#everyoneneedsaplan to understand the new Age Pension Assets Test
Posted by Dean McKinnon
on 19 January 2017
Changes to the Age Pension Assets Test commenced 1 January 2017, and may reduce your Age Pension payment.
Following is a summary of the main points of the changes:
- Only the Assets Tests has been changed - there are no changes to the Income Test.
- Be aware that your Age Pension payment is determined by completing the Assets Test and the Income Test for your particular financial circumstances, and which ever Test provides the lowest payment will be applied.
- For example: if you were entitled to $400 per fortnight under the Income Test, but only $300 per fortnight under the Assets Test, you would only be paid $300 per fortnight (the lower of the two tests) - and vice-versa.
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The most significant change to the Assets Test is the increase to the Taper Rate.
- The Taper Rate is the term used to describe the rate at which the Age Pension payment decreases, depending on the value of your Assets.
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Before January 2017, under the Assets Test, the Age Pension payment would decrease by $1.50 per fortnight for every $1,000 above the Lower Asset Threshold.
- The Lower Asset Threshold is the value of your assets (not exempted - such as your own home) that will entitle you to the maximum pension payment.
- The Lower Asset Thresholds vary, depending if you are single or a couple, and if you own your own home.
- From 1 January 2017, under the Assets Test, the Ape Pesnion payment will decrease by $3.00 per fortnight for every $1,000 above the Lower Asset Threshold.
- However, the Lower Asset Thresholds has been increased - but not by much!
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Whether or not your will be affected by the changes will depend on your own particular financial circumstances, and I would strongly recommend you seek advice from a qualifed Financial Adviser - that is experienced in Social Security rules.
- If you don't have a Financial Adviser, please don't hesitate to contact my office and discuss your requirements.
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Following is an example of how the changes can affect an Age Pension payment:
- A couple receiving the Age Pension have $650,000 invested in assessable financial assets such as: term deposits; shares; managed funds; and Allocated Pension investment accounts (in addition to their family home).
- The couple's Income Test (primarily payments from their own Allocated Pension investment account) does not provide an Age Pension payment, and therefore only the Assets Test is applied to determine their Age Pension payment.
- Before January 2017 they received $20,596 per year in Age Pension payments, and from 1 January 2017 these payments were reduced by $7,663 ($295 per fortnight), to $12,932 per year.
Author:Dean McKinnon
Tags:RetirementSocial Security |
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