From 1 January 2017, significant changes to the Age Pension are expected to impact hundreds of thousands of Australian seniors. These changes may impact your personally, or an older family member who is close to or already in retirement. Here’s what you need to know.
Around 65% of seniors rely on a government pension for income in retirement1 so any changes to the Age Pension are worth preparing for.
Changes to the asset test
From 1 January 2017, the asset limit to qualify for a full Age Pension will be raised. Couples who own their home will be able to hold $375,000 in assets and still qualify for a full pension (up from $291,000 at present). The threshold for homeowner singles is rising from $205,500 to $250,000. It means you could qualify for full pension from 1 January 2017 if you are earning a part-pension now.
At the other end of the scale, the assets threshold for a part pension will reduce from $1.15 million to $823,000 for homeowner couples, and from $775,000 to $547,000 for singles. If you hold assets over these limits, you may no longer qualify for a part-pension from 1 January 2017.
The ‘taper rate’ will increase
From 1 January 2017, the Age Pension will reduce by $3 per fortnight for every $1,000 of assets you own over the full pension limit – up from $1.50 at present. Consequently, many seniors receiving a part-pension today could find their payments are reduced.
With these changes due to take effect from 1 January 2017, it is important to take action now to know how you or any older family members may be impacted – and plan ahead.
I can work with you or those closest to you to explore options to replace lost income. Or, it may be possible for those impacted to reduce their assessable assets by bringing forward major expenses like home renovations or the purchase of a new car or holiday.
If you’d like more information on how you – or an older family member - may be affected and what you can do to protect your retirement lifestyle, contact us today.