The concept of the Australian dream has long been synonymous with owning a family home. It's a symbol of security, a place to raise a family, and, for many, a significant part of their retirement plan.

However, recent discussions have revealed a contentious issue that could impact retirees with high-value homes.

The Actuaries Institute suggested that the government consider including the value of family homes above $2.1 million in the age pension asset test.

This move would encourage retirees to downsize and release some of the estimated $1.3 trillion in housing equity held by Australian retirees, according to the Institute.

Actuaries Institute suggested including the value of family homes over $2.1 million in the age pension asset test.

This proposal, detailed in a discussion paper, suggested that the value of the family home above the threshold should be included to assess the eligibility for a full or part age pension.

The Actuaries Institute's recommendation is an inflation-adjusted echo of the 2010 Henry tax review, which suggested that homes above $1.2 million owned by retirees should be included in asset testing.

With a 4 per cent annual indexation, today's threshold would be around $2.1 million, potentially varying by region or postcode to reflect the diverse property market across the country.

Currently, the family home is exempt from the asset test for the age pension, a policy that the Actuaries Institute believed should be reconsidered.

The inclusion of high-value homes in the asset test could lead to a reassessment of entitlements for a number of age pension recipients, similar to the estimated 10,000 affected if the policy had been implemented in 2010.

National Seniors Australia and the Combined Pensioners and Superannuants Association (CPSA) have both rejected the idea.

National Seniors Australia Chief Executive Chris Grice advocated for ‘a universal pension with appropriate tax reform’.

On the other hand, CPSA believes the current asset limits for the age pension were ‘sufficient’, stating, ‘the Australian government has plenty of other options to make homeownership more affordable for younger generations.’

Counting the family home in the age pension asset test has long been a taboo subject, and the government has previously dismissed the notion.

However, Andrew Boal, the report's author and Chairman of the Actuaries Institute’s Retirement Strategy Group, argued that Australia should not shy away from this debate, especially considering the recent tax changes for superannuation accounts exceeding $3 million.

‘One of the things we’ve seen recently is the introduction of the additional earnings tax for superannuation accounts of more than $3 million, so difficult changes can be made,’ Boal said.

The 2020 Retirement Income Review highlighted that retirees often avoid tapping into their housing wealth to fund retirement, even with limited income.

This is despite various incentives and home equity release schemes available to them. With data showing that over 60 per cent of retirees have less than $250,000 in superannuation, the report suggested additional measures to support asset-rich, cash-poor retirees.


These measures include abolishing stamp duty for downsizers over 55 and allowing those who access equity in their home through schemes like reverse mortgages to make a 'downsizer contribution' to their superannuation.

Furthermore, the report recommended that the age pension asset test exempt amounts up to $300,000 for singles and $600,000 for couples when the family home is sold or equity is accessed.

Boal mentioned that every measure would enable asset-rich, cash-poor retirees to live more comfortably and reduce the risk of depleting their retirement savings.

Additionally, these measures would address the family housing shortage.

Key Takeaways

• The Actuaries Institute has suggested that the Australian government include the value of family homes exceeding $2.1 million in the age pension asset test.
• The institute believed that this change would contribute to releasing part of the estimated $1.3 trillion in housing equity held by retirees, encouraging them to downsize.
• Senior groups, including National Seniors Australia and the Combined Pensioners and Superannuants Association, have rejected the proposal, arguing for other solutions.
• The report also recommends abolishing stamp duty for downsizers over 55 and allowing contributions into superannuation from those utilising equity release schemes, in addition to exempting certain amounts from the age pension asset test when the family home is sold or its equity is accessed.

What are your thoughts on the proposed changes to the age pension asset test? Share your experiences and opinions in the comments below.

 

[gbaerken]

What asset testing do retired Politicians get subjected to, none I bet and they only have to serve 2 terms to get their pension. I worked many years for mine and even had 2 jobs on many occassions to make ends meet. Not like these bludging politicians, some who have never worked hard a day in their life, like Albo.

