Australian Age Pension
The below changes took effect in January 2017. There is also a change from July 2017 to introduce a transfer balance cap and a proposed change from the 9 May 2017 Federal Budget to allow older Australians to contribute downsizing proceeds into super.
Pension assets test changes 2017
The assets test is used to work out two things:
a) Your eligibility for the Government Age Pension, and
b) If you are eligible, how much Age Pension you can receive each fortnight.
Only those people who have assets with a total value less than a certain threshold, are able to receive the full pension.
If the total value of your assets is above the threshold, then the amount of Age Pension you’ll be entitled to will decrease.
In January 2017, the assets threshold increased. The new assets threshold is in addition to the value of your home.
|Homeowner||Not a homeowner|
If the value of your assets is less than the threshold for your particular circumstances, you may receive the full Age Pension (depending on your income).
If you are eligible to receive the Age Pension and the total value of your assets is above the threshold, then the amount of Age Pension you receive will decrease faster than it currently does.
From 1 January 2017, the pension taper rate increased from $1.50 to $3 – this means for every $1000 of assets beyond the assets free area ($250,000 for a single homeowner and $375,000 for a home-owning couple) the pension is reduced by $3 per fortnight, or $78 per year.
The upper limit of the Age Pension assets test dropped to $542,500 (from $793,750) for singles, and $816,000 (from $1,178,500) for couples.
Examples of assessable assets include household contents, personal effects, cars, boats, caravans, investments and real estate. The family home is excluded from the Age Pension assets test.
It was estimated that just over 300,000 retirees would lose some, or all, of their Pension entitlements.
What can you do to retain your pension?
Not everything you own is actually counted towards your assets for the purposes of the test – for example, your family home is not included in your total assets. See the info box below, for more details.
Since everyone’s financial position and asset portfolio is different, it is important to get professional advice from a financial planner with expertise in retirement income.
If you’re a member of an Industry SuperFund, then you can call your fund and ask to speak to one of their specialist financial advisors.
What can you do if you are worried about these changes?
If you are concerned about the effect that these changes may have on you, you can email your local MP and let them know of your concerns here www.aph.gov.au/Senators_and_Members/Members