Self-funded retirees have been overlooked in the federal budget, which should have included support measures to offset retirement income losses stemming from the impact of COVID-19 on the economy, a retiree representative body has claimed.
Association of Independent Retirees president Wayne Strandquist said the impact of COVID-19 was beyond the capacity of self-funded retirees to bear without assistance in the budget and support was needed to allow them to continue to fund their own retirement after the pandemic ended.
“The association suggests the government provides support measures for retirees, such as providing offset assistance where regulatory policies such as reducing dividends by banks to cope with mortgage defaults [have led to a decline in income],” Strandquist said.
He also called on Canberra to issue government-backed infrastructure bonds for retirees, reduce the deeming rate, decrease the age pension asset and income test taper rate, introduce continuous Centrelink valuation of assets for deeming and threshold purposes, bring in more super drawdown flexibility for retirees over the age of 75 and raise the threshold for receiving the Commonwealth Seniors Health Card.
According to Strandquist these support measures are required due to large investments within superannuation and retirement income portfolios into dividend-paying companies that were currently paying reduced or nil dividends to investors.
“To compound the income loss by retirees, the Australian Prudential Regulation Authority (APRA) has provided guidance to banks to cut dividends to offset potential defaults in mortgages held by the banks. With retirees traditionally having significant investments in bank shares, this guidance by APRA means that retirees have been unfairly called upon to forgo dividend income to support bank mortgage defaults,” he explained.
“These retirees rely on income from investments in the share market, property and fixed interest, either through superannuation or private investment, for their living expenses. They have been overlooked by the government as billions of dollars have been allocated to programs to stimulate employment and the economy.
“Retirees are not requesting special consideration, but are seeking fairness in government support along with the rest of the community while COVID-19 continues to seriously impact the economy.”