subscribe to our newsletter
Super changes tipped to hit 300,000 pensioners

Super changes tipped to hit 300,000 pensioners

Reporter
05 December 2016

Up to 300,000 retirees on a part-pension could be negatively affected by changes to the superannuation bill passed by the Coalition government last week, according to one fund manager.

Plato Investment Management says changes to the asset test rules mean less retirees will have access to a partial aged pension, as the upper limit for assets held by both home-owning individuals and couples will see reductions of $250,000 and $350,000 respectively.

Additionally, a doubling in the taper rate from a fortnightly reduction in pension payments of $1.50 to $3 for every $1,000 above the asset test amount – equating to $78 a year for every additional $1,000  effectively means “the new taper rate assumes pensioner assets earn 7.8 per cent per annum”.

“In our low-return world, we believe most asset classes will likely struggle to deliver 7.8 per cent per annum in returns, especially the conservative asset classes such as cash and fixed income favoured by many in the pension phase,” Plato managing director Don Hamson said.

This reflects remarks made previously by the Association of Superannuation Funds Australia (ASFA) that changes to the taper rate and asset threshold will have an impact on how retirees plan for their retirement.

“While some individuals with relatively low retirement savings will receive a small increase in their age pension after 1 January 2017, others will receive a lower age pension, or none at all, until they run down their superannuation,” ASFA chief executive Martin Fahy said.

“As a result, many individuals and couples will require higher levels of private savings for a comfortable standard of living in retirement.”

Super changes tipped to hit 300,000 pensioners
smsfadviser logo
join the discussion

Do your clients plan to add additional members to their SMSF if the new six member limit is passed as law?

SUBSCRIBE TO THE
SMSF ADVISER BULLETIN

Get the latest news and opinions delivered to your inbox each morning

In this month's issue:

  • Time wrap
  • The tech bull run
  • From hobby to passion
  • Golden Years
  • An untimely reminder
  • Why change is so difficult
  • Key Strategies for equalising super