A new analysis shows just how important it is to own your own home in retirement and how tough it is for those who rent, as a lack of housing supply and rising prices lock out more people from homeownership.

“Many that don’t own their own home, particularly singles, are being disadvantaged by the income and asset thresholds [of the age pension],” says Jeremy Duffield, a director of Retirement Essentials, which carried out the analysis.

Jeremy Duffield, a director of Retirement Essentials, says the pension system is incredibly biased against single non-homeowners.Credit: Craig Sillitoe Photography

Services Australia states that the maximum assets that a single, non-homeowning retiree can have and still receive the full age pension is $543,750.

However, the age pension is subject to two tests—the asset test and the income test—and the test that results in a lower pension amount applies.

Because of the way the income test works, a non home owner can only have up to $289,000 in financial assets, including superannuation, after which they would start receiving less than the full age pension, the analysis shows.

Under the income test, retirees are “deemed” to earn income from their financial assets, regardless of what the assets actually earn.

Deeming for a single person is 0.25 per cent on the first $60,400 of financial assets, and anything over $60,400 is deemed to earn 2.25 per cent.

That means a single, non-homeowning person who had the stated maximum assets of $543,750 – assuming all of it is in the person’s super fund – would be deemed to have earned about $11,000 on those assets, which exceeds the income test of just over $5,300 for a single person to receive the full age pension.

QOSHE - Why the age pension rules are ‘incredibly biased’ against renters - John Collett
menu_open
Columnists Actual . Favourites . Archive
We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

Why the age pension rules are ‘incredibly biased’ against renters

9 1
03.04.2024

A new analysis shows just how important it is to own your own home in retirement and how tough it is for those who rent, as a lack of housing supply and rising prices lock out more people from homeownership.

“Many that don’t own their own home, particularly singles, are being disadvantaged by the income and asset thresholds [of the age pension],” says Jeremy Duffield, a director of Retirement Essentials, which carried out the........

© The Sydney Morning Herald


Get it on Google Play