The government needs – as an emergency issue – to review the policy concerning mandatory withdrawals.

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The pensioners who might be overlooked

The Coalition government has never openly acknowledged, as the rest of the world has done, the effectiveness of the financial management of the ALP in the GFC, in their payments to business and lower income groups to sustain the economy.

The fact that the government has now implemented a similar package has, however, given unspoken recognition to those actions.

And they should be applauded for that.

There was one further step taken by the ALP which cannot be overlooked.

When we speak of pensioners, the picture conjured up varies from one individual to another.

As a migrant, my knowledge of Australian history is pretty shaky, but I believe it was Menzies, as Opposition Leader in a Chifley government who insisted that the stigma of welfare should not be attached to the Age Pension, as it was a payment which recognised the contributions to the national economy made by recipients during their working life.

Sadly, the low level of payment for those whose sole source of income is the Age Pension, indicates that their lifetime contributions are not valued adequately!

For many people, these are the group referred to when talking about pensioners.

But income and asset testing allows many other retirees to be entitled to a part-Age Pension.

These people include a group who have rolled over their superannuation into an Allocated Pension, or similar fund, and these people require immediate attention.

Their fund is invested in the market which is currently beyond volatile!

They are required to withdraw a minimum amount, based on their age, designed so that – in theory – the fund will be exhausted when they die.

Actuarial calculations of age expectation do not match individual situations, and when, as now – and as was the case during the GFC – the market nose-dives, withdrawing any funds, let alone the stipulated minimum is potentially disastrous.

The government needs – as an emergency issue – to review the policy concerning mandatory withdrawals.

Since many of these pensioners make regular withdrawals, maybe they should get financial advice as to whether they should reduce the regular amount or even leave any withdrawal to the end of the financial year.

Meanwhile, the government must hasten to re-think their situation, since, if these individual funds are exhausted prematurely, the government will have greater Age Pension costs further down the line.

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11 comments

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  1. Keitha Granville

    Yes, thank you. We have no options, we can’t take it out and put it back when , if, things improve.

  2. RosemaryJ36

    I transferred my balance out of shares into ‘cash’ or fixed interest in the fund and am monitoring the extent to which the loss of value is stabilising so that I can buy back in nearer the bottom of the market. Your fund manager can provide you with access to current values and you can set up a spreadsheet to keep watch.

  3. Stuart Dean

    RosemaryJ36, We did the same, but a little belatedly. I lost $12,000 and my wife lost about $15,000 before we converted to cash. And these are not big super amounts, either. I have had negative returns before, but not as big as this. And because of our current Government [ ? ] inaction and dithering, a whole lot of people are going to be hurt.

  4. RosemaryJ36

    During the GFC I just sat tight and, despite ‘losing’ $20 or $30 k, the fund recovered. So don’t call it a loss yet!

  5. Matters Not

    RosemaryJ36 re:

    During the GFC I just sat tight and, … the fund recovered. So don’t call it a loss yet

    Looking at my records (been retired for 20 years) today the balance of my super fund is at approximately the same level as it was 12/05/17. Like you I’ve held tight, didn’t panic, didn’t change allocations etc – while now having serious regrets re the ‘big’ paper losses of recent days and weeks (following the rather extraordinary gains in the preceding period). Nevertheless, this time it seems more serious.

    But making changes at this moment in time (moving out of equities into cash and the like) will crystallise what are at the moment just notional losses. Having said that, it’s hard to see any light at the end of the financial tunnel – apart from what looks like an oncoming train of disaster. (But I though the same previously as well.)

    Then again – it’s only money.

  6. Pingback: The pensioners who might be overlooked #newsoz.org #auspol – News Oz

  7. RosemaryJ36

    MN I will get back to you on this one in a few weeks time. My fund balance also held its own, although the level staying the same is on paper, but the real value in purchasing power is still less.

  8. RosemaryJ36

    Hurray! The required minimum withdrawal has been halved!

  9. Joseph Carli

    RosematyJ36….I must say, I marvel at your apparent ease and adroitness at the maneuvering of your funds around what I can only presume is a complex and hazardous stock/money management market…You seem to have a confident hand on the steering of your …aparently….ample funds to “play the market” to your advantage….Perhaps you could give assistance to one such as myself, having only the ONE aged pension to “fiddle around” with after a lifetime of labour…perhaps there is some sort of magic bullet “money tree” that you seem to have been able to draw fruit from that many of us are unaware of…could you please advise?

  10. RosemaryJ36

    Joseph – I am not wealthy but I have has a great deal of good fortune in my life. Maths was always my best subject and I taught it on and off for nearly 50 years. Maths teachers are like hens teeth, so finding work was never a problem. I also worked for 3 years with AMP when it was still a respected Mutual Provident Society.
    I have been using computers since 1989, which is another valuable source of skills. I was able to join Comsuper in 1984 and, having taken many years out of full time work while my children were at school, I worked until I was 69. My main income is from Comsuper, I am also entitled to a small Age Pension, a small UK pension (I was in the UK until I was nearly 35) and I can access all the information I need to about my Allocated Pension online and move funds around as I choose.
    I have a spreadsheet, updated daily, which monitors the ups and downs of my investments in that scheme and I am probably making quite a few mistakes!
    I do not actually have ample funds but I have enough from secure sources – ie Comsuper – that I can afford to be a little rash!
    I feel guilty sometimes that I have had so many lucky breaks in life.

  11. Joseph Carli

    ” I feel guilty sometimes that I have had so many lucky breaks in life.”……Oh well….us innocents abroad ought to be able to blush a little at our good fortune while also to smile benevolently on the clumsy wayward halts and stumbles of others less intellectually endowed..eh?….best of fortune to you, m’lady…

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