The federal government will put forward a plan to save as much as $1 billion by tightening the eligibility rules for the age pension in next week’s budget.
The Australian reports cabinet ministers have approved a plan to introduce a new age pension assets test that will scale back pension entitlements for retirees with “substantial private wealth”.
The report suggests the new rules will not apply to the family home, therefore meaning millions of pension recipients will be unaffected. However, an estimated 200,000 individuals will have their pension payments “trimmed”.
Last year the federal government proposed to adjust the indexation of the age pension. However, The Australian reports this plan has now been dumped in favour of tightening the criteria for those who could survive retirement without a pension.
The Labor opposition has already hit out at the proposal, while the Greens have offered qualified support to changing the eligibility for the age pension.
But Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany this morning the government needs to “think of the unintended consequences, the ageing population and the impact on confidence” of introducing the new test.
“When you hear these sorts of announcements you immediately think of the impact on confidence,” Strong says.
“We will be having a look at what it means for small business people when they go into retirement because sometimes they are hit harder than others.”
Meanwhile, the federal government could have a fight on its hands on another front over its proposed budget changes to the pharmaceutical benefits scheme (PBS).
Fairfax reports big pharmaceutical companies will “bear the brunt” of the proposed $5 billion in savings from changes to how some drugs are considered under the PBS, but pharmacists will be affected by plans to introduce a discount for pharmaceutical co-payments.
The Pharmacy Guild of Australia is already pushing back against the proposal, which is estimated to cost pharmacists around $800 million over a five year period. Not all pharmacies are expected to be able to afford the discount and therefore their patients could miss out.
Strong says the government will have a fight on its hands.
“The Pharmacy Guild is powerful for a reason, not because it’s shonky but because it’s reputable, big and an important part of the community,” Strong says.
“They represent thousands of highly trained, ethical individuals.”