Is the #pension a safety net or an asset in a portfolio?

Malcolm is not as popular as he once thought he would be. Here is a little window into his waning popularity with Australians in receipt of the age pension:




The difficulty here is that the purpose of the age pension is no longer clearly established and accepted by the (majority) population. Is it a safety net that pays only to those in genuine hardship? Or is part of a retiree’s personal wealth portfolio, a defined benefit lifetime annuity independent of other sources of assets or income?

The pension was established (over 100 years ago) as a safety net. For much of the 20th century, anecdotal evidence suggests the population accepted that fact and ‘going on the pension’ was almost seen as an indicator of low social standing and to be avoided. The pension is means-tested, so phases out entirely when assets and income exceed thresholds. Clearly, it has been operated as a safety net, although there is a genuine debate over the appropriate threshold levels.  Yet the angry pensioners argue that they have earned the right to their pension and no politician should take it away even if they have a million dollars in other investments and they own their own home outright.

As is often the way in political economy, when Governments fail to do the spadework before pulling the policy levers of change, we end up in an unholy mess. The spadework must prepare the ground based on values, principles and attitudes. Only when the population is in broad agreement and understanding with and of these principles should policy be developed or reformed.  Only when Australians  agree on the purpose of the age pension should it be amended.