Latest Rules and Changes Noel Whittaker Sunday Mail July 18 2021 The latest six-monthly age pension adjustments have taken place – effective from July 1. The main changes are a slight increase in the levels at which both the asset test and the income test start to taper. The maximum pension for a single person remains at $952.70 a fortnight, and for a couple $718.10 a fortnight each. Note that Rent assistance, where applicable, is paid as an additional amount. The lower asset limits are now $270,500 for a single pensioner and for a couple $405,000. Once these levels are exceeded the pension tapers until it reaches the upper cut off point where no pension is payable. The base income threshold is $320 a fortnight for a couple and $180 a fortnight for a single. The cut-off point for a homeowner couple has gone up to $884,000 and for a single pensioner $588,250. For nonhomeowners the numbers are $1,100,500 and $804,750 respectively. The income test cut-off points are now $83,002 per annum for a couple and $54,220 for a single. If one partner is eligible, and the other is under pensionable age, the eligible partner receives half the couple’s pension. For example, a 67-year-old with a 57-yearold partner could qualify for 50 per cent of the couple’s pension. You are tested under both an assets and an income test, and Centrelink applies the test that gives you the least pension. Consider a homeowner couple with assessable income of $800 a fortnight and assessable assets of $740,000. Their pension under the income test would be $598.10 a fortnight each – under the assets test, $215.60. Therefore, they would qualify for an age pension of $215.60 a fortnight each. The value of your assets does not include your family home, while your chattels such as furniture, car and boat are valued at second hand value, not replacement value. This puts a figure of $5000 on most people’s furniture. The income test is not relevant if you are asset tested. For example, a single person with assets of $540,000 and receiving a pension of $144.20 a fortnight could earn assessable income of $45,000 a year including their deemed income, and employment income, without affecting their pension because they would still be asset tested. If you are at the higher end of the asset test scale seek advice about the new lifetime pension products that are becoming available due to government urging. For example, a 70-year-old couple may have $900,000 of assessable assets and accordingly be over the assets test cut-off point. If they invested $300,000 of their superannuation in a QSuper lifetime pension they may be able to receive a pension of just over $20,000 a year indexed for both of their lives, plus the age pension of just over $8000 a year. This would boost their income by $28,000 a year and still leave them with $600,000 of assessable assets. The rules are prima facie simple, but there is devil in the detail. If a member of a couple has not reached pensionable age it’s prudent, if appropriate, to keep as much of the superannuation in the younger person’s name because then it is exempt from assessment by Centrelink. However, the moment that fund is moved to pension mode, it’s assessable irrespective of the age of the member. Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. noel@noelwhittaker.com.au
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