Much ado about Nothing

Apologies to Shakespeare, of course, but the title of his comedy from the late 16th century could equally apply to the 2015 Budget changes supposedly intended to make the age pension more sustainable. In case you missed it, the asset test arrangements are to be re-jigged for entitlement to the age pension. At lower levels of assets, the threshold has been lifted meaning some people with assets around the margin will receive higher age pension payments. At the upper end, the threshold has been lowered so some people with higher levels of assets around that margin will have lower pension payments. The rate of taper between the two thresholds will accelerate.

A Shakespearian comparison is valid. Equally, is the contemptuous Mick Dundee New York scene – “that’s not a knife”.

I won’t bore you with modelling charts as the end result is a yawn. For the vast bulk of the population, these changes mean virtually nothing. Many people will see payments marginally increase. Those with assets at the higher end of the means-test will see initially lower pension payments, then as their personal assets reduce more quickly to make up for the short fall, they will then move on to the higher pension payments. For most, it is simply a minor timing switch in the receipt of pensions.

“That’s not sustainability.”