From 1 January 2017, the asset test for the pensions has been tightened, meaning that some part-pensioners with assets of more than $291,000 (single homeowner) or $453,500 (couple homeowner) will lose some of their part pension. Non-homeowners with assets above $539,500 (single) and $702,000 (couple) will lose some of their part pension.
The pension will no longer be paid to people with single people with assets of $542,500 (homeowner) and $742,500 (non-homeowner) and couples with assets of $816,000 (homeowner) and $1,016,000 (non-homeowner).
Once people’s assets decline, they will be eligible for the pension again or a higher rate of pension.
Approximately 170,000 part pensioners with assets below the bottom asset test thresholds will see their pension increased as the asset test will be relaxed for pensioners with smaller assets.
Most of those whose pensions are reduced are home-owning couples on Age Pensions with assets (other than the home) between $500,000 and $1,000,000 in value. People with this level of assets are not ‘rich’ but they have well above ‘average’ levels of wealth and arguably don’t need the level of pension they now receive to achieve a decent living standard in retirement.
The pension is a vital part of our social safety net and ACOSS has consistently opposed polices that would reduce it for those who need it, especially people on the maximum-rate payments. At the same time, it is a long standing principle of our social security system that pensions should go to people who need them and not to people who have enough income or assets to meet their own needs. Superannuation is for retirement and it is reasonable to expect people with substantial funds in super to gradually draw them down through retirement.
ACOSS supports the assets test changes. They were a fairer alternative to Government proposals (which we opposed) reducing indexation of the pension to the CPI only, which would have reduced the incomes of all pensioners over time (up to $80 per week over ten years) and impacted on those least able to afford it (pensioners with little or no private income). The assets test change partly restores the arrangements that applied before the test was eased in 2007. The change helps ensure the pension is sustainable, as a safety net for those who need it, in the coming decades.
ACOSS’s full position on the changes can be found here : http://www.acoss.org.au/wp-content/uploads/2015/07/Submission-to-Fair-and-Sustainable-Pensions-Bill-FINAL.pdf