The Government will make changes the pension from 1 January 2017 by:
• increasing the 'asset free areas' for both homeowners and non-homeowners.
• increasing the asset test taper from $1.50pf to $3pf per $1,000 of assets over the lower threshold.
Asset free area changes
The proposed changes to the asset free area (the lower assets test threshold) are:
• For homeowners, the asset free area is proposed to increase from $202,000 to $250,000 for singles and from $286,500 to $375,000 for couples. This represents an increase in the lower assets test threshold of $48,000 and $88,500 for singles and couples respectively.
• For non-homeowners, the asset free area is increasing from $348,500 to $450,000 for singles and from $433,000 to $575,000 for couples. This represents an increase in the lower assets test threshold of $101,500 and $142,000 for singles and couples respectively.
For those with lower levels of assets, these changes may result in an increased rate of age pension. The Government has also confirmed the comparatively larger increase in the lower assets test level for
non-homeowners is in recognition of higher living costs.
Asset test taper rate
The asset test taper rate, the amount by which a person's pension entitlement decreases under the assets test is proposed to increase as outlined above.
Under these proposed changes the asset test taper rate will return to 2007 levels and will result in a substantial reduction in the upper assets test threshold. This table sets out the current and proposed asset test thresholds:
*Based on 1 January 2017 RATES
The government estimates that approximately 12 % of pensioners will lose entitlement to the pension as a result of the changes to the asset test. These people will automatically be issued with a Commonwealth Seniors Health Card, or a Health Care Card for those under pension age.
Previously announced changes to income test free areas and deeming thresholds
Due to the changes in the pension asset test, the government will not proceed with changes to the pension income test free areas and deeming thresholds that were announced in the 2014 Federal Budget.
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