The asset test changes for Centrelink Aged Pension payments will take effect on 1 January 2017. Despite these changes first being announced in the 2015 Federal Budget, I am certain that are many people who are unaware of the changes and what it will mean to them.
If you are over 65 and in receipt of a full or part Aged Pension, then for every $1,000 owned above the assets test free amount your pension will be reduced by $3 (previously this was reduced by $1.50 for every $1,000).
The thresholds which apply are different for singles, couples, and whether you own your own home or not (the actual value of the home is excluded from the below). The changes are illustrated in the table below:
More people will now qualify for the full pension, however many more will no longer qualify for a part pension and must fully self-fund their retirement. This will obviously deplete their assets more quickly.
It also serves as a warning sign for people of all ages who are still working – the government is clamping down on the Centrelink Aged Pension and will continue to do so. You must try and position yourself so that you can fund your own retirement. Having Cornish Wealth Management review your superannuation is a good start.
What assets are included?
The market value of most of your assets are taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:
- Property (excluding your home),
- Household contents,
- Motor vehicles, motorbike, boats & caravans,
- Financial investments & any business assets and
- Superannuation if you’re over Age Pension age.
Commonwealth Seniors Health Card
The Commonwealth Seniors Health Card gives older Australians access to cheaper prescription medicines and other government concessions. All the pensioners who will lose their Age Pension entitlement on 1 January 2017 due to the new asset test limits will be issued with a Commonwealth Seniors Health Card which will be exempt from the usual income test requirements.