An estimated $39.5 billion was spent on age pension entitlements in 2013/2014 benefitting 2.4 million Australians, an amount the government does not see as sustainable.
Announced in the Liberal government’s May 2015 budget are a number of proposed changes to age pension eligibility based on the value of assets held outside the family home. Approximately 91,000 wealthier retirees will lose access to the pension as a result of the more stringent asset test thresholds and taper rates, while 170,000 will receive a pension increase. It is estimated 235,000 will have their pensions reduced.
What’s proposed (from 1 January 2017):
- The value of assets you can have in addition to your family home to qualify for a full pension would increase as follows:
|Home owners||Non-home owners|
- The maximum value of assets retired couples can hold outside of the family home and still qualify for a part pension would reduce as follows:
|Home owners||Non home owners|
- The taper rate which is the fortnightly amount, by which a person’s pension entitlement decreases under the assets test, will increase from $1.50 to $3 per $1,000 of assets over the lower threshold.
- Couples who own their own home and have additional assets of less than $451,500 will get a higher pension.
- Couples who don’t own their own home and have assets up to $699,000 will be better off.
- Singles who own their own home and have additional assets of less than $289,500 will be better off.
- Singles who don’t own their own home and who have less than $537,000 will be better off.
Other important changes to Centrelink eligibility:
- From 1st January 2015, non-taxable superannuation income will be included in the Commonwealth Seniors Health Card (CSHC). This is subject to grandfathering provisions pre 1 January 2015 however the new test will be applied to new account based pensions purchases after this date.
- The current qualification age for the Age Pension is 65 years, increasing to 67 years by 1 July 2023. This proposed measure increases the qualifying age from 67 to 70 years.
- On 1 July 2025 the qualifying age will increase from 67 years by six months every two years until 1 July 2035 when the Age Pension qualifying age will reach 70.
o This change applies to people born after 30 June 1958 who claim Age Pension from 1 July 2025.
o From 1 September 2017 all pension payments and pension equivalent payments will be indexed by the Consumer Price Index only, which will make indexation arrangements consistent across all social security payments. (proposed).
- From 1 July 2017 the indexation of some of the social security means test settings will be fixed for a period of three years. These settings are the pension income and assets test free areas for social security pension payments and equivalent Veterans’ Affairs pension payments.