Important pension changes you need to know about starting July 1
- Replies 67
Gather 'round, members of the Seniors Discount Club, we've got some news that might just make your day! Christmas has come early for many Australian seniors, as significant pension changes are set to take effect from July 1.
We understand that pension changes can be a bit of a headache to keep track of, but never fear! We're here to break down the essential information so you can fully understand and benefit from these upcoming changes.
First off, we want to clarify that the pension rates themselves are not changing. So, what exactly is changing, you ask?
The thresholds that determine how much pension is paid have been adjusted for inflation, which means that many part-pensioners will now move to a full pension.
Additionally, some people who were previously ineligible for a pension (due to being over the assets test cut-off point) will now be eligible to start claiming a part pension and reap the benefits of all the concessions that come with it.
Here's the exciting part for our part-pensioner members: every part-pensioner couple can now expect a $50-a-week increase, while singles will receive an extra $35 a week.
Keep in mind that these benefits are exclusive to part pensioners, as they're due to a change in the taper rates and not an increase in the overall pension payable amount.
Next up in the changes, the assets test cut-off points are getting an uplift as well. The lower level, where the pension starts to reduce, has increased from $419,000 per couple and $280,000 for singles to $451,500 and $301,750, respectively.
The upper level, where eligibility for pension cuts off, moves from $954,000 for a homeowner couple to $986,500, and for singles, the numbers shift from $634,750 to $656,500.
These new figures also affect the amount pensioners can earn before their pension starts to reduce under the income test. For couples, the income test cut-off point rises from $336 a fortnight to $360 a fortnight, while for singles, it increases from $190 a fortnight to $204 a fortnight.
Deeming rates (which are used to work out income from your financial assets) will remain at favourable levels. For singles: 0.25% on the first $60,400 and 2.25% on the balance, and for couples: 0.25% on the first $100,200 and 2.25% on the balance.
The government had previously promised these rates would be frozen until July 1, 2024, but thresholds have been adjusted slightly in line with inflation. This change will result in a small benefit to all income-tested pensioners.
We know it can be a bit confusing when it comes to Centrelink and their tests, as they tend to use both the income test and the assets test. It's important to understand how they intersect: Centrelink will apply whichever test gives you the least pension.
However, some results can arise due to the disparity between the two tests. For example, if you're asset-tested, deeming is not relevant—it's only used for the income test.
In addition, the rule regarding the reduction of pension for a retired couple when their income exceeds $360 per fortnight does not apply to pensioners who are subject to an assets test.
Let us provide you with an example that might help. Imagine a couple named Jack and Jill. They own their own home and have a total of $600,000 in assets that can be assessed. Out of this amount, $550,000 consists of financial assets, which are subject to deeming. Since they fall under the assets test, their pension will increase from $530 per fortnight to $580 per fortnight for each individual after June 30.
As per the assets test, Jack and Jill can earn up to $36,000 annually without any negative impact on their pension. Under the proposed adjusted deeming rules, their $550,000 in financial assets would be considered as earning $10,000 per year. This means they have the flexibility to earn an additional $26,000 per year without affecting their pension.
If you click on this link, you'll have the option to download the new pension charts. Noel Whittaker, one of Australia's foremost financial commentators, also has a website where you can use the age pension calculator and the deeming calculator, both of which have been updated with the latest figures. Feel free to experiment with these tools and gain a better understanding of how the changes may affect you.
Now, we know we've thrown a lot of numbers and changes your way, but the bottom line is that these adjustments should mean more money and flexibility for many SDC members. As the rules change, it's essential to review your situation and consider whether making small adjustments could increase your cash flow.
Remember, knowledge is power. Remain informed of these crucial pension changes, and ensure that you make the most out of the increased benefits. Don't forget to share this news with your friends and loved ones so everyone is aware of these important changes coming from July 1.
We understand that pension changes can be a bit of a headache to keep track of, but never fear! We're here to break down the essential information so you can fully understand and benefit from these upcoming changes.
First off, we want to clarify that the pension rates themselves are not changing. So, what exactly is changing, you ask?
The thresholds that determine how much pension is paid have been adjusted for inflation, which means that many part-pensioners will now move to a full pension.
Additionally, some people who were previously ineligible for a pension (due to being over the assets test cut-off point) will now be eligible to start claiming a part pension and reap the benefits of all the concessions that come with it.
Every couple who receives a part pension could get an extra $50 a week in their pension, while singles could be entitled to an additional $35. Credit: Pexels/Kaboompics.
Here's the exciting part for our part-pensioner members: every part-pensioner couple can now expect a $50-a-week increase, while singles will receive an extra $35 a week.
Keep in mind that these benefits are exclusive to part pensioners, as they're due to a change in the taper rates and not an increase in the overall pension payable amount.
Next up in the changes, the assets test cut-off points are getting an uplift as well. The lower level, where the pension starts to reduce, has increased from $419,000 per couple and $280,000 for singles to $451,500 and $301,750, respectively.
The upper level, where eligibility for pension cuts off, moves from $954,000 for a homeowner couple to $986,500, and for singles, the numbers shift from $634,750 to $656,500.
These new figures also affect the amount pensioners can earn before their pension starts to reduce under the income test. For couples, the income test cut-off point rises from $336 a fortnight to $360 a fortnight, while for singles, it increases from $190 a fortnight to $204 a fortnight.
Deeming rates (which are used to work out income from your financial assets) will remain at favourable levels. For singles: 0.25% on the first $60,400 and 2.25% on the balance, and for couples: 0.25% on the first $100,200 and 2.25% on the balance.
The government had previously promised these rates would be frozen until July 1, 2024, but thresholds have been adjusted slightly in line with inflation. This change will result in a small benefit to all income-tested pensioners.
For couples, the threshold at which their pension begins to decrease from the set amount will rise from $336 per fortnight to $360. Credit: Pixabay/pasja1000.
We know it can be a bit confusing when it comes to Centrelink and their tests, as they tend to use both the income test and the assets test. It's important to understand how they intersect: Centrelink will apply whichever test gives you the least pension.
However, some results can arise due to the disparity between the two tests. For example, if you're asset-tested, deeming is not relevant—it's only used for the income test.
In addition, the rule regarding the reduction of pension for a retired couple when their income exceeds $360 per fortnight does not apply to pensioners who are subject to an assets test.
Let us provide you with an example that might help. Imagine a couple named Jack and Jill. They own their own home and have a total of $600,000 in assets that can be assessed. Out of this amount, $550,000 consists of financial assets, which are subject to deeming. Since they fall under the assets test, their pension will increase from $530 per fortnight to $580 per fortnight for each individual after June 30.
As per the assets test, Jack and Jill can earn up to $36,000 annually without any negative impact on their pension. Under the proposed adjusted deeming rules, their $550,000 in financial assets would be considered as earning $10,000 per year. This means they have the flexibility to earn an additional $26,000 per year without affecting their pension.
If you click on this link, you'll have the option to download the new pension charts. Noel Whittaker, one of Australia's foremost financial commentators, also has a website where you can use the age pension calculator and the deeming calculator, both of which have been updated with the latest figures. Feel free to experiment with these tools and gain a better understanding of how the changes may affect you.
Now, we know we've thrown a lot of numbers and changes your way, but the bottom line is that these adjustments should mean more money and flexibility for many SDC members. As the rules change, it's essential to review your situation and consider whether making small adjustments could increase your cash flow.
Remember, knowledge is power. Remain informed of these crucial pension changes, and ensure that you make the most out of the increased benefits. Don't forget to share this news with your friends and loved ones so everyone is aware of these important changes coming from July 1.
.png){kind=icon}
