YourLifeChoices provides a quarterly update to help you stay abreast of government changes that affect retirees or those planning for retirement.
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Age Pension age set to change
The Age Pension eligibility age will increase to 67 from 1 July. It is 65.5 years if you were born between 1 July 1952 and 31 December 1953; 66 if you were born between 1 January 1954 and 30 June 1955, and 66.5 years if you were born between 1 July 1955 and 31 December 1956. From 1 July 2023, it will be 67 if you were born on or after 1 January 1957.
Age Pension thresholds to change
On 1 July 2023, the assets and income test thresholds for the Age Pension and other government benefits will be altered.
Asset and income disqualifying limits were lifted on 20 March, along with pension payment rates. The Age Pension currently cuts out when assets reach $634,750 for a single homeowner, and $859,250 for a non-homeowner, and at $954,000 for couple combined homeowners and $1,178,000 for non-homeowner couples.
Income disqualifying limits are $2318 per fortnight for a single, $3544 per fortnight for a couple combined and $4592 per fortnight for an illness-separated couple combined.
If you didn’t qualify for a pension before 20 March, or were on a reduced rate due to your income or assets, it’s worth re-examining your financial position to see if you qualify.
Change to superannuation drawdown rates
The freeze on minimum super drawdown rates will end on 1 July.
If you have a super income stream, there are rules on the minimum amount you can withdraw (or draw down) each financial year. Normally, this amount goes up slightly each year.
Due to COVID, the government temporarily reduced the superannuation minimum drawdown rates, which allowed retirees to keep more money in super.
Your minimum drawdown rate depends on your age. See all the details on the ATO website.
Super guarantee set to increase
The super guarantee rate goes up in July.
On 1 July 2022, the rate of super paid by employers to employees increased to 10.5 per cent of the employee’s salary. From 1 July, this will increase again, and all employers must pay all employees entitled to super 11 per cent of their salary.
To make sure you’re being paid all the super you’re entitled to, log in to your fund’s website and check your account. Report any unpaid super here.
‘Bring forward’ super rule
Since the start of the 2023 financial year, those aged 67 to 74 can make use of the ‘bring forward’ non-concessional contributions rule. This option was previously only available to those aged 67 or younger.
A bring forward non-concessional contribution can be useful if you receive a windfall, such as from the sale of a house or an inheritance
The rule allows you to make three years’ worth of non-concessional contributions to your super in a single year without going over the cap.
General transfer balance cap
The general transfer balance cap, which dictates the maximum amount that can be moved into a tax-free retirement phase account from super will rise from its current level of $1.7 million to $1.9 million from July.
Medicines on the PBS
Eligibility for the COVID antiviral drug Paxlovid (nirmatrelvir and ritonavir tablets) on the Pharmaceutical Benefits Scheme (PBS) expanded on 1 April. It now includes people aged 60 to 69 with mild to moderate COVID with one additional risk factor for developing severe disease as well as people aged 50 or older, with two additional risk factors. People aged 70 and older were already eligible.
Paxlovid is a prescription only oral medicine taken twice daily for five days and within five days of COVID symptoms appearing.
Age care reforms
From 1 July 2023, the Aged Care Quality and Safety Commission decreed that approved providers must have at least one registered nurse onsite and on duty 24 hours a day, seven days a week, at each residential facility. Check the reforms here.
Also, from 1 April, the aged care interest rate rose for a sixth consecutive month, to 7.46 per cent. Read more here.
One for the diary
From 1 December 2022 to 31 December 2023, a one-off, temporary credit of $4000 applies to Work Bonus income bank balances. The maximum income bank balance increased to $11,800 over this period. On 1 January 2024, the maximum income bank balance will automatically reset to $7800.
In case you missed it
Removing the superannuation ‘work test’. Up until 1 July 2022, Australians aged 67 to 74 could only make voluntary contributions to their super if they’d worked at least 40 hours during a 30-day period in the relevant financial year. Go here for more details.
Downsizer contribution. As of 1 January 2023, you’re now eligible to make a downsizer contribution if you’re 55. Previously, the eligibility age was 60 (and before that, 65). See details on the ATO website here. The downsizer contribution is a government initiative that lets you contribute up to $300,000 as an individual or $600,000 as a couple to your super from the proceeds of selling your property. You can do this even when the usual contribution rules mean you wouldn’t normally be eligible to add to your super.
Home Equity Access Scheme. The scheme allows senior Australians to supplement their retirement income by accessing the equity in their home through a government loan. The compound interest rate for the scheme is currently 3.95 per cent per annum. Changes from 1 July 2022 enabled participants to bring forward a portion of their fortnightly loan payments as a lump sum advance. Lump sum advances are capped at 50 per cent of the annual Age Pension rate. For more details, check the Department of Social Services website here.
Do you find it easy to stay up to date with changes that might affect your retirement or retirement planning? Do you have any tips for other members?
Also read: What inflation drop means for pensioner spending power – and the next indexation
