1 July brings changes to family payments and to the Asset and Income tests used to calculate Age Pension, Disability Support Pension and Carer Payment. The changes affect how the pension is calculated, and will see almost 1 million pensioners get more pension while some not currently receiving a pension will become eligible. The maximum pension payment is unchanged, so those receiving the full pension won’t get a pay rise until payments are indexed on 20 September.
Here’s some of the key changes.
*It’s important to remember that Age Pension is calculated under an Asset Test and an Income Test, the test which determines the lowest amount of pension is the one that is applied.
Your asset threshold is based on your relationship status (Single or Couple) and whether you are classified as a Homeowner or Non-Homeowner.
For Single Homeowners the asset test threshold is increasing from $270,500 to $280,000 and for Non-Homeowners it will increase from $487,000 to $504,500.
For Couple Homeowners the asset test threshold will go from $405,000 to $419,000 while for non-homeowners it will jump from $621,500 to $643,500
Under the asset test your pension is reduced by $3 per fortnight for every $1,000 of assets above the threshold so the changes mean that singles could see an increase in their pension of up to $52.50 per fortnight while couples could receive a boost of $66 per fortnight (combined).
The point at which you are not eligible for an Age Pension under the asset test has increased in line with the increase to the thresholds. Single Homeowners will have a cut-off point of $609,250 while for non-homeowners it will be $833,750. Couple homeowners will have a cut-off point of $915,500 and for non-homeowners $1,140,000.
The income threshold for Singles will increase from $180 to $190 per fortnight, for couples it will rise from $320 to $336 per fortnight.
Under the Income Test, once your income goes above the threshold your pension reduces by 50c per dollar so the changes mean that singles could get an additional $5 per fortnight and for couples $8 per fortnight
The point at which you are not eligible for an Age Pension under the income test has increased by the same amount, for Singles the cut off point for pension will be $2,165.20 and for couples it is $3,313.60 per fortnight.
Changes will also be made to the deeming thresholds with the lower deeming threshold increasing to $56,400 for Singles and $93,600 for Couples. The deeming rates of 0.25% on the lower amount and 2.25% on the upper amount remain unchanged.
*higher cut off points apply to couples who are separated by illness.
Other changes include:
The Retirement Village and Granny Flat extra allowable amount will increase from $216,500 to $224,500
The asset assessment exemption for Special Disability Trusts will increase from $700,250 to $724,750 and the exemption for funeral investments will increase from $13,500 to $14,000.
With inflation pressure mounting on household budgets the indexation to pension rates in September can’t come fast enough for many.
*The information contained in this article is general in nature and does not take into account any person’s individual objectives, financial situation or needs. It is not intended to imply any recommendation, opinion or advice. You should seek advice from a qualified professional about your particular financial situation, needs and objectives.