 

[Clancieblue]

Absolutely ridiculous the family home needs to be left alone.

I have lived in my home since 1988.

I live in a Sydney suburb which consist of middle and low incomes .

My house is valued at around $2.3 million which in Sydney .
Average house prices in Sydney are now around $1.2 to $1.4 . My house is on large land .

You can't buy groceries or pay bills with your house.

I totally agree that other assets be included eg personal assets, money in the bank ect .

If they want pensioners to down size then they need to put in place exempt stamp duty and fees for seniors who downsize.

Why should I or any other people be forced to sell their family home all because it becomes part of the asset test.

A friend of mine could never save for a deposit for a house due to her luxury life style of expensive cars and holidays.
I did without so I could save and pay off my mortgage.

Now I own my house and she is still renting and doing it tuff as she was a huge spender.

At least the government do not have to pay those who own their own home rent assistance.

SO LEAVE PEOPLES PROPERTY THEY LIVE IN ALONE

With you Suzanne.

 

[Knell]

In Sydney house prices are ridiculous. I have a friend who has lived in Watson Bay all her life.
Her house is modest 3 bedroom brick home , no mansion , average land size . Her house is valued at 5.5 million . She has a small ammount of money and pays very high land rates.
Should she be made move from an area she has been in all her life , that she feels safe in ?

Well, you choose to challenge me on my personal morals/ethics. I did not speak about “your friend’s” situation nor do I care what her situation is. I do not have assets or super anywhere near the amount mentioned in the article. I was a stay at home mum for much of the superannuation funding time. I have never whinged about the pension I receive - I am grateful and don’t feel the need to be kept by the Govt. and will take responsibility for myself and one dependant for as long as I live - and if that means selling our home to self-manage - I will do that, but it is for me to decide - how I view entitlement/self-interest/greed/dependency. Too bad if my view differs from yours!

 

[IAN3005]

They will be coming for every cent they can lay their grubby little fingers on and they couldn't give a toss about the effect it has on the owner...you can pis and moan about it but it is like water off a duck's back....... unless you are politician, of course, ag get a $24,000 increase.
Wait until the Digital IDis fully entrenched and the cash-less society comes about...and it will...

 

[Alicat09]

One time I may have agreed with this, but $2.1million is nothing in many areas, not at all luxury homes. That means people may need to sell and move out of the area to less affluent area, buying up more affordable housing. it also means they have to move from friendship networks and medical supports they have been using for many years.

 

[MaccaMan]

Stop hitting o pensioners. Start by taking away negative gearing on investment properties if you want to address the housing shortage for young home buyers. Then, build more low income/social housing for rental and put, say, 5+ year leases on them so they are regularly reviewed for the occupants' change in circumstanes (eg children growing up and either leaving the family home or earning an income). Rents should be based on income too.

If you start messing around with pensioners' homes that they worked and paid for all their lives you will introduce a "why should I bother buying a house" attitude by the younger generation and that won't help the ongoing situation ar all.

High time the governments started taking out all those things thar are in the "too hard basket" and began dealing with them, eg high flyers' tax avoidance, corporate tax avoidance, preventing criminals and bikie gangs from washing their dirty money by purchasing real estate, preventing non-residents buying real estate, taking over empty properties (there are plenty in and around Seaforth Balgowlah NSW etc bought bt Chinese, never lived in or rented out and just left there to deteriorate.

It's all part of the, 'you will own nothing and you will be happy' New World Order... Again, conspiracy theory turning into conspiracy fact...

 

[MaccaMan]

F*** the Actuaries Institute. Haven't the stupid b******* heard of inflation? That is what has raised the price of the family home from $75000 in 1986 to more than $1 million plus now. It is about time Australia re-established the government-guaranteed Old-age Pension for all who are 65 and over. Paul Keating's clot-headed "pensioner's assets test" and private superannuation stuff-up is directly responsible for changing the rules so that it became logical for the cashed-up impending elderly 35 years olds (us lot of decrepit oldies now) to have sought whatever cheap houses we could as secure investment against such scams as the Great Financial Scam of 2007-2008. As a treasurer, Keating was the worst little treasurer Australia had to have.

