There are changes to the asset test used to calculate pensions from 1 January 2017. Retirement planners should take note of these changes as they may impact pension payments.
These changes are designed to reduce the pension payable to pensioners with substantial assets and redistribute the pension to pensioners with minimal assets.
The pensions that are affected include:
- Age pension
- Carer payment
- Disability Support Pension
- Widow B Pension
- Wife Pension
Please note that the following is for information purposes only because numerous clients have asked us. We suggest you contact your financial planner for more detail or contact us, and we can refer you to one who can assist you.
The assets test-free area is increasing. This is the threshold for pensioners with minimal assets. If your assets are below the following amounts, you may qualify for the full pension:
- $250,000 for a single homeowner (up from $209,000)
- $375,000 for a homeowner couple (up from $296,500)
- $450,000 for a single non-homeowner (up from $360,500)
- $575,000 for a non-homeowner couple (up from $448,000)
The family home is still exempt from the assets test.
Pension payments start reducing when assets are more than these amounts. Previously the pension was reduced by $1.50 for each $1,000.00 of assets above these thresholds. From 1 January 2017, the reduction is $3.00 for each $1,000.00 of assets above these thresholds. This reduced pension is referred to as a part pension.
These part pensions are now cancelled from 1 January 2017 when assets exceed:
- $542,500 for a single homeowner (down from $793,750)
- $816,000 for a homeowner couple (down from $1,178,500)
- $742,500 for a single non-homeowner (down from $945,250)
- $1,016,000 for a non-homeowner couple (down from $1,330,000)
Feel free to contact us if you wish to discuss.
Kreston Stanley Williamson Team
*Correct as of January 2017
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.