On 1 January 2023, there were two changes made to the Age Pension that could influence decisions you might make in the future.
One was an increase in the assets test exemption period for funds from the sale of your home.
If you sell your family home now, you have more time to look for a new home.
The amount you received from the sale that you intend to use on your new home is now exempt from the assets test for up to two years. In some circumstances, the exemption can be extended up to three years.
Even though the asset value is exempt, there will be income deemed from the funds. For properties sold after 1 January, the income will be deemed at the lower deeming rate, currently 0.25 per cent.
It’s important to know that the assets test exemption and lower deeming rate apply only to money from the sale that you plan to use to purchase (buy or build) your new home. These changes mean selling and downsizing will have less of an impact on your fortnightly pension than it did before.
For example: If you sell your principal home for $750,000 and plan on using $500,000 to build your new home, then the $500,000 will be an exempt asset and deemed at the lower deeming rate for up to two years. The remaining $250,000 will be an assessable asset straight away and will be deemed at the normal rates.
The second change is the extended employment suspension period.
Since 1 January, Services Australia is making it easier to get back on a pension if it was stopped because you were earning too much.
If you start getting income from employment and receive no Age Pension for more than six fortnights, you’ll be advised your payment and income reporting requirements have been suspended. That has always been the case, but now you’ll have two years before your payment is cancelled.
This extended period means:
- If your income reduces or stops within the two-year period, you don’t have to reapply for the pension, you can just get it restarted. So it’s much easier to get on the pension again.
- You remain eligible for your Pensioner Concession Card for the two-year period, until your pension is then cancelled.
If you and your partner are both on a pension, you can both take advantage of the extended employment suspension period even if only one of you is working.If your partner isn’t receiving a payment and his/her employment income is stopping your pension, you can’t get the two-year extended employment suspension period unless you are earning wages or self-employment income yourself.
With the changes to the Work Bonus that took effect in December last year, extending the employment suspension period makes it even easier for people on an Age Pension to earn extra income from employment if they want to.
Hank Jongen is general manager at Services Australia.
Did you know about these changes? Do they assist you? Why not share your thoughts in the comments section below?