In terms of finance, a lot of things happen on 1 July each year. A new tax year begins, pensions get adjusted and most of the federal government budgetary changes are implemented. This year also included a change in tax rates.
It’s a lot to take in, so it’s understandable that some of the changes get ‘lost in the wash’. One that you may have missed was an update to pension eligibility rules. And the alteration might work in your favour.
The change that is set to benefit a number of older Australians is an increase in the income and assets test limits used to determine Age Pension eligibility. While the pension amounts themselves are not changing, the thresholds for qualification have been adjusted. The thresholds have been raised for both income and assets.
As a result, a number of previously ineligible Australians will now qualify for at least a part age pension.
Pension eligibility changes in detail
The amount you can earn while still receiving the full aged pension has risen. From 1 July a single pensioner can earn up to $212 per fortnight and receive the full pension. This is up from $208. For couples the new fortnightly earnings ceiling is $372, up $12 from $360.
Of course exceeding these amounts won’t void your pension eligibility entirely, but it will trigger a sliding scale reduction. For each dollar earned over the threshold ($212 for singles, $372 for couples), your pension amount decreases by 50 cents.
In terms of assets, the thresholds for both singles and couples have been raised. The increase amounts differ depending on whether or not you are homeowners. Single homeowners will maintain full pension eligibility if they have assets totalling $314,000 or less, up from $301,750. For single non-homeowners the threshold has risen from $543,750 to $566,000.
Couples who are homeowners will be able to have combined assets of $470,000 and get the full pension, a rise of $18,500. Couples who do not own a home can have up to $722,000 and receive the full pension. That’s up from $693,500, representing an increase of $28,500.
As with earnings, you will not lose your entire pension if you are a single dollar over the threshold. Part pension eligibility cuts out for each of the four categories as when assets exceed amounts as set out below:
- Single homeowners: $686,250 (up from $674,000)
- Single non-homeowners: $938,250 (up from $916,000)
- Couple homeowners: $1,031,000 (up from $1,012,500)
- Couple non-homeowners: $1,283,000 (up from $1,254,500)
Other benefits
One thing to note is that even part pension eligibility provides other potential benefits. Chief among those is the Pensioner Concession Card. The card allows access to cheaper medication under the Pharmaceutical Benefits Scheme, potentially delivering significant savings.
The Pensioner Concession Card may also entitle you to doctors’ appointments at bulk-billed rate (at the clinic’s discretion), assistance with hearing services and subsidised medical costs if you reach the Medicare Safety Net during the year.
So, if you’ve come into July having previously not qualified under pension eligibility rules, it might be worth revisiting your financial circumstances. You might just have moved into the qualification zone, unlocking some much-needed cost-of-living relief.
Were you aware of the change in pension eligibility thresholds? Will they make a difference to you? Let us know via the comments section below.
Also read: Pension rules require urgent overhaul: NSA
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
