Major changes for age pension in 2017
Much has been made of the impending changes to the age pension asset test, which are currently slated to be implemented nationwide on the January 1, 2017.
The new rules will impact the lives of thousands of Australians.
Basically, the Government is going to introduce two changes to the way the age pension asset test is structured, altering the asset test limit and the asset taper rate.
The asset test free areas (the figure above which allowances are not paid and pensions are reduced) will be significantly increased to the following figures:
- $250,000 for a single homeowner
- $375,000 for a homeowner couple
- $450,000 for a single non-homeowner
- $575,000 for a non-homeowner couple
Source: Department of Human Services
This means, for example, if you are a single homeowner and you have assets totalling a value higher than $250,000 and apply for the pension you may be subjected to an assets test that could potentially see your allowances reduced.
The other change is that pensioners with assets above the asset free threshold will be subjected to a new tapering rate of $3 for every $1,000 you’re above the threshold. A taper rate refers to a pension reduction, which depending on your assets could add up.
The Department of Human Services have noted that income support recipients who lose their payment entitlement will be issued a Commonwealth Seniors Health Card and exempt from the usual income test requirements for cards indefinitely.
While pensioners with assets above the threshold might feel a bit of a pinch, because the asset thresholds have increased theoretically (at least) more people will qualify for an allowance. SuperGuide estimates an additional 50,000 Australians will receive a full age pension rather than their current part age pension entitlements.
Were you aware of the changes to the age pension asset test? Do you think they’re fair? Let us know in the comments. We’d love to hear your thoughts.
Related links:
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How government changes are failing over-60s
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