Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

My question is addressed to the Minister for Superannuation and Corporate Law, Senator Sherry. Is the minister aware of the issues being faced by self-funded retirees as a result of the global financial crisis? Is the minister also aware of what actions the government has taken to help the 950,000 self-funded retirees in our community?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I thank Senator Polley, who has always taken a keen interest in issues that affect the retired community in my home state of Tasmania. The Rudd government is very keenly aware of the problems that have flowed as a consequence of the world financial and economic crisis for approximately 950,000 retirees. We have moved quickly to provide a range of relief, which I will touch on. Many superannuants have expressed concern about the depletion of their capital as a result of the volatile financial markets that have flowed from the global financial crisis. As I am sure most senators would be aware, Australian superannuation funds had a negative return of minus 19.6 in the last calendar year, and that translates into a sharp reduction in capital for Australia’s retirees in most circumstances. Retirees asked the government for help in the form of relief from what is known as the minimum draw down rules for account based pensions.

The Rudd government responded quickly and decisively. It announced on 18 February that minimum pension drawdown requirements would be halved for this financial year. I can advise today that the executive council last Friday approved the regulations to enact these changes to the 2008-09 financial year. This means that superannuation funds can act on members’ instructions to suspend payments for the rest of this financial year. The measure responds to very real community concern. I have personally had hundreds of letters, emails and representations.

The change means that self-funded retirees will avoid having to sell further investment assets and realise losses in a depressed market. The temporary relief will also address the concern that the minimum drawdown requirement was set based on asset values as at 1 July 2008. Clearly, at that time equity values were higher. For those people who have already taken half the current minimum payment for 2008-09, the annual nature of the minimum payment rules means that a further payment— (Time expired)

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister update the Senate on what other ways the Rudd government is assisting self-funded retirees at this difficult time?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I should also say in respect to the minimum drawdown requirements that we will be closely monitoring the markets and we will make an announcement about arrangements for the 2009-10 financial year before the end of this financial year.

One further way we have taken action to assist is in relation to deeming rates. The government has cut deeming rates three times in the last five months. This means retirees will continue to be fairly assessed on what returns they are earning on their investments for entitlement to the age pension. Of these three reductions in deeming rates—November last year, 26 January this year and now for operation on 20 March 2009—two were outside the usual March and September reassessment periods. This demonstrates that the Rudd Labor government has again responded to reductions in returns from deposit-type accounts to ensure the pension means test remains fair. (Time expired)

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister advise of any additional benefits provided to self-funded retirees by the government as part of the Economic Security Strategy, the Nation Building and Jobs Plan and broader tax measures?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

The government extended lump-sum payments as part of its 2008 Economic Security Strategy to holders of the Commonwealth seniors health card as well as aged pensioners. Apparently the Liberal opposition now believes this was a waste of money to those who worked hard—many superannuants and pensioners in our community. Many self-funded retirees will also be eligible for the tax bonus under the Nation Building and Jobs Plan if they paid tax in the 2007-08 financial year and had a taxable income of $100,000 or less. Apparently the Liberal opposition believes this relief to many self-funded retirees is also a waste of time. The government also assists self-funded retirees through the tax system, in particular the senior Australian tax offset—SATO, as it is known—which, when combined with the low-income tax offset, ensures that the eligible single older Australian can have income of up to $28,867— (Time expired)