Pension boost plan welcomed by seniors

SENIORS approve a proposal where they give their savings to the Government in return for a boosted pension payment.

Hope ... a new scheme may give pensioners the edge after retirement / Eric Lobbecke

Pension boost plan welcomed

SENIORS have welcomed a proposal to allow them to hand their retirement savings over to the Government in return for a boosted pension payment.

The Henry tax review is reportedly considering a plan to allow lower income earners with small superannuation lump sums to transfer that money to the Government.

They would then be given guaranteed income payments indexed to the aged pension.

The industry estimates that a retiree with a lump sum of $60,000 could get an extra $2000 a year under such a plan.

National Seniors Australia chief executive Michael O'Neill welcomed the discussion, saying it was important that older Australians had more choice about their retirement income.

"A more innovative approach to retirement incomes will provide retirees with a greater level of choice," he said.

"Even with the recent $30 increase in the age pension, the reality is that it will never fund the aspirations of those approaching retirement, the baby boomers."

The fall in global financial markets has wiped billions from superannuation funds over the past year, forcing some older Australians to delay their retirement and stay in the workforce longer.

Mr O'Neill said there was a gap in the retirement income market, as many Australians were looking to government-backed investments as a safer option.

However, the Opposition said the Government had seven superannuation reviews outstanding and the delay in deciding on a reform plan had left many Australians in limbo about their super choices.

Treasury boss Ken Henry is reportedly considering the proposal as part of a sweeping review of the tax system, due to report to the Government at the end of the year.

A paper commissioned by the review and released yesterday also recommended increasing the fuel levy and charging motorists for driving at peak times.

Under the plan, cars would need to be fitted with electronic devices so the Government could track where drivers were travelling to and how far they were going.

Nationals leader Warren Truss called on the Government to dismiss the proposed 10c fuel tax slug, saying it was unfair for many Australians.

"What these city-based pointy heads have forgotten is people living in regional Australia have to drive further each day to go to work, take their kids to school or go to the doctor, compared to their city cousins," Mr Truss said.

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