Self-funded retiree Jim Pembroke stands to lose $8,000 a year of income if the Labor party wins office and goes ahead with its plan to scrap franking credit cash refunds for retirees with self-managed super funds.

Key points: Self-funded retirees split on issue of cash refunds for franking credits

Self-funded retirees split on issue of cash refunds for franking credits Some think government could better use refund money on other programs

Some think government could better use refund money on other programs Others think it is unfair that rule change will cut their retirement income

And he doesn't mind one bit.

"When I thought about it I realised it was something that I did not earn," he told 7.30.

"It was something that they were giving me just for owning shares.

"I didn't earn it. I didn't deserve it. It wasn't necessary."

'Who needs assistance?'

Jim and his partner Therese Otago are among an estimated 900,000 self-funded retirees who will be affected if the rules around franking credits are changed.

"Therese and I have a little less than $1.2 million in our self-managed super fund," Mr Pembroke said.

"We have the boat, which is a pretty modest 1986 timber boat. We have an imported Japanese van, campervan, and that's it. They're our assets.

"We don't own any property at all, we don't have a house.

"We've chosen to use our super to fund this lifestyle."

Jim Pembroke says he doesn't need the franking credit refund. ( ABC News )

The self-described progressive voters think the more-than $5 billion spent each year on refunding franking credits to retirees could be better used elsewhere.

"I look at my $1.2 million, and I realise that represents 50 years of the Government's aged pension," he said.

A single pensioner receives $838.40 a fortnight or $21,798.40 a year from the Government.

"If you have $2 million in a self-managed super fund, you've got 100 years of the aged pension," Mr Pembroke added.

"Now, who needs assistance? Me with 50 years of the aged pension, somebody with 100 years of the aged pension or someone who's struggling on the aged pension?

"They're the people who need assistance, not me."

'I'm now a second-class retiree with shares'

Steve and Linda Taylor are in a similar financial position to Jim Pembroke and Linda Otago, but they hold a different view.

Also self-funded retirees, they pay no tax on an income of about $75,000 a year, including about $20,000 from the refund on franking credits. This is in part because income from a superannuation fund is not taxed at all.

"It's a quarter of the money that we get from shares, which is a third of the money we live on," Steve Taylor told 7.30.

This might seem large but following a Howard/Costello tax change in 2000, retirees can now earn a much higher amount than people working without paying tax due to the seniors and pensioners tax offset (SAPTO).

A single retiree can earn up to $32,280 a year and not pay any tax (or $57,950 for a couple). This compares generously with a working person who starts paying tax at 19 per cent for each dollar earnt over $18,200.

Mr Taylor concedes that they live a comfortable life.

Self-funded retirees, Steve and Linda Taylor, think the proposed changes are unfair. ( ABC News )

"I don't tell anyone we don't have a nice lifestyle. We have a nice lifestyle," he said.

But after years of careful planning and investing for retirement, they now feel they could be penalised by a change in rules.

"I do think it's unfair, we've been told to do things a certain way and we've done it and this is what happens," Ms Taylor said.

"I wouldn't have minded if their rule was that everyone lost their banking credits," Mr Taylor said.

"My point is that I'm now a second-class retiree with shares."

People on a pension or part-pension are exempted from Labor's changes.

Steve and Linda Taylor think that if the changes are made, retirees like them may sell off assets to enable them to qualify for the pension.

"I just think its false economy to make us sell," Mr Taylor said.

"I've never been on a cruise, so I'll probably sell a lot of shares and go on a cruise."

Make an informed vote

Deloitte Access Economics economist Chris Richardson said as with all changes, there would be winners and losers.

Either way, he said voters owed it to themselves to fully understand what the policy was and what it meant for them.

"The changes to franked dividend credits and their refundability is the biggest dollars, currently, that the two sides are arguing about," he said.

"If you don't understand it you're not going to make an informed vote."