Couple Pension Changes

Proposed Pension Changes

Proposed Changes to Pension Entitlements
From 1 January 2017, changes will be made to the way the Government calculates how
much pension you are entitled to. Many pensioners will receive less and some may even
lose their Government pension altogether.

If you currently receive a part pension or you plan to retire soon, it’s important that you
understand how the changes could affect you. For some, these changes will create a
shortfall in income and may have a significant impact on their standard of living.

What is the Asset Test and how will it change?
When determining the amount of Government Age Pension you receive, two tests are applied. One looks at your total income (Income Test) and the other at the level of assets you own (Asset Test). The test that results in the lower rate of payment is used.

From 1 January 2017, the level of assets that you can own and still receive the full pension will increase. This will mean that some pensioners who currently receive a part pension because their assets exceed the current thresholds will benefit from an increase in payment.

Remember that the value of your family home is excluded when we talk about total assets.

Increase in the Asset Test Thresholds

Family Situation Current Threshold Threshold from January 2017
Single Homeowner $205,500 $250,000
Single Non-homeowner $354,500 $450,000
Couple Homeowner $291,500 $375,000
Couple Non-homeowner $440,500 $575,000


Increase of the Asset Test taper rate from $1.50 to $3.00
The assets test taper rate is used to determine a retiree’s age pension entitlement under the assets test. Currently a person’s age pension entitlement under the assets test is reduced by $1.50 for every $1,000 of assets above the assets test threshold (which is increased with effect on 1 January 2017 as per the above table).

The proposed measure will increase the taper rate to $3.00, effectively reducing the amount of assets a person can have before they are no longer entitled to a part age pension entitlement.

The increase to the taper rate means many pensioners will receive less and some may even
lose their Government pension altogether.

A person is no longer entitled to a part age pension when their assets exceed these levels

Family Situation Currently From January 2017
Single Homeowner $775,500 $547,000
Single Non-homeowner $922,000 $747,000
Couple Homeowner $1,151,500 $823,000
Couple Non-homeowner $1,298,000 $1,023,000

Is there anything I can do to reduce the impact of the future changes?

Reducing your assets between now and January 1 2017 may help to alleviate the impact of the future changes to the asset test. However, it is important that this is considered in light of your entire situation and overall goals and objectives.

Options that may be considered include:
– Gifting within the allowable limits
– Purchasing a funeral bond within the allowable limits
– Superannuation fund contributions on behalf of a spouse who is below pension age
– Bringing forward capital expenditure such as holidays and home renovations

We are currently discussing the impact of the changes with our existing clients.

What should I do now?
If you have concerns about losing all or part of your age pension entitlement and wish to find a way to replace that lost income, I’m happy to help you design a customised plan for your specific circumstances. Your customised plan will identify all potential options available to you and show you how to maximise your income in retirement given the government’s age pension changes.

That way, you can make a decision about your future with all of the information at hand without wasting time or money. There is no cost to this and no obligation of any kind.

Why do I do this?
I offer this free service because I am a financial planner and I specialise in maximising retirement income of pensioners and baby boomers. If you find value in the help I give you, you might want me to implement a plan to maximise your income in retirement.

No obligation
With that said, please understand that I promise not to pressure you or pester you in any way at all.
In fact, if you feel in designing your plan that I’ve wasted even a second of your time, let me know and I will immediately send $100 to a charity of your choice to compensate for your time.

Who can I help?
Now wait a minute, before you go any further, you need to know that I can’t help everybody. I can only be of benefit to people who are of retirement age (or pre-retirement age) who will lose part or all of their age pension as a result of the government’s changes taking effect on January 1, 2017.

The next step
If you want to schedule a financial planning session with me to design your customised plan, simply email me back answering these questions in the form below about your circumstances and what you are looking to accomplish.

Once I have that information, I will do some research for you and will set up a time to go over it together.

An email will be generated and sent to our office. We will be in contact with you shortly to set up a time to go over it together.

If you would have any other questions, contact our office on 1300 873 455 or email me directly at [email protected]

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

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