"You will own nothing and you will be happy"

 

[Greentrees]

"Knell, I very much doubt you'll find ANYONE with a $10m property - or even $5m - collecting a pension." - Well I do! What about those of ill-gotten gain, hiding cash by way of expensive properties? Many have made their superannuation (?) funding this way...but then, not prepared to support themselves with those said funds?

The Actuaries Institute is not the Government. I’m sure The Prime Minister is not the only politician who has one or more negative geared houses. Many “ordinary “ people do too. The assets test would prevent them from receiving the pension. We worked like others to own our home which has certainly increased in value. Think about this : It took a lot to save a £1.00 when wages were £7.50 per week. What is a£ worth these days. Boats & other such items are subject to the assets test

 

[Knell]

It's all part of the, 'you will own nothing and you will be happy' New World Order... Again, conspiracy theory turning into conspiracy fact...

Well, you certainly will own nothing when you are dead....will you be happy? Probably not.

 

[gordon1940]

hmm...interesting question. If I were to own a property valued at say $10m - would I feel any ethical or moral responsibility about getting a hand out from struggling, hard-working, tax-paying people? I would like to think I would.

So would I.

 

[gordon1940]

A better idea would be to stop punishing retirees for having lived responsibly. Do as most other countries do and pay EVERYONE over retirement age a pension, then apply sensible taxation.
Knell, I very much doubt you'll find ANYONE with a $10m property - or even $5m - collecting a pension. There may be quite a few folk whose family home has increased in value to over $2m and I think it's a disgrace that anyone should think to penalize them for that if they don't have an adequate living income. Nobody should be forced out of their home in retirement.
What about those who reverse mortgage? Will the loan be deducted from the value?
How will the value be calculated? What of folk whose property is deemed valuable but who can't sell it for a decent price? A friend had a farm ostensibly worth $3 million, but due to planning for future infrastructure, he couldn't get anyone to even consider buying it, even after reducing the price to $900,000.
There are way too many complications, as is the case with the current very seriously flawed pension system. Just pay it to all retirees and tax it. Other nations do that and it works.

I would REALLY like some suggestions as to how the "everyone" Pension would be funded!

 

[Suzanne rose]

Well, you choose to challenge me on my personal morals/ethics. I did not speak about “your friend’s” situation nor do I care what her situation is. I do not have assets or super anywhere near the amount mentioned in the article. I was a stay at home mum for much of the superannuation funding time. I have never whinged about the pension I receive - I am grateful and don’t feel the need to be kept by the Govt. and will take responsibility for myself and one dependant for as long as I live - and if that means selling our home to self-manage - I will do that, but it is for me to decide - how I view entitlement/self-interest/greed/dependency. Too bad if my view differs from yours!

Take a chill pill. I didn't say it was about you.
I'm glad you are supporting yourself plus one without any government assistance.

As you said you can do as you want but don't you think that is being a touch hypercritical!!! That's exactly what others want to be able to keep their house and have it exempt from asset testing although everyone is happy to have all other assets including money in the bank included in asset testing

 

[Suzanne rose]

If you owned a home worth 10 million you would have been a hard worker and a taxpayer, probably going without other luxury to pay for it. Many people don't even try to get themselves a home, they holiday buy expensive cars and generally waste money. Then they expect rental assistance.
Will the PM give up his home to keep his PM's pension.?

My point exactly. I believe the ones being negative are the renters

 

[Knell]

Take a chill pill. I didn't say it was about you.
I'm glad you are supporting yourself plus one without any government assistance.

