The asset thresholds and taper rates that apply to the Age Pension asset test will change on the 1st January 2017 and will affect all pensioners who are asset tested or become asset tested.
Whilst the asset free area is increasing, the upper threshold reduces from that date meaning fewer people will qualify for a part Age Pension. The taper rate will also increase to $3 for every $1,000 by which the asset free threshold is exceeded (up from $1.50 per $1,000), meaning the Age Pension payment will reduce more quickly.
The measure will also affect means testing for aged care fees, because your income including pensions is used to calculate aged care fees and government subsidies.
Thresholds comparison
* | Current Thresholds | Thresholds from 1 Jan-17 | ||
Asset free | Pension cut-off | Asset free | Pension cut-off | |
Homeowner | ||||
Single | $209,000 | $791,750 | $250,000 | $541,250 |
Couple (combined) | $296,500 | $1,175,000 | $375,000 | $814,250 |
Non-homeowner | ||||
Single | $360,500 | $943,250 | $450,000 | $741,250 |
Couple (combined) | $448,000 | $1,326,500 | $575,000 | $1,014,250 |
*Thresholds are subject to indexation and published quarterly.
People who are no longer eligible for the Age Pension due to the changes will automatically receive a Health Care card and the Commonwealth Seniors Health Care (CSHC) card; and will be exempt indefinitely from the usual income test for those cards.
Can you manage your assets to retain the pension? Generally you can give away money and other assets to any value at any time you choose. However you should be aware of gifting rules and how they might affect your Age Pension assessment. That means that if you’re already receiving the Age Pension or planning to claim the Age Pension within the next five years you will need to disclose the assets that you have given away.
Gifting assets above the prescribed limits may affect the benefit payment you receive. The maximum gifting amount for singles and couples combined is $10,000 in any financial year with a maximum of $30,000 over a rolling 5 financial years. That means to avoid your pension payment being reduced under the deprivation rules you must not give away more than $10,000 in any one year or $30,000 over a rolling five year period.
You should carefully consider your financial position and consult your financial advisor about ways to manage the changes and maximise your income before making a decision to gift your assets.
Media comment
Genene Wilson
Senior Financial Planner
Omniwealth
p 02 9112 4332
m 0403 026 800
e genene.wilson@omniwealth.com.au
w www.omniwealth.com.au