In recent years there has been a number of changes made to the social security pension rules with another major change occurring on the 1st January, 2017. You may have already started receiving information from Centrelink around these respective changes, however not be aware of how this will impact you on an individual basis.
There will be two changes to the social security pension Assets Test on the 1st January, 2017:
• An increase to the Assets test thresholds, and
• Doubling of the taper rate from $1.50 to $3 per $1,000 of assets that exceed this threshold.
The first of the changes relate to the increase in the Assets Test threshold allowing pensioners to hold more assets before their pension starts to reduce under the Assets Test. For some pensioners with lower asset levels, this may lead to an increase in their Age Pension entitlement.
The second change relates to the increase in the taper rate. This change will reduce Age Pension entitlements at a faster rate once assessable assets exceed the new Assets Test thresholds. As an example a pensioner couple (homeowners) will now lose their pension entitlement completely if they exceed $816,000 worth of assessable assets.
If you fit into this category and are looking to maintain your Age Pension entitlements, then you may wish to consider some options such as:
• Increased drawdowns from income streams or savings
• Asset reduction strategies, such as gifting
• Investing in a lifetime annuity
• Purchasing a funeral bond
An important point to note is that if you lose your Age Pension completely then you will also lose any grandfathering that may have applied to your older style income streams. You will also lose your ‘Pensioner Concession Card’, however you will automatically be moved over to a ‘Commonwealth Seniors Health Care Card’.
We at Cooper Wealth Management are here to help you negotiate this important time. So if you would like an individual consultation on how these changes may impact on your Age Pension entitlements please contact us to arrange a free initial consultation.