As you may be aware, there will be changes to the Age and/or Service Pension assets test that will take effect from the 1st of January 2017. Evidently, a person’s Age and/or Service Pension entitlement is based on an assets and an income test. The test that results in the lesser amount of pension is the test that is applied.
In the 2015 budget the government announced a major change to the assets test which will take effect from the 1st of January 2017. The change will see an increase in the current lower thresholds – which will result in an increased pension entitlement for some people.
Currently – once a person’s assessable assets exceed the lower threshold, their age pension reduces by $1.50 per fortnight for every $1000 of assets above the threshold. From January 2017, this ‘taper rate’ will increase from $1.50 per fortnight to $3.00 per fortnight for every $1000 of assets above the threshold. This will result in a substantial number of pensioners suffering a reduction in their Age or Service Pension.
The following table provides a brief outline of the current lower and upper thresholds in comparison to the future thresholds after the 1st of January 2017.
*The future upper thresholds are based on the current rates of pension.
Depending on your personal circumstances if you believe your assets (excluding your home) are in excess of the current threshold as per this table – we strongly urge you to review your situation before the end of the year. There are certain things you can do that may help to preserve your pension entitlement.
If you would like to discuss your current and future Age or Service Pension position, and the options that may be available to you, please contact our office to make an appointment.