There is a significant change coming to the way your Aged Pension, Disability pension or Carer’s pension is calculated with the assets test change as of the 1st of January 2017.
The main changes will be increases to the assets-test-free thresholds and decreases to the upper limits for Pension eligibility. In addition, the taper rate will double, from $1.50 per fortnight for every $1,000 of assets over the assets test threshold, to $3.00.
The changes are expected to reduce the part pensions of around $235,000 Australians, while more than $90,000 are expected to have it cut entirely. It is also expected that some pensioners will see an increase from 1st January 2017.
Here’s the basic information about current cut off thresholds – this will be the case until 31/12/2016
| Pensions | Asset Test | ||
| Threshold | Cut-off | ||
| Single | Homeowner | $209,000 | $793,750 |
| Non-Homeowner | $360,500 | $945,250 | |
| Couple
(combined) |
Homeowner | $296,500 | $1,178,500 |
| Non-Homeowner | $448,000 | $1,333,000 | |
| For every $1,000 above the threshold, Pension rate reduces by $1.50 pf | |||
Effective 1/1/2017
From 1/1/2017, the asset test will be changing ($3.00 per $1,000 taper), and a large increase to the affecting threshold.
This will see some people entitled to a bit more pension, some a bit less and some will lose entitlement altogether.
|
Pensions (1/1/2017) |
Asset Test | ||
| Threshold | Cut off** | ||
| Single | Homeowner | $250,000 | $542,500 |
| Non-Homeowner | $450,000 | $742,500 | |
| Couple
(combined) |
Homeowner | $375,000 | $816,000 |
| Non-Homeowner | $575,000 | $1,016,000 | |
**These assets test-free thresholds and upper limits are estimates only. They will be indexed again prior to 1 January 2017.
From 1/1/2017, Allowance and Pensions asset thresholds will be aligned.
Part of this measure sees the permanent issue of either a CSHC and/or a Low income Health Care Card (depending on what income support is lost) to those who lose entitlement to income support as a result of this measure.
For more information please visit the following links to Centrelink.
Centrelink link to Assets change information:
https://www.humanservices.gov.au/customer/enablers/income-test-pensions
Assets Test changes seminar
Topics covered:
- Maximum rates of pension
- Current income and assets tests
- Assets Test changes from 1 January 2017
- Examples
Preparing for the changes
Depending on how the changes may impact you, there are a number of things worth exploring and talking to your financial adviser about, including:
- How you might replace any lost income if your entitlements are reduced
- How you might be able to trim down your assets before the changes come in, to retain your current entitlements—for example, gifting within annual limits, moving savings into a spouse’s super, or bringing holidays or home renovations forward
- How strategies outside of asset reduction may be able to help—working for longer or reviewing your budget in retirement.