The new Age Pension assets and income test claimed the part pension payments of around 90,000 individuals and couples in 2017.
On top of that, hundreds of thousands of Australians who were receiving a full Age Pension had their payments reduced under the Federal Government’s revised rules that came into effect on 1 January 2017.
The new rules caught many older Australian unawares, and those who had based their retirement income on receiving a part Age Pension are now having to re-evaluate their retirement.
The Department of Social Services (DSS) confirmed that around 86,600 part age pensioners had their pension revoked last year.
The new pension taper rate reduced the pensions received by anyone over the threshold by $3 for every $1000.
Official government data revealed that between the 31 December 2016 and 31 June 2017, the number of part age pensioners dropped from 486,031 to 321,106.
While no full-age pensioners had their pensions cancelled due to assets test changes during that time, the total number of Australians receiving a full Age Pension dropped from 2.57 million to 2.49 million.
The number of couples receiving a full or part pension dropped from 1.43 million to 1.37 million, with singles falling from 1.13 million to 1.12 million.
DSS data shows that around 1.18 million pension recipients are couples who own a home, with a further 660,000 home-owning singles.
While the assets test does not (currently) consider the family home as an assessable asset, it does count any other assets owned, such as other property, cars, boats, caravans, superannuation and savings.
Superannuation balances held by many Australians at retirement automatically puts them over the new thresholds. The problem is that super may generate less tax-free income than an Age Pension. Translation: more assets means less money.
So, to receive more tax-free pension and stay under the asset thresholds, many retirees are taking money from superannuation and putting it into improvements or buying new family homes.
However, in doing so, many are leaving themselves short of available funds, becoming asset-rich but cash poor and unable to maintain a comfortable standard of retirement living.
Read more at The Australian
How does the assets and income test affect you? Do you think it’s fair?