Older Australians’ also raised the possibility of the home being included with a proportion of the value of the home being exempt e.g. the first $600,000 in value but then the value above this to be included in the test. The argument for this would be that people with very high-value homes could take advantage of schemes such as Reverse Mortgages or the Government’s Pension Release Scheme.
Most Australians over age 65 still live in their own home – see the table below – so any changes to the treatment of the family home could affect a lot of people.
Living Circumstances of Australians over age 65
We don’t yet know what the outcomes of the Retirement Income Review will be but we can definitely expect some changes to the superannuation system and possible changes to the Age Pension. It’s unlikely there will be major changes to the treatment of the family home right now but the possibility is there. We will keep you informed as soon as we know more about the review. In the interim please tell us what you think by commenting on this post.