Changes to the Assets Test for Age Pensions came into effect on January 1 – Ensure Centrelink have your correct numbers
Last years Federal Budget included a number of significant changes to means testing for the Centrelink age pension, these changes came into effect 1 January 2017.
Over the last couple of months Centrelink began communicating with those that will be affected. As a consequence of this communication we have had a number of clients report that their asset numbers seem to be inflated, which if left uncorrected will result in a lower pension entitlement under the new rules.
Should this occur, it is best to assume:
- that you will receive less in pension benefits until the true value of your asset pool is established
- that a refund will not be provided.
What you need to do
You must ensure Centrelink has the correct information with regard to your current asset portfolio.
If you have a My Gov account you can check the asset values Centrelink currently hold against your records by visiting https://www.humanservices.gov.au/customer/services/centrelink/age-pension
Alternatively if you are at all concerned about how the changes to the age pension will affect you, please contact a Finsec Partners adviser to discuss in more detail.
Information regarding the new legislation is summarised below.
Who is affected by the changes to the assets test for Age Pensions?
Australians over the age of 65, currently receiving a part or full age pension, will incur a $3 reduction per fortnight (currently $1.50 per fortnight) to their pension for every $1000 in assets owned above the ‘assets test free’ threshold.
The new thresholds are dependent on whether you are single or a couple and rent or own your own home. The below table outlines the new asset threshold limits (the number at which the pension starts reducing) for each scenario.
What assets are included in the threshold?
The market value of most assets are considered when calculating your age pension. This includes but is not limited to:
- Property (excluding your home)
- Motor vehicles, boats and caravans
- Financial investments
- Superannuation if you’re over age pension age
- Business assets
- Household contents and personal effects
Please note: there are different rules for contributions paid to live in a retirement village. Some farm related assets, funeral plans and carer payments may also be exempt.