In the last few weeks nearly 700,000 Australians received a letter from the Department of Human Services letting them know that they have been identified as potentially being impacted by the assets test changes from 1 January 2017. This includes those close to the new thresholds in case their circumastances change in the future.
The assets test free area – the amount of assets above which allowances are not paid and pensions are reduced – will increase to
- $250,000 for a single homeowner (up from $209,000)
- $375,000 for a homeowner couple (up from $296,500)
- $450,000 for a single non-homeowner (up from $360,500)
- $575,000 for a non-homeowner couple (up from $448,000)
Above these amounts, Pensioners will lose $3 per fortnight Centrelink benefits for every $1000 in assets. This is called the taper rate, which is currently $1-50 per fortnight per $1000 of assets.
The effect of this increased taper rate is that the upper threshold above which pensions are no longer paid are reduced to
- $542,500 for a single homeowner (down from $793,750)
- $816,000 for a homeowner couple (down from $1,178,500)
- $742,500 for a single non-homeowner (down from $945,250)
- $1,016,000 for a non-homeowner couple (down from $1,330,000)
It is expected that 166,000 will receive an increase to the age pension, however 313,000 will be worse off, with 88,000 losing their pension altogether.
Its important to know that those that lose their Age Pension as a result of these measures will qualify for a Commonwealth Seniors Health Care Card, means test free, for life.
Other payments affected are Carer Payment, Disability Support Pension, Widow B Pension, and Wife Pension. If you lose these benefits and you are below Age Pension Age, you will retain a Low Income Health Care Card, means test free, for life.
If you think you will be affected by these changes it is important that you seek advice now from a Certified Financial Planner to explore what strategies you can use to minimise any reduction in your benefits.
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This article is general in nature only and does not constitute or convey specific or professional advice. Formal advice tailored to your specific circumstances should be sought before acting in any of the areas discussed