From 1 January 2017, Centrelink is introducing changes to the Age Pension Assets Test. More than 300,000 Australians will be affected, so it’s a good idea to understand how the changes could impact your pension eligibility and payments.
What do the asset test changes mean to you?
Let’s start with the good news. The government is increasing the value of assets that you can own when assessing your eligibility for the full Age Pension. For couples who own their own home, the level increases by $78,500 to $375,000. For single homeowners, the level will rise by $41000 to $250,000.
Part pensions and taper rates
When you have assets that exceed the asset test limits, your pension will be reduced to provide you with a part pension. Currently, the pension rate payable reduces by $1.50 per fortnight for every $1,000 of assets you own above the relevant limit. For example, if you own $10,000 worth of assets over the Assets Test limit, your pension will reduce by $15 per fortnight ($7.50 per fortnight each for couples). This is known as the ‘taper rate’.
From January 2017, the taper rate will increase to $3.00 for every $1,000 of assets you own over the threshold.
So, if you own $10,000 worth of assets over the Assets Test limit, your pension will reduce by $30 per fortnight.
While $30 fortnightly may seem manageable, over a year it equates to $780. That’s $780 that you could be using for a weekend away, servicing your car, budgeting for Christmas or even a regular visit to the movies.
Additionally, the Assets Test limit to receive a part pension (and the pensioner concession card) will decrease.
If you own your own home, the Assets Test limit for a part pension will decrease to $816,000 for couples and $542,500 for singles. If your assets exceed these thresholds, you will no longer qualify for the part pension you have received in the past.
If you would like us to help with strategies to optimise your pension eligibility and income please call the office or contact me via email - firstname.lastname@example.org
This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs.
Emma Brooke is an Authorised Representative and GTC Financial Services Pty Ltd ABN 69 596 897 575 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523.