Matt is concerned that the changes to the asset thresholds scheduled for 1 January 2017 will greatly impact his Age Pension, so we clarify what the changes actually mean.
Q. Matt
I am contacting you about the changes that will come into effect on 1 January 2017. There is very little information about the changes that I can find. Perhaps you can help.
As a single person I am concerned about the impact of the income and assets test. Presently, the income test is the tougher of the two. I believe that based on the existing deeming rule, a person having $250,000 would not receive the full Age Pension.
I have read that the pension will increase, but will the utility and clean energy supplement be removed? If this is the case, then the increase may be there to compensate for the supplements being taken – is this correct?
A. When you apply for an Age Pension, your income and assets are separately assessed to determine which test results in the lower rate of Age Pension payment, and this is the payment you will receive. This is also the ongoing method by which you will be assessed. Periodic reviews of your income and assets may mean that, if the alternative test returns a lower payment than you are currently receiving, then this will be the method under which you are paid.
It should also be noted that the pension taper rate will increase from $1.50 to $3 for every $1000 over the asset threshold your assets are and, therefore, this may result in the method under which you are paid being changed.
The asset threshold is a total of all your assets, some of which will not be subject to deeming, therefore it is not correct to assume that someone with assets of $250,000 will not receive a full Age Pension.
The Age Pension is not due to increase, other than by regular indexation. What has actually been said is that some people will receive more Age Pension due to the changes in the asset thresholds. There are no plans to remove the Clean Energy Payment or the Pension Supplement.
You may find the following article useful – Age Pension: Asset threshold changes