To save $4000 a year in pension payments, Sydney housewife Noelene this week withdrew $25,000 from her superannuation savings and bought a holiday cruise to Alaska.
Noelene, who recently turned 70 and didn’t want her surname published, lives on just under $30,000 a year. She draws a private pension of $2000 a month which is supplemented by a $490 per month government pension.
Under the changes proposed by Social Services Minister Scott Morrison in this year’s budget, Noelene’s government pension would drop to about $157 because she has more than $400,000 in superannuation savings.
By buying a cruise through the Alaskan Inside Passage, her super balance is now just below the new $400,000 threshold for investible assets, excluding her home in Sydney’s Fairfield West, and will preserve her government pension.
While the tighter rules are designed to stop wealthy retirees living off the government, they seem to be having a perverse effect: encouraging pensioners to blow their savings to continue to receive benefits.
“I am normally very careful not to spend more money than I need to, but it turns out that withdrawing $25,000 to take this trip that my late husband and I always wanted to go on together means that instead of losing about $4000 a year my income will stay as it is,” Noelene said.
Noelene’s husband John, a self-employed electrician, died seven years ago at the age of 67 following a five-year illness. Noelene was a full-time homemaker caring for three children.
