The government’s changes to the Age Pension could affect your ability to plan for a comfortable retirement.
Recent reports1 suggest that more than 300,000 Age Pensioners will have at least part of their pension cut, with just under 100,000 of these people losing all Age Pension entitlements, taking effect from January 2017.
The Age Pension provides income support and access to a range of concessions for eligible older Australians2. Retirees who are currently aged 65 or over, and who satisfy income and assets tests and other requirements, can receive a full or part pension.
Recently, the government introduced changes to the Age Pension’s assets test thresholds which will take effect from 1 January 2017. The thresholds indicate the value of the assets you can own (excluding your home) before you lose your eligibility for the Age Pension.
You can find more details regarding the assets test here.
From 1 January 2017, some people will benefit and others will be worse off.
Around 50,000 Aussies are expected to be better off under the government’s changes and receive the full pension. Approximately 120,000 part-pensioners are likely to add around $30 per fortnight to their wallet.
People who do lose their pensions in 2017 will automatically be entitled to receive a Commonwealth senior’s health card or a low-income health card. These cards will provide access to Medicare bulk billing and less expensive pharmaceuticals.
From 1 January 2017, around 91,000 part-pensioners will lose their Age Pension and about 235,000part-pensioners’ payments will be reduced.
Depending on how these changes will impact you, there could be a number of things for you to consider, including:
Generally, it’s a good prompt to review your finances. Experts say single people need an annual amount of $42,569—and couples $58,444—for a comfortable retirement. Use our What’s my number calculator to work out how far your money will go in retirement.
Stay tuned for further updates closer to when these changes are due to come in. If you would like more information now, call us on 1300 346 837 or contact Centrelink to find out how your Age Pension will be affected. If you’d like financial advice, get in touch with one of our advisers in your local area.
Assumptions as at 1 January 2017:
For single homeowners
For couple homeowners
What you need to know
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