#asset test

Age Pension changes which take effect from January 2017 will mean that a considerable number of older Australians will lose part or all of their pension.  A smaller number of pensioners will be better off as a result of these changes. So what are the changes to the age pension in 2017?

The Age Pension provides income support and access to a range of concessions for eligible older Australians. Retirees who are currently aged 65 or over, and who satisfy income and assets tests and other requirements, can receive a full or part pension.  There are changes to the rules around the assets test which will come into effect on 1 January 2017.

What are the age pension changes?

From 1 January 2017, some part pensioners will receive a full pension.

Full pension, home owners If you own a home, the new assets thresholds will allow you to hold assessable assets up to $250,000 (singles) and $375,000 (couples) without impacting your full-pension entitlements.

Full pension, non-home owners The new assets thresholds for those who don’t own a home will be $450,000 (singles) and $575,000 (couples).

If you’re on a part age pension what will happen?

Part pension, home owners Couples who are homeowners will not receive the pension when their assets reach $823,000 in value. Single homeowners will stop receiving the pension when they have more than $547,000 in assets.

Part pension, non-home owners Singles who don’t own a home won’t qualify for the pension if assets total $747,000. And couples will lose pension entitlements after they’ve accumulated more than $1 million in assets.

The upside of losing the age pension

People who do lose their pensions in 2017 will automatically be entitled to receive a Commonwealth senior’s health card or a low income health card. These cards will provide access to Medicare bulk billing and less expensive pharmaceuticals.

How you can prepare for the changes to the age pension?

You can find out more about age pension changes on the Department of Human Services website .

Depending on how these changes will impact you, there could be a number of things for you to consider, including:

If your entitlements are reduced, how will you replace lost income?

Are there any ways to minimise the impact of these changes?

It’s a good idea to seek advice about these changes soon from a qualified financial adviser.

About Margaret Harrison

Margaret is co-founder and Director of Signpost Aged Care Services, an aged care advisory service that allows people to make informed decisions about accessing care for older Australians. Margaret practiced in private practice and as a corporate lawyer for more than 20 years. Her personal experience with her own elderly and frail parents led her to establish Signpost in 2012 when she was unable to find a person who could help her understand the available aged care options and assist with appropriate care. For more information www.signpostlms.com.au

Photo credit: Couple planning budget by Pressmaster

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President Obama has already threatened to veto the farm bill being debated this week in the Republican-dominated House of Representatives over its $20.5 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP), an amount five times greater than what the Senate agreed to last week and enough to disqualify nearly 2 million people who rely on food stamps for their next meal.

Even worse than the cuts themselves is how the House would achieve them. Current law allows states to align their rules for SNAP eligibility with the rules they apply for welfare beneficiaries, giving lawmakers some flexibility over how they disburse food stamps. Without that flexibility, states would be required to enforce federal eligibility rules that haven't been changed in decades, including an asset test that would disqualify anyone with over $2,000 in savings—a limit set in 1986 and never adjusted for inflation. The 2013 House farm bill would remove that flexibility, forcing the five states that have raised their SNAP asset limit, and the 36 states that have eliminated the asset test entirely, to present food stamp recipients with a terrible choice: either burn through your savings until you achieve sufficient insolvency, or make do without.

“Strict asset limits tell families: ‘Don’t you dare save or make responsible financial decisions,’” said Reid Cramer, director of the Asset Building Program at the New American Foundation, in a press release Wednesday. “We’re forcing them to accept long-term poverty in exchange for short-term assistance.”

Yet forcing families to choose between their savings and food security—a policy Cramer calls “beyond counter-productive”—is precisely how the House farm bill would achieve nearly 60 percent of its $20.5 billion in SNAP cuts. Without the ability to look beyond outdated federal criteria, states would have no choice but to enforce the arbitrary $2,000 cutoff for savings, disqualifying massive numbers of working people who live everyday on the edge of poverty. Even owning a car worth with a market value of $5,000 or more could prevent applicants from receiving food stamps under the House bill, regardless of how little equity they actually have in the vehicle. For low income families living in rural and suburban areas without access to public transportation, that provision alone could mean having to choose between keeping their job or putting food on the table.

Eileen S. Sklaroff, President Female Hebrew Benevolent Society

I am not a cheater nor am I a quitter so I knew with great certainty that I would stick to the rules of The Challenge and see it through to the bitter end. There were days when I was hungry and reached instinctively for a bunch of grapes or a rice cake to tide me over. But those snacks were in my mind, not within my budget, so I waited until the next meal.

I spent $60.88 of my $64.40 allowance. It seemed fair to hold back the remainder because Mark could not participate with me after Friday lunch because he had a bris in New York on Shabbat. (I am ashamed to say that my first thought was “more food for me!”).

The only food that remains is a head of Romaine, a few carrots, a few potatoes, half a cuke, a can of tomato sauce and two boxes of pasta, which we didn’t eat because we didn’t like the taste, and some rice. Not an inspiring repertoire with which to begin a new week, but I won’t have to do that because come tomorrow morning I will be at the closing event for the FSC where a light breakfast will be served. And I can eat it!