National Seniors has joined with the Alliance for a Fairer Retirement System to lobby the Federal Treasurer to consider economic reform options for retirees to boost the economic recovery of a post-pandemic Australia.
In a statement, National Seniors said consumer spending by older Australians, particularly those relying on income from investments, was critical to the health of the economy.
“On the eve of the release of the report of the Retirement Income Review, National Seniors has joined with its partners in the Alliance for a Fairer Retirement System to raise important issues facing retirees impacted by the COVID-19 pandemic,” it said.
“We have written to the Government and opposition outlining the impacts of the COVID Financial Crisis (CFC) on retirees with investments, highlighting the very real risks that investors face as a result of the poor design of the retirement income system.”
It said the submission also puts forward a number of potential reform options to assist retirees during the recovery phase.
“The Alliance paper argues that there has been limited attention in the media about the very real impacts on retirees’ current and future incomes,” the statement said.
“With some commentators claiming that retirees should pay more for the cost of the recovery, this has heightened the risk that the government will seek to withdraw support for retirees,” it said.
“However, as the paper argues, there are good reasons to support retirees through the crisis, not least because of the risk to consumer confidence and consumption.”
With around 3.8 million Australians aged 66 and over, National Seniors said it was important to understand the enormous contribution this section of society has on the economy.
“Retiree spending, and willingness to spend, will have critical impacts on the economy in any post-stimulus recovery phase,” it said.
“Just think, for example, of the enormous impact that ‘grey nomads’ have on the economy. Whole industries have emerged to manufacture and sell caravans and other items. Then there’s the huge financial impact these travellers have on regional towns and communities as they wind their way around the country.”
It said that under the current market conditions there was a risk older Australians would further withdraw from the economy, which would slow Australia’s recovery.
“Retirees may not have the confidence to spend if they continue to face significant impacts on their income,” it said.
Conversely, it said that if older consumers have confidence in the economy and in their personal finances, they will spend more than they save, aiding Australia’s recovery.
The Alliance has put forward several options to support retirees through this tough time, these include:
- Automatic revaluation of assets by Centrelink to account for falls in the market;
- Further reduction of deeming rates;
- Further reduction of the Pension Loans Scheme (PLS) interest rate and wider promotion of the scheme;
- Reduction of the high Assets Test Taper Rate;
- Widening of the eligibility to the Commonwealth Seniors Health Card (CSHC) and promotion of the card.
It said many of these options had already been discussed in submissions to the Retirement Income Review, however it was critical that the Government consider them and other reforms in the short term to assist the recovery effort.
You can read the Alliance’s full submission to the Treasurer here.
