Navigating age pension social security changes

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Changes to the aged care and social security rules from 1 January 2017 are expected to affect the pension payments of half a million Australians. Here we outline the key things you may need to know.

Age pension assets test

Changes to the age pension assets test thresholds are projected to affect more than 495,000 Australians, with around 170,000 people having their pension payment increased and 326,000 people losing all or part of their Age Pension payment1.

The key amendments to the test, one of the factors that helps to determine eligibility for the Age Pension payment, are:

  • The raising of the lower assets test threshold (meaning more Australians will now be eligible for the full Age Pension); and
  • The lowering of the upper threshold (meaning fewer Australians will now be able to access the part Age Pension).

The tables below outline the current and new thresholds.

Current thresholds

Status Lower threshold Upper threshold
Single homeowner $209,000 $793,750
Single non-homeowner $360,500 $945,250
Couple homeowner $296,500 $1,178,500
Couple non-homeowner $448,000 $1,330,000

Thresholds from 1 January 2017

Status Lower threshold Upper threshold
Single homeowner $250,000 $542,500
Single non-homeowner $450,000 $742,500
Couple homeowner $375,000 $816,000
Couple non-homeowner $575,000 $1,016,000

Aged care

There will also be changes to the way in which the former homes of aged care residents are assessed under the social security assets and income tests from 1 January 2017.

Currently aged care residents who rent out their former home and pay aged care accommodation costs periodically do not have their former home or rental income assessed under the social security assets or income tests. For people who enter into residential aged care from 1 January, however, that rental income will be assessable and generally, the former home will be an assessable asset, two years after they enter care.

What do these changes this mean for you?

If your pension payments are likely to be affected by the upcoming changes, speak to your financial adviser. Your adviser will assess your personal circumstances and work with you to find strategies to structure your assets and make the most of your pension and aged care entitlements under the new rules.

Source:
1. Parliament of Australia Budget Review 2015-16

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