Changes to the assets test for Centrelink aged pensions from 1 January 2017

By Greg Major, Financial Advisor

As the end of the year is drawing rapidly to a close it may feel like the changes to the Asset Test for the Aged Pension have just been drawn up, however, these were announced in the 2015 Federal Budget.

As a trustee, you may be asking yourself, “what does this really mean for me – and what are my options?”

First, let’s look and see who these measures apply to

If you are over 65 and in receipt of a full or part Aged Pension, then you need to be aware that for every $1,000 owned above the assets test free amount your pension will be reduced by $3 (this was previously reduced by $1.50 for every $1,000).

The thresholds that apply are dependent on whether you are single or a couple, own your own home or not, and are either in receipt of a full or part pension.

For those on full pensions and are single homeowners, the pension starts reducing when assets reach $250,000. For couples it is when their assets reach $375,000.  For non-homeowners, it is $450,000 for a single and $575,000 for a couple.

For single homeowners on part pensions, the pension will be reduced to zero when assets reach $542,500 and for a couple it is when assets reach $816,000.

For non-homeowners who are single it is reduced to zero when assets reach $742,500 and for couples, when assets reach $1,016,000.

What assets are included in the threshold?

The market value of most of your assets is taken into account when calculating your Age Pension. This includes, but is not limited to, things such as:

• Property (excluding your home)
• Motor vehicles, boats and caravans
• Financial investment
• Superannuation if you’re over Age Pension age
• Business assets
• Household contents and personal effects