Financial planners prepare Warrnambool residents for pension changes
Asset test changes will affect pensioners from January 1st 2017 and income test changes have already come into effect on January 1st 2016. Luckily your local financial planners at Sinclair Wilson’s Warrnambool office are here to explain the changes and make sure that you are not only informed, but prepared.
So what’s changing and how will it affect the aged pension?
Changes to Income Tests from January 1st 2016:
The income test deductible amount for most defined benefit income streams will be capped at 10%.
Defined benefit income streams are less common now than in generations past but in some cases this change could have a dramatic impact on a person’s age pension entitlement.
Those age pensioners impacted by this change have probably already received correspondence from their provider about the changes and will have already seen their age pension entitlements change as a result.
If you’re uncertain if you’ve been impacted by this change, or would like to explore all your options, you may benefit from talking to your Income Stream provider or one of our financial planners at Sinclair Wilson in Warrnambool.
Changes to Asset Tests from January 1st 2017:
The minimum asset test thresholds are being increased and the maximum thresholds are being reduced, some might say, quite substantially (see the tables below for details). The result of these threshold changes are that you can hold more assets before they begin to affect your pension, but, you can hold much less assets before they prevent you from being eligible for a pension altogether.
For those who fall between the minimum and maximum thresholds; the taper rate, the rate at which your fortnightly pension is reduced, will double from $1.50 to $3 per $1000 over the minimum asset test threshold.
e.g. If you’re a single homeowner with $360,000 in other assets:
Under the current settings:
- You’re $158,000 over the $202,000 minimum threshold.
- You’re having $1.50 deducted from your fortnightly pension for each $1000 you’re over the minimum threshold.
- You’re fortnightly pension is being reduced by $237.
Under the proposed settings:
- You’re $110,000 over the $250,000 minimum threshold.
- You’re having $3 deducted from your fortnightly pension for each $1000 you’re over the minimum threshold.
- You’re fortnightly pension is being reduced by $330.
You’ll be $93 per fortnight worse off.
Homeowner:
| Minimum thresholds | Maximum thresholds | |||
|---|---|---|---|---|
| Current until March 2016 |
Proposed from January 2017 |
Current until March 2016 |
Proposed from January 2017 |
|
| Single | $202,000 | $250,000 | $783,500 | $547,000 |
| Couple | $286,500 | $375,000 | $1,163,000 | $823,000 |
Non-Homeowner:
| Minimum thresholds | Maximum thresholds | |||
|---|---|---|---|---|
| Current until March 2016 |
Proposed from January 2017 |
Current until March 2016 |
Proposed from January 2017 |
|
| Single | $348,500 | $450,000 | $932,500 | $527,500 |
| Couple | $433,000 | $575,000 | $1,596,500 | $1,023,000 |
The Assets Test changes were announced in the 2015 Federal Budget, but have not yet taken affect. With such long lead times on such changes, it is important to speak to financial planners who know what’s coming and how it affects you.
At Sinclair Wilson in Warrnambool there are financial planners, like me, who specialise in aged pensions. We can help you understand how these changes affect you and develop a personalised plan to guide you to the best possible outcome.