On the 1st of July the age pension asset and income thresholds increased, in addition to the increase in these thresholds the levels at which the deeming rates of interest are applied also increased.
Two weeks after this date the government announced that the deeming interest rates would be reduced. The lower rate dropping from 1.75% to 1% and higher rate falling from 3.25% to 3%. This drop in deemed interest rates will be effective from the 1st of July but will not be adjusted for age pensioners paid under the income test until the end of September. Any increase in the age pension will be back dated to the 1st of July.
The following tables provide an overview of the changes as well as upper limits from an asset’s and income perspective:
ASSETS TEST
Assets test threshold for full pension
| For homeowner’s assets must be less than: | For non-homeowner’s assets must be less than: | |
| Single | $263,250 | $473,750 |
| Couple combined | $394,500 | $605,000 |
Assets test upper limits:
| For homeowner’s part pension assets must be less than: |
For non-homeowner’s part pension assets must be less than: |
|
| Single | $572,000 | $782,500 |
| Couple combined | $860,000 | $1,070,500 |
INCOME TEST
Single:
|
Fortnightly income |
up to $174 pf |
Full payment |
|
Reduction in payment |
over $174 pf |
50 cents for each dollar |
|
Upper limit |
$2,026.40 pf |
No entitlement |
Couple combined:
|
Fortnightly income |
up to $308 pf |
Full payment |
|
Reduction in payment |
over $308 pf |
50 cents for each dollar |
|
Upper Limit |
$3,100.40 pf |
No entitlement |
For those retirees receiving a part age pension, the benefits of the increase in the thresholds are seen immediately with an increase in the first age pension payment they would receive in July.
However, for the retiree who is not in receipt of an age pension it is not as simple.
The first step for this retiree is to review their current assets or income position against the new upper thresholds, if they are under the new thresholds now is the time to lodge an application for the age pension.
If they are still just above the thresholds, by only a few thousand dollars now is the time to talk to an adviser about the benefits of a gift of up to $10,000 or the purchase of a funeral bond, up to the value of $13.250. Both strategies will reduce their assets and possibly their income under either the income or assets test.
I would like to point out that the minimum pension that can be paid is not $1 per fortnight but $36.70 per fortnight for a single age pensioner or $55.40 per fortnight combined for a couple. So, the effort in applying and talking to your financial adviser can certainly be worth it.