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Did the pension changes catch you off guard?

The new asset test was expected to reduce payments for 200,000 age pensioners.

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Last updated: 04 July 2019

Changes to the age pension asset test that took effect on 1 January 2017 may have come as a rude shock to many seniors who currently receive a part pension, as the advocacy group National Seniors warned when the new rules came into effect. 

The new asset tests, which were set in motion by the 2015 federal budget, were expected to see roughly 200,000 people receive lower part-pension payments in 2017, and 100,000 lose their pension payments altogether.

If you've been affected, read on to find out more about the updated arrangements.

"Many people are still unaware if or how the assets test changes will impact their payment rates," said National Seniors Chief Executive Dagmar Parsons on the eve of the changes. "Those close to the cut-off limits would need to act quickly and adjust their affairs in the next couple of months, if doing so is right for their circumstances."

Keep on keeping on – advice on ageing well including health, travel and money tips.

Higher thresholds for full pension eligibility

On the plus side of the changes, the amount of assets seniors can have and still receive the full pension went up. A single home-owning pensioner with assets worth $263,250 or less is currently eligible for the full pension. Before the 2017 change, you had to have assets worth $209,000 or less to qualify.

The full pension is also currently available to: 

  • homeowner couples with combined assets worth $394,400 or less (up from $296,500 before the 2017 change) 
  • non-homeowner singles with assets worth less than $473,750 (up from $360,500) 
  • non-homeowner couples with combined assets worth $605,000 or less (up from $448,000).

The higher thresholds were expected to make about 50,000 Australians newly eligible for the full pension. 

But for each $1000 worth of assets you have above the full pension threshold, your fortnightly pension payment was cut by $3 – the new taper rate. The previous taper rate was $1.50 per $1000. 

Superannuation is included in the asset test (along with assets like property, cars, boats, caravans, other investments, and household contents and valuables) but the family home remains exempt.

Lower pension cut-off points

Those with more assets, on the other hand, currently receive less money from the government than they did before the 2017 change. The lower part-pension thresholds were expected to see about 100,000 age pensioners lose payments altogether.  

Cut-off points currently in effect
Home and family status Current cut-off point Cut-off point before1 January 2017
Single homeowner $572,000 $793,750
Single non-homeowner $782,500 $945,250
Homeowner couple $860,000 $1,178,500
Non-homeowner couple $1,070,500 $1,333,000

To cushion the blow, seniors who lost pension payments from 1 January 2017 should have received a Health Care Card and those over age pension age should have also received a Commonwealth Seniors Health Card without having to meet income requirements.

These concession cards allow access to benefits like bulk billing and discounted medicines as well as other potential discounts.

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Adjusting to the part-pension change

Though the changes are now in effect, there are a number of steps you can take retrospectively to potentially restore your previous part-payment if it's been reduced, or to limit its reduction going forward. But you should seek trusted information by calling National Seniors' Financial Information Desk on 1300 020 110 or email fid@nationalseniors.com.au.  

  • Reducing your assets: You may be able to reduce the amount of assets you have on hand by gifting money to your children or other loved ones. Current limits are $10,000 per year for both singles and couples, and no more than $30,000 over a five-year period. Any sums above these limits will be subject to the means test, meaning they will still be counted as your assets and affect your part-pension eligibility.  
  • Putting savings in a partner's super if they are under age pension age: Money held in the accumulation phase of superannuation while under age pension age is exempt from the pension assessment. Additionally, if you pay income tax and your partner is a low income earner or currently not working, you can make after-tax contributions to their super fund and you may get a tax offset.  
  • Spending your assets: If you've been putting off a big expense that will likely pay dividends down the road, like home renovation, now may be the time to do it.

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