Changes to Age Pension Assets Test
Changes to the Age Pension assets test on 1st January 2017
As you may know the Government has introduced changes to the pension assets test that may affect your eligibility for the Age Pension. These changes are now law & come into effect on 1 January 2017. The asset test upper limit has been decreased & pensioners will be subject to a new taper rate of $3 for every $1,000 above the new assets test free areas.
How will these changes affect my pension entitlements?
From 1 January 2017, people with lower levels of assets could see an increase to their entitlement & those with higher levels of assets could see a significant reduction or complete loss of their age pension entitlement. Approximately 50,000 Age Pensioners are expected to be better off under the government’s changes & receive the full pension, whereas, approximately 120,000 part-pensioners are likely to add around $30 per fortnight to their wallet. In particular:
- For full pension, home owners:: If you own a home, the new assets thresholds will allow you to hold assessable assets up to $250,000 (singles) & $375,000 (couples) without impacting your full-pension entitlements.
- For full pension, non-home owners: The new assets thresholds for non-home owners will be $450,000 (singles) & $575,000 (couples).
What about those on part Age Pensions?
From 1 January 2017, around 91,000 part-pensioners will lose their Age Pension & about 235,000 part-pensioners’ payments will be reduced. In particular:
- For part pension, home owners: Home owner couples won’t receive the pension when their assessable assets exceed $823,000. Single home owners will lose the pension when they have over $547,000 in assessable assets.
- Part pension, non-home owners: Single non-home owners won’t qualify for the pension if their assessable assets exceed $747,000 & couples will lose pension entitlements when their assessable assets exceed $1 million.
If you lose your pension because of these changes you should be entitled to the Commonwealth Senior’s Health Card or the low income health card. These cards provide access to Medicare bulk billing & less expensive pharmaceuticals.
What do I do next?
Depending on how these changes impact you, there are a number of things to consider, including:
- If your entitlements are reduced, how will you replace lost income?
- Do your assets need reducing? Your financial adviser can assist with asset reducing strategies.
- Do you have any large planned expenses, such as a holiday or home repairs for example, that might reduce your assets before the changes come in.