There have been some recent news stories around changes to the assets tests for pensions from 1 January 2017. This was something that was announced in the 2015-16 Federal Budget and seems to be making news again.
So what’s it all about? The Government has legislated to change the ‘asset test’ for the calculation of eligibility for pensions. The asset test is the value of various assets you own – these may include such things as: real estate assets (but NOT including your principal home), financial investments, superannuation, business assets, vehicles etc. For a full list of assets that may be assessed, as well as the changes to thresholds, please click here.
Certain Pension payments are calculated based on your assets. If you are eligible and own assets valued under the thresholds, you may be eligible for a full pension. Part-pensions are calculated based on a taper rate above the assets test free area. A taper rate is the amount your pension is reduced based on every dollar of value of your assets you own above the threshold.
The good news is that from 1 January, the asset test thresholds will increase. However, the bad news is that the taper rate will also increase – and this may affect people who are receiving a part pension.
If you are concerned about how these changes might affect you, please contact your financial advisor or our office.