As you said you can do as you want but don't you think that is being a touch hypercritical!!! That's exactly what others want to be able to keep their house and have it exempt from asset testing although everyone is happy to have all other assets including money in the bank included in asset testing

I was not judging anyone else with my initial comment - I was clearly speaking for myself. What am I being hypocritical about? I did not say I wanted to keep my own house as such, just that I will keep it until I can't for whatever reason. In this scenario - I am unaffected. I don't need to take a chill pill (condescending), you make assumptions - you responded to my comment with someone else's situation as if I should consider that? I did not say I do not get government assistance...consider reading and comprehension.

 

[Jennie]

Stop hitting o pensioners. Start by taking away negative gearing on investment properties if you want to address the housing shortage for young home buyers. Then, build more low income/social housing for rental and put, say, 5+ year leases on them so they are regularly reviewed for the occupants' change in circumstanes (eg children growing up and either leaving the family home or earning an income). Rents should be based on income too.

If you start messing around with pensioners' homes that they worked and paid for all their lives you will introduce a "why should I bother buying a house" attitude by the younger generation and that won't help the ongoing situation ar all.

High time the governments started taking out all those things thar are in the "too hard basket" and began dealing with them, eg high flyers' tax avoidance, corporate tax avoidance, preventing criminals and bikie gangs from washing their dirty money by purchasing real estate, preventing non-residents buying real estate, taking over empty properties (there are plenty in and around Seaforth Balgowlah NSW etc bought bt Chinese, never lived in or rented out and just left there to deteriorate.

My hubby worked shift work, big money back in the day. A chap he worked with earned even more as he was a supervisor, he had a housing comm home and so did his 2nd wife, they lived in one and rented the other one out. Obviously no checks and balances once you move in. There needs to be social housing, yes but a time limit and a check on income.

 

[VikkiM]

Well this is rediculous.. and makes No sense, some of these homes are small and in areas that have significant growth over the years…some are heritage listed, so what young family can afford a home over $2.1M. and some have been in the family for generations . Why should seniors cater to this. Why should they do some reversed mortgage thing, there is no benefit to this. Once again the government is penalising seniors. Seniors have worked hard their whole life for these comforts, now the government wants to take this away from them. What happened to the pension fund that the older seniors paid into ..stolen by the government. Why not stop paying out royalties to the aboriginals, so they can sit on their buts and not contribute to society. Stop handing them landmarks, let them earn it like everyone else…get them to contribute to all seniors.

 

[rehandra]

Totally agree. Why should some have millions tied up in a home and get the aged pension. The country has to look to the future and I think this is one way of freeing up homes where two people are rattling around. I know my thoughts will be in the minority!

 

[Petbay]

It stinks you work hard all your lives to provide a good home for family now you’re older it’s like putting you on the scrap heap because you provided for your retirement

 

[I'm Mal]

There has always been this insane jealousy of people who work hard and plan for their retirement well in advance and who accumulate wealth to enjoy in they twilight years. Too often on social media outlets we see posts by self entitled spoilt brat karens screaming with rage about old people who, in their eyes don't deserve a pension. Just because some people are savvy enough to provide for themselves in retirement, they shouldn't be punished for that. Just the fact that this topic rears its ugly head quite often is cause for concern. The biggest worry is what we were wisely warned in 2022 "liebour can't manage money so they will come after yours."

 

[Suzanne rose]

Totally agree. Why should some have millions tied up in a home and get the aged pension. The country has to look to the future and I think this is one way of freeing up homes where two people are rattling around. I know my thoughts will be in the minority!

Average house in Sydney is over a million why should people be made to sell.
Different if you are in an area with a house with pool, spa 10 bedrooms snooker room over looking tge harbour but anyone with a house like this has money in the bank.

My house of 38 years worth just over $2 million and I purchased it for $158,000. Why should I gave to give it up when I worked hard for it. It's not a mansion, no pool ect . Why should I move away from my support team and doctors ect .

Can I ask how much your house is worth