25 Sep Important changes to the age pension in 2017
Important changes to the age pension in 2017
From 1 January 2017, there are some important age pension changes that could impact your benefits and warrant some pre-emptive action.
The lower asset threshold that determines your eligibility for the full age pension will increase. This threshold varies, depending on your relationship status and whether or not you own a home. It is also indexed periodically by the Government. To find the current thresholds visit humanservices.gov.au.
The age pension payable will also be reduced by $3, for every $1,000 you hold in assets above this threshold. The current reduction amount, known as the â€˜taper rateâ€™, is $1.50 per $1,000.
How will these changes impact your entitlements?
Currently, your age pension entitlements are assessed under both an incomeÂ and assets test and the impact of these assets test changes will depend on a range of factors. Generally speaking, you will:
- not be impacted if your assessable assets are well below the current and 2017 thresholds, at which the full pension entitlement starts to reduce;
- receive higher payments if you only have assets which are not classified as â€˜financial investmentsâ€™, and your age pension entitlement is determined by the assets test;
- receive lower payments if your financial investments are above the current threshold whereby the full pension starts to reduce, but below the amount that will apply from 1 January 2017; and
- lose your entitlement altogether if your assets exceed the threshold from 1 July 2017 where the age pension payments will cease completely.
The thresholds apply exclusively to home – owning couples and the dollar values would be different if you are single and/or not a home-owner. The best way to determine how you may be affected is to make an appointment with your adviser to review your financial position. The earlier you do this, the more you may be able to take advantage of strategies that could retain your current entitlement, increase your entitlement and improve your overall financial position.
Strategies that could help you
Strategies you may benefit from could include:
- improving or upgrading your home
- pre-paying your funeral expenses, and
- gifting money within the permitted limits to relatives or others.
But, great care should be taken when considering strategies that could dramatically lower your assessableÂ assets, as they may be short-sighted. For example, if the income test deeming rates (which are at historically low levels) were to rise significantly the benefits of reducing your assessable assets, could be reduced considerably. To find out how the changes could impact you and discuss strategies that may assist you, contact your Adviser.
Source: NAB Group