Budget 2015: Superannuation & Pensions
The Government kept its promise to leave superannuation as it, however 91,000 older Australians will no longer qualify for part-pensions.
Date of effect: From 1 January 2017
Approximately 91,000 part pensioners will no longer qualify for the part pension, following the Government's reaffirmation that it will increase the asset test thresholds and withdrawal rate at which pensions are reduced once the threshold is exceeded. The taper rate will revert back to the pre 2007 level of $3 (from $1.50).
Maximum value of assets changes
The value of assets pensioners can have in addition to the family home in order to qualify for a full pension will increase from $202,000 to $250,000 for single home owners and from $286,500 to $375,000 for couple home owners. All couples who own their own home with additional assets of less than $451,500 will get a higher pension
Pensioners who lose pension entitlement on 1 January 2017 as a result of these changes will automatically be issued with a Commonwealth Seniors Health Card or a Health Care Card for those under Age Pension age.
Pensioners with modest assets may see an increase
For pensioners with modest assets, the change will increase their pensions.
Pensioners who do not own their own home will also benefit by an increase in their threshold to $200,000 more than homeowner pensioners. This increases the gap between homeowners and non-homeowners thresholds by more than a third, recognising their higher living costs.
Couples who don't own their own home and have asset holdings up to $699,000 in January 2017 will be better off. For singles the maximum threshold point, below which pensioners will be better off, will be $289,500 for home owners and $537,000 for non-homeowners
Date of effect: From 1 July 2015
The Government is changing rules for terminally ill people to access their superannuation. Currently, patients must have two medical practitioners (including a specialist) certify that they are likely to die within 1 year to gain unrestricted tax free access to their superannuation balance.
The Government will change this period to 2 years.
Date of effect: From 1 January 2016
A larger proportion of a superannuant's defined benefit income will be taken into account when applying the relevant social security income test, capping the proportion of income that can be excluded at 10%. A defined benefit income stream is a pension paid from a public sector or other corporate defined benefit superannuation fund where the pension paid generally reflects years of service and the final salary of the beneficiary.
Under current arrangements, some defined benefit superannuants are able to have a large proportion of their super income excluded from the pension income test. Recipients of Veterans' Affairs pensions and/or defined benefit income streams paid by military superannuation funds are exempt from this measure.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.