Yahoo Finance Scott Morrison tells retirees: Spend your super, don't pass it onto children
Social Services Minister Scott Morrison has told Australian retirees who have accumulated a big super balance to spend their cash and not save it to pass onto their children.
In an interview with the Australian Financial Review, Morrison said retirees must run down their superannuation savings to maintain their incomes instead of thinking about inheritances.
Morrison also rejected claims that his new wealth test could backfire and see more people on the pension, saying that this “fundamentally misunderstands the role of the pension in the welfare system”.
Financial planners say that the proposed tightening of the pension assets test mean a retiree with $750,000 of assets - excluding the family home - would receive around half the total income of a person with $325,000 of assets but who qualifies for the age pension.
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Morrison argued that the the purpose of providing tax incentives to encourage people to build up their super is so “they can draw down on it in their retirement, not maintain it as a capital pool to be passed on as an inheritance”.
Labor is firmly opposing Morrison’s proposal and has released an analysis by NATSEM that shows nine out of 10 lower-income earners will be worse off and nine out of ten higher income earners will be better off.
NATSEM analysis has also found the poorest 20 per cent of households with children will lose up to 7.1 per cent of their total disposable income over the next four years, after all budget measures are taken into account.
By contrast, households with children in the top 20 per cent will see their disposable incomes increase slightly, by 0.2 per cent, by the end of 2018/19.
