What you need to know
What are the main changes which will affect retirees and their income over the next 12 months?
Here’s a handy End of Financial Year (EOFY) checklist to keep you up-to-date. You may wish to also share this with friends and family. Some changes are not yet legislated, so keep an eye on your Retirement Essentials emails, as we will confirm these rules as soon as they do become law.
Income and Asset thresholds will change
Income and assets tests change three times a year. The upper (disqualifying ) income and asset thresholds change on 20 March and 20 September, in line with indexation (based upon the CPI figures from the previous 6-month period). The lower thresholds change just once a year. This means that they will change on 1 July – and this is likely to increase the number of people able to qualify for a full Age Pension.
The specific amount of the new limits will shortly be confirmed by the Federal Government. As a benchmark, last year the income test limit was increased by $8 for singles and $12 for couples combined while the asset test limit (for non-homeowners) was increased by $22,250 for singles and $28,500 for couples combined.
How to plan ahead
You can check out the current thresholds here and use the Age Pension Entitlements Calculator to test your current Age Pension status. You may be entitled to a higher fortnightly payment after 1 July. Or if your entitlement is currently borderline, you may now become eligible for an Age Pension as well as the automatically issued Pension Concession Card.
Age Pension age
The minimum age for entitlement to an Age Pension remains at 67, with no plans to further increase it.
How to plan ahead
You don’t have to wait for your birthday! You can apply for an Age Pension from 13 weeks before the day you turn 67. But if you are aged 65 or over, it’s prudent to be aware of your likely Age Pension eligibility. (You can do this easily by using our free Age Pension Entitlements Calculator). This means you can work out your likely retirement income, through an understanding of potential Age Pension payments and how your super will top them up.
Deeming Rates
As deeming rates are usually reviewed on 1 July each year and changed at the discretion of the Minister, there was a lot of conjecture at Budget time whether they would remain frozen. This has been the case for the past few years due to assumed impacts from the Covid pandemic. This freeze was scheduled to end on 30 June 2024, then extended until 30 June this year. The recent Federal Election campaign put Ministerial decisions on hold, but it is widely assumed that the deeming rate will remain frozen to help retirees withstand cost of living pressures. Should the Minister decide to increase them, this information will be available at the same time as the above-mentioned assets and income limits. We will report this change immediately it is announced.
How to plan ahead
Changes in the deeming rate are an area of income assessment that is beyond individual control, but knowing the ramifications of such a change is wise. You can use the free Retirement Essentials Age Pension Eligibility Calculator at any time to see the effect of current deeming rates upon your Age Pension eligibility and payments. You will then be prepared (should your payments be very low) if you may be about to lose eligibility if rates rise in July.
Changes to superannuation
Increased Super Guarantee (SG)
From 1 July 2024, the Super Guarantee rate moved up to 11.5%. There will be a final increase of 0.5% on 1 July 2025 to 12%. There are no more legislated increases to the SG.
How to plan ahead
Those still working will probably enjoy this boost to their retirement savings. But don’t just sit there and accept it! If you are working full-time, or even well remunerated for part-time work, using salary sacrifice could add even more to your retirement pot! Projecting how much income you can reasonably expect from your savings over the course of your retirement is a great way to understand the impact of the increased SG.
Transfer Balance Cap increases
The Transfer Balance Cap is a limit on the total amount of superannuation that can be transferred into the retirement phase. From 1 July, this amount will increase from $1.9 million to $2 million.
How to plan ahead
Earnings on your super in retirement (decumulation) phase are tax-free. It may be that you will benefit from this extra allowance, but it’s important to check that such a transfer will not have a negative impact on other aspects of your retirement funding.
Higher taxes on high super balances
The so-called ‘better targeted’ super legislation is yet to become law. The re-election of the Albanese Government means this legislation is likely to be fast-forwarded to come into effect in this coming financial year (2025-26). The increased tax of 30% (up from 15%) will apply to super balances in excess of $3 million, but it is likely the legislation will be modified to include some indexation if the Albanese Government depends upon cross-party support to get the bill through the Senate. Again, we will report on this change as soon as any legislation is passed.
How to plan ahead
Whilst there is an intention to implement this legislation, until the legislation is finalised there is a need to be aware, but not take action at this stage.
Super drawdown rates
The temporary minimum rate for retirement income stream withdrawals was halved during the Covid pandemic. This reduced rate went back to the normal amount, as listed in the table below, from 1 July 2023. The withdrawal amounts are based upon your age. The most important thing is to ensure you have met the minimum amount within the current financial year as there may be penalties if you have not complied.
| Age | Standard minimum drawdown rate 1 July 2023 onwards (unchanged at time of writing) |
| Under 65 | 4.00% |
| 65 to 74 | 5.00% |
| 75 to 79 | 6.00% |
| 80 to 84 | 7.00% |
| 85 to 89 | 9.00% |
| 90 to 94 | 11.00% |
| 95 or over | 14.00% |
How to plan ahead
It’s always good to plan at least a year ahead when it comes to managing withdrawals from your super. It is worth checking now that you have complied with this amount before the end of this financial year. If you do not need this full amount of money for your normal living expenses (i.e. the rate is too high), you may be able to recontribute to your super or talk to an adviser about how to use another strategy which maximises your overall financial position.
Aged care funding changes
Significant changes to aged care funding will commence on 1 July. These include significant changes to home care packages. Retirement Essentials reported on these detailed changes earlier this year.
How to plan ahead
The most difficult aspect of aged care is that this can present a sudden financial challenge, as opposed to one you can plan for. That said, understanding the rules and your potential funding needs is something you can do right now. Retirement Essentials will be offering some more specific aged care consultations shortly.
Are you feeling fit and ready for the end of the financial year?
Or is it a total pain to keep up with all the changing rules?
