How the assets test will work in 2017 could increase your Age Pension entitlements, or take some or all of them away.
With revisions to the Age Pension recently implemented, it’s important to understand how the changes could impact you, particularly with part-pension thresholds somewhat tighter than initially projected.
These thresholds are the value of assets you can own (excluding your home) before you lose eligibility for the Age Pension.
The Age Pension assets test changes will affect Age Pension recipients, aged 65 and over. To be eligible for full or part Age Pension, retirees must satisfy an income and assets test, as well as other requirements.
According to reports, changes to the assets test, effective as of 1 January 2017, will see more than 50,000 additional Australians receive the full Age Pension. Meanwhile, roughly 300,000 retirees on the part pension will have their entitlements reduced, with about 100,000 losing all entitlements.
The Age Pension assets test thresholds will change
The cut-off thresholds previously announced were only projections, as Age Pension rates were not updated until 20 September 2016.
Following the recent update to Age Pension rates, the part-pension cut-off thresholds are a bit tighter than previously announced, meaning more people could be affected. The lower thresholds for eligibility for a full pension remain unchanged.
If your assets are below the thresholds in table one, you will be eligible for a full pension under the 2017 assets test.
|Full pension||Previous asset limits||2017 asset limits|
The table below outlines the assets test cut-off point for those on a part pension.
If you have assets above these limits, a part-pension will no longer be payable.
|Part pension||Previous asset limits||2017 asset limits|
(initial projection $747,000)
(initial projection $1,023,000)
(initial projection $547,000)
(initial projection $823,000)
This means that pension payments will reduce by $3.00 per fortnight for every $1,000 of assets above the lower assets test threshold. Currently, the taper rate is $1.50 (75c each for couples) per fortnight, which means as of 1 January 2017 pensions have reduced at a faster rate.
The market value of most of your assets is taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:
Find out more about which assets are assessable on the Department of Human Services website.
People who lose their Age Pension in 2017 as a result of the changes will automatically be entitled to receive a Commonwealth senior’s health card and/or a low income health care card. These cards will provide access to things such as Medicare bulk billing and less expensive pharmaceuticals.
Depending on how the changes may impact you, there are a number of things worth exploring and talking to your financial adviser about, including:
Please feel free to start a conversation with us and set up a time to come in so we can discuss how these changes could affect you and put plans in place going forward.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Futuro Financial Services Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Steve May, Luke Styles and May Wealth Pty Ltd T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guide and business/adviser profiles.
May Wealth Pty Ltd ABN 71 612 234 518 trading as Steve May Financial Services is a Corporate Authorised representative of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478.
Steve May and Luke Styles are Authorised Representative’s of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478