Changes to the Age Pension
Wednesday, 21 December 2016 11:51
Here at IMB Bank, we've developed a quick cheat sheet to changes for the aged pension. Continue reading to learn more about how these changes could affect you.
What is changing?
The Federal Government has made changes to the Assets test for those receiving a Centrelink pension, including the Age Pension. Therefore, depending on the level of your investable assets, your pension payments may be less. According to the Federal Government, if you have not received a letter informing you that your pension has changed, it will remain the same.
When does it take effect?
January 1, 2017, so, therefore, your first age pension payment of 2017 will reflect the changes if you are impacted.
How many people will be affected?
It has been estimated that the changes will affect 300,000 Australians in receipt of the age pension. Up to 100,000 Australians may lose their age pension payments completely.
How do I know if I am going to be affected?
There are two major changes - the assets test threshold and the taper rate. In summary, the effect will be:
The assets test threshold:
- If you are a couple who owns their own home and has investable assets of more than $600,000, you could have your age pension cut by up to $5714.
- If you own your own home and have investable assets of $816,000 or more, it is likely you will lose your pension altogether.
The taper rate:
As it now stands, for every $1000 you have over the asset threshold, you lose $1.50 (75c for couples) per fortnight. Come January 1, 2017, you will lose $3 per fortnight for every $1000 you have over the asset threshold.
What assets are considered in the calculation (not limited to):
- Property (excluding your home)
- Motor vehicles, boats and caravans
- Financial investments
- Superannuation if you’re over age pension age
- Business assets
- Household contents and personal effects
The market value of most of your assets is considered when calculating the age pension.
What can I do to minimise the impacts?
There are some measures – such as reviewing and restructuring your investable assets – that may assist you in retaining more of your pension. Talk to IMB Bank’s accredited financial planners so you are sure you are receiving as much of the age pension as you can. Individuals who have their age pension cancelled as a result of these changes will automatically be issued with a Commonwealth Seniors Health Card and the Health Care Card without the need to satisfy the usual income requirements.