How January 1st Pension Changes May Impact You – The Australian Pension
If there’s one thing about the Australian Government that you can’t fault, it’s the amount of information they make available to the public when there is going to be a change in certain policies. Conversely, the sheer volume of information has a tendency to confuse and obfuscate the important points they are trying to convey.
The Australian Pension
In this case it’s the pension and the changes to the asset tests involved. With a significant sector of the population at pension age, you can imagine the level of interest. “Don’t mess with the aged pension!” can be heard across the nation as recipients suspiciously go over the new policy trying to find where government intends to make cuts.
In fact it’s not only the aged pension that will be affected. Other pensions such as:
• Carers
• Disability
• Widow B
• Wife
– are all in the sights of a government that is always strapped for cash.
Let’s see if we can clarify some of the points for you.
- The family home is sacrosanct. Whether you live in a 60s weatherboard in the western suburbs or a mansion on the harbour, there is no change to how your home is viewed from a pension point of view.
- The allowable asset limit for a married couple changed to $816,000. That’s a significant drop from the previous $1,178,500.
- The single age pension asset limit is now $542,500. The previous amount was $793,750.
- On a positive note the threshold was also lifted for both married and single pensioners, which allowed a few thousand into the full pension fold that weren’t there before.
The Taper Rate
The amount of pension deduction applied to your pension was previously at a rate of $1.50 per $1,000 of assets over the limit. Now it will be $3.00 per $1,000.
Married: $816,000 limit.
To calculate your pension payment take your asset total, and subtract it from the limit. For example, let’s say your asset total is $975,000.
Total assets $975,000, less the limit $816,000 = $159,000.
$3.00 X 159,000 / 1000 = $477. Your pension therefore is $850-$477 = $373 per fortnight.
These changes affected 300,000 Australian Full Age pensioners. Some lost all of their pension while others lost part of it. This change in the pension might result in a few thousand people selling or otherwise disposing of some assets. Perhaps the truth of the matter is that some folks may have to realise parts of their assets to live a reasonable lifestyle.
Your Assets
When you first applied for the pension you would have had to fill in quite a few forms listing all the things you owned.
Your assets, apart from your family home, are made up of:
• Your Superannuation
• Investment Properties
• Household contents
• Valuables
• Cars, boats, and caravans
• Other investments
You might want to call this your “net worth” – all the things you have accumulated and invested in during the years of your working life.
Possible Actions to Lessen the Blow
Being eligible for the pension has a number of benefits apart from that fortnightly payment – medical, chemist, transport and insurance, to name a few. If you have invested and saved wisely then the fortnightly payment is not all that important. If you are borderline surviving on assets and the pension payment, you might want to consider any or all of the following:
• Spending your assets
• Reducing your assets
• Topping up your partner’s super if they are under the pension age.
To discuss the mechanics of this the team of professionals at Hart Partners in Melbourne welcome your call on (03) 9600 3220 or email today on paula@www.hartpartners.com.au