Aged pension changes hit hard

Finance experts warn most aged pensioners will be impacted by changes being introduced on January 1.Finance experts have warned most aged pensioners will be impacted by changes being introduced on January 1.
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The Federal Government will introduce two changes to the aged pension means test which calculates income and assets excluding the family home.

From the New Year, the lower threshold assets test would increase by $3 per fortnight for every $1000 over the threshold, according to Cape Financial Planning expert Cindell Baker.

“This has the effect of reducing the cut-off limit where an age pension is no longer payable,” she said.

Ms Baker said some people received part payments or none at all, and people with higher levels of assets could see a reduction or cancellation of the aged pension as a result of the changes to the taper rate.

“It is not all bad news some older Australian will actually be better off under the new rules,” she said.

“According to Centrelink 90 per cent of pensioners would not be affected or would receive an increase in their pension.”

She suggested strategies to help reduce assessable assets for pension purposes which included improving or purchasing a more expensive home or booking a holiday before January 1.

Other strategies included contributing to superannuation in the name of a spouse under the age pension age or gifting to someone within allowable limits.

The Department of Human Services general manager Hank Jongen saidthey had written to around 700,000 pensioners who hold a significant value of assets to advise how they may be affected by the changes.

Mr Jongen said if a pensioner’s payment rate reduces or stops as a result of the changes, they would receive another letter from the department in December with further information.

ADepartment of Social Services spokesperson said each year, a growing number of people retired, and many received the age pension for far longer than in the past.

“As a result, there will be a much smaller proportion of people paying taxes for a larger proportion of people receiving the pension,” they said.

“The age pension is there to help those who can’t fully support themselves, it’s not intended to support those with higher levels of wealth to maintain their capital base.

“These changes will make the pension system fairer andbetter targeted.”

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