Big changes to the Age Pension Asset Test are coming on 1 January 2017, which is likely to see around 250,000 people have their Age Pension reduced and a further 100,000 lose the pension entirely (Source: www.abc.net.au).
A bit of background. A person’s Age Pension entitlement is based on an assets and an income test. Providing both income and assets are below the respective levels, the test that results in the lesser amount of pension is the test that is applied.
In May 2015 the government announced a major change to the assets test which will take effect from 1January 2017.
The key change is a reduction in the level of assets a person can have and receive a part Age Pension.
The following table provides a brief outline of the current lower and upper thresholds in comparison to the future thresholds post 1 January 2017.
*data source – Department of Human Services.
Depending on your personal circumstances if you believe your assets (excluding your home) are in excess of the current threshold as per this table – we strongly urge you to review your situation before the end of the year.
The upside of losing
People who lose their pension on 1 January 2017 will automatically be entitled to receive a Commonwealth Senior’s Health Card. So while the monetary benefits of the Age Pension will cease, you will continue to enjoy access to Medicare bulk billing and discounted items on the Pharmaceuticals Benefits Scheme.
There are a few things which you may consider in order to maximise your age pension after 1 January 2017. These include paying for any planned expenses (e.g. holiday) now, repairs/renovations to your home or being extra generous this Christmas (joking! J).
If you would like to find out how these changes will impact your Age Pension entitlement, please call or email me as we have a range of calculators and simulators we can use to help plan your future.
Disclaimer: This publication has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions.
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