Harsher asset testing will see Age Pension entitlements cancelled from 1st January 2017 for most pensioners currently receiving less than $375pfn for a single pensioner or $250pfn each for a couple. These amounts are for pensioners living in their own home. For non-homeowners the cut-off amounts are lower at $302pfn for a single person and $216pfn each for a couple. These figures assume people are being assessed on the Asset Test which the vast majority of pensioners are. Generally the only pensioners assessed under the Income Test are those who are still working, retain an interest in a business or have some sort of lifetime pension entitlement from a previous job.
Homeowner, Asset Tested pensioners receiving less than $750pfn for singles or $515pfn each for couples will see their entitlements reduced but not cancelled. Generally, the smaller your part Age Pension now the more your proportionate reduction will be. For some pensioners receiving just under the full pension ($858pfn for a single or $668pfn each for a couple) there will actually be a very slight increase in pension entitlements with the changes. Centrelink have confirmed anyone losing the Pension in full will automatically receive the Commonwealth Seniors Health Care card in the mail without needing to complete application paperwork.
For a short YouTube video explaining the basics of Age Pension means testing click here Video – How does the Australian Age Pension system work and for a detailed look at the changes to the Asset Test that will result in the above reductions refer to our August 2015 written article by clicking here – A brief explanation of the Budget’s Age Pension changes
Whilst these changes are harsh and will see around 91,000 people lose their pension and a further 235,000 have their part pension reduced, they are only taking pension asset testing rules back to where they were prior to John Howard relaxing them in 2007. That’s scant comfort for couples losing up to $13,000 of their yearly income and the worries of wondering ‘How long will my super last? What should we change going forward?’
If you’re concerned about these changes then now is certainly the right time to be reviewing the investments, structure and planning of your retirement. Pulling all the factors like investment performance, budgeting and cash flow, how much to draw from your super, Aged Care plans and whose name money is invested in together is the key to ensuring you’re squeezing every last cent of income and lifestyle out of your retirement.
If you’d like an obligation free assessment of your retirement funding plans, don’t hesitate to contact us.
