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Back Issue Newsletters
Media
- Managing business succession - Professional Planner by Tony Negline
- Ethical super rules against sole purpose test - Investor Daily
- Bare trusts should use corporate trustees - Investor Daily
- Loans the lifeblood of self-managed funds - The Australian by Tony Negline
- Smart gearing will help cover your assets - The Australian by Tony Negline
- Clients forgiving towards advisers over losses - Money Management by Peter Townsend
- SMSFs vs. POFs - Super Living by Peter Townsend
- The Super Game - The Australian
- Retirees precious capital - Sydney Morning Herald
- Super pension in a financial downturn - SMSF by Michael Hallinan
New Inflation Index: Pensioner & Beneficiary Living Cost Index
18/09/2009
One of the May 2009 Budget initiatives was a proposal to develop an inflation index which was designed to measure price changes of the disposable incomes of pensioners.
The Australian Bureau of Statistics has developed the Pensioner and Beneficiary Living Cost Index ( “the PBLCI”). This CPI for Pensioners will be used to index social security pensions when the PBLCI is greater than the CPI.
Consequently, social security pensions will be indexed by whichever is the greater: the increase in the CPI or the increase in the PBLCI.
While this is good news for pensioners, the bad news for taxpayers is that social security liabilities will be increasing at a faster rate than the CPI.
Additionally, now that there is a price index for pensioners (which will usually increase at a greater rate than the CPI) there will be strong pressure to index other pensions to the higher of the CPI or PBLCI.
Unfortunately, as pensions from SMSFs are mostly not open-ended liabilities but fixed-dollar liabilities which are fully paid by the SMSF pensioner member, indexation will not be relevant.