T  o claim or not to claim, that is the question. As the debate in Canberra over spending and taxation reform gathers pace, there is an interesting philosophical divide between those who believe welfare should be preserved for the truly desperate and those who think that where there is an entitlement, it should be claimed.
Australia enjoys one of the best retirement income systems in the world. Released two weeks ago, the Melbourne Mercer Global Pension Index scored Australia 79.6 out of 100, ranking us third in the world behind Denmark (81.7) and the Netherlands (80.5). The scoring takes into account the integrity of the system, the adequacy (where Australia is ranked first) and the sustainability of the system (where we are ranked fourth).
The interaction between self-reliance and government support is managed in Australia through the means-testing system. Put simply, it says that if you have the means to either fully or partly fund your own retirement, then you are compelled to do so. If you were lucky enough to inherit grandma's $3 million Nedlands property and chose to hang on to it as an investment property to leave to your children, then that is your choice. But don't expect society to pick up the tab for your retirement by paying you a pension as well.
There are those who, having worked all their lives and paid their taxes, expect something in return. In many cases, through their own success, they have received little or no direct government benefits along the way. Singles feel particularly peeved when they see how many middle-class welfare gold nuggets are dished out to couples with kids and then discover they'll receive no pension in retirement, thanks to means testing.
It's a quirk of the means-testing system that reducing your assets can get you a more generous payment from Centrelink. Understanding this basic rule has led to many a retiree enjoying a trip overseas, a home upgrade or even helping their kids.There are plenty who see this as a form of rorting or gaming the system and argue that we should discourage the practice or even prohibit it.
It's easy enough to do. The rules surrounding gifting sit underneath a section in the Social Security legislation dealing with deprivation. That is, you can't deliberately deprive yourself of assets to get more from the system. Were the government serious, they just need to expand the list of actions that would be caught by the deprivation rules. Of course, every caravan park owner, 4WD salesman and kitchen upgrade expert would have something to say about that. Those who were encouraged to pile thousands of dollars into super might equally express an opinion at the next election if restrictions were retrospectively imposed on accessing their funds.
There's no doubt that in any complicated system, there will be winners, losers and those who choose not to play the game. The challenge for Australia is to ensure we have a system that is fair to everyone. So far, so good.