There are calls again for the family home to be included in the assets test for the aged pension.

The Australian Chamber of Commerce and Industry (ACCI) says workers retiring at the age of 65 should not be eligible for a full or part pension for five years if their primary residence was valued above a debt-free $450,000.

ACCI has lodged its pre-budget submission, urging the Federal Government to implement spending cuts it admits would bring “short-term pain” for long-term budget sustainability.

ACCI says retirees with assets above the threshold should get interest-free pension loans against the value of the assets.

The loan would then act like a reverse mortgage, to be repaid when the property is sold, or if the borrower dies or moves into aged care.

“This provides retirees with choice so that they can remain in their primary residence, leave a bequest and afford their retirement,” the submission said.

The idea of including the family home in the pension assets test is likely to be rejected by the Government.

Revenue and Financial Services Minister Kelly O'Dwyer says some ideas end up in the ‘too hard basket’.

“That would be very much against the principles of the Coalition government,” Ms O'Dwyer said.

“Never before have we included the family home [in the assets test] and I don't see why that would change.”

The harsh proposal comes alongside anger and confusion over changes to superannuation tax benefits and cuts to the aged pension for some retirees, which came into effect this year.

The submission also looked at restrictions on access to the aged pension, and says the early transfer of assets (so retirees still qualify) should not be encouraged.

ACCI said four out of five retirees are relying on a full or part-time pension, while also locking up about $1 trillion in value in their homes.

The chamber also wants the retirement age to be gradually lifted to 70 by 2035.

Other recommendations included reducing government spending to 25 per cent of GDP, and cutting the company tax rate to 25 per cent over a decade.