Social Services Minister Scott Morrison has moved to limit eligibility for the pension by changing the assets test, according to ABC reports.
The government is looking to reduce the threshold at which the part pension cuts out – a move that is sure to hit wealthy retirees and SMSF trustees.
Currently, an Australian couple can own $1.15 million in assets in addition to their family home and qualify for the part pension.
Under the changes, the threshold will be reduced to $823,000, which will result in tens of thousands of couples no longer qualifying for the benefit.
The family home remains excluded from the assets test and people currently eligible for the Commonwealth Seniors Health Card or Health Care Card will continue to be eligible, according to National Seniors Australia.
The beneficiaries from the changes include more than 170,000 part pensioners with modest assets who will benefit from an average increase of $30 a fortnight to their pension, including 50,000 part pensioners who will now qualify for a full pension, National Seniors said.
“A significant number of older Australians will be adversely impacted, so it is critical that clear information and access to advice are a priority so they can consider their position and the adjustments they may need to undertake,” said National Seniors chief executive Michael O’Neill.
“These changes will cause anxiety, particularly for those older Australians who have been in receipt of a part pension for an extended period of time.”
As our aged population grows, paying “Age Pension” is going to get expensive on all subsequten budgets. Hence every current and future governments – will find techniques to pay late and pay less.
The current changes would motivate us to be either self funded or “spend all” before you reach pensionable age.
I would be very pleased if both political parties stuck to principle and left superannuation tax arrangements intact and tightened age pension handouts further eg by a $1 for $1 income test to solve their expenditure problems. I would hate to be taxed further to support people better off than myself.
But I suspect that is a vain hope and they will both turn around and attack super after the next election at which stage a lot of money will head elsewhere into different legal structures.
Dr Terry Dwyer
Abbott says he is targeting “liquid asset millionaires”. However the draconian new proposed taper test targets COUPLES with assets in the range $375k up to the current $1.15M cutout. Those with more than $1.15M will be unaffected by the proposed changes to the assets test. Does Abbott know what he is doing? Fortunately it is 2 years till proposed implementation and reconsider once the analysis is done and understood by the wider public.
Does Morrison understand arithmetic or has he been badly advised or is he simply flying a kite between now and June 2017? The proposed new taper test ($3 p.f. x 26) means a $78 per year reduction in pension for every $1,000 in assets above the proposed new $375,000 assets threshhold. Every $1,000 invested would have to earn $7.8% just to make up for the loss in pension entitlement. On an income basis that would be a 100% marginal tax rate on the additional earning earnings. Of course earnings on assets are likely to average less than 7.8% so the marginal tax rate would actually well exceed 100%. So a couple with assets $475k will likely be worse of than a couple with $375k who would still qualify for the full pension! (unless the couple with the $475k can earn >7.8% or draw down their capital which is not sustainable). Has the Govt thought this through. Please someone tell me that I am wrong>