In its 2015/16 Budget, the Government announced it would not proceed with the freezing of indexation to the income and deeming thresholds, and would maintain benchmarking of the Age Pension indexation against the Pensioner and Beneficiary Living Cost Index (PBLCI). It then benchmarked against Male Total Average Weekly Earnings (MTAWE) – all of which left many wondering what this meant for the asset thresholds that will change significantly from 1 January 2017.
YourLifeChoices has sought clarification from the Department of Social Services (DSS) and is pleased to report that the news isn’t all bad.
Provided by DSS spokesperson
The changes announced in the 2014/15 Federal Budget – to freeze the asset test free areas for pensions for three years from 1 July 2017 – have been reversed as part of the rebalancing of the assets test that was announced in the 2015/16 Federal Budget.
Rebalancing the assets test will improve the fairness and affordability of the pension system. More than 90 per cent of pensioners will either be better off, or have no change to their Age Pension under the measure. There will be no change to the existing assets test exemption for the family home.
Starting from 1 January 2017, the changes will:
- provide an increase in the amount of assets a pensioner can hold before their pension is affected under the assets test. This will assist pensioners with moderate assets holdings
- provide an additional increase in the assets test free areas for non-homeowners to ensure fairer treatment for those who have chosen not to, or are not in a position to, purchase their own home and therefore do not benefit from the principal home exemption, and
- better target the Age Pension by reducing support to pensioners with higher levels of assets who have greater capacity to support themselves.
The new amount of assets (excluding the family home) pensioners can hold without any impact on their Age Pension under the assets test (i.e. the assets test free area) will be:
- $250,000 for a single homeowner
- $375,000 for a homeowner couple
- $450,000 for a single non-home owner, and
- $575,000 for a non-home owner couple.
The assets test free areas will be adjusted using the Consumer Price Index on 1 July of each year, starting from 1 July 2017.
To find out who will be affected by the asset threshold changes, read Asset threshold changes explained.
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