The 2021 Federal Budget

The 2021 Federal budget has promised a number of funding increases to help boost the economy.  Several of the initiatives will benefit senior Australians by providing better access to support services and also enabling many to top up their income in retirement. Some of the highlights were:

  • Enabling easier contributions to super which could benefit homeowners and self funded retirees in particular
  • Changes to the pension loans scheme
  • A boost for Aged Care in the form of further support for home care packages.

In this blog we provide an overview of the elements of the budget that target senior Australians:

Contributing to super by downsizing

The budget contained a couple of reforms that will enable some seniors to boost their super savings.  The first of these is downsizing.  Downsizing refers to selling your home to live somewhere smaller and potentially cheaper.  This can sometimes free up money that can be contributed to super.  A one off contribution of up to $300,000 per person – so $600,000 for a couple – can be made to super under this scheme.  There are a number of requirements to meet including having owned your home for at least 10 years to access the scheme.

We wrote about this last month however the Treasurer announced that the age at which you can become eligible for the downsizer option will drop from 65 to 60. In addition to helping boost retirement savings for some retirees this is likely to free up some capacity in the housing market.

Contributing to super and the work test

The Treasurer announced the abolition of the work test.  This means seniors aged from  67 to 74 no longer need to meet a work test to contribute to super.

Both the downsizer and the work test reforms are proposed to become effective from 1 July 2022.  They are also both subject to contribution limits.  We will write further on both these topics in coming weeks.

Removing the $450 per month minimum income threshold

This reform is not directed at seniors but seniors can still benefit.  Essentially this means that super contributions will be paid on behalf of all employees, not just those earning more than $450 a month.  Seniors in part time employment could benefit from this.

Pension Loans Scheme

Reforms have been promised to the Pension Loan Scheme which currently allows people to get access to some of the capital locked up in their home.  The scheme is available for self-funded retirees as well as those on the age pension.  Those that are eligible under this scheme could get a loan of up to 150% of the maximum rate of Age Pension.  This loan provided additional income to the recipient in the form of fortnightly payments.

The change announced in the budget is that from. From 1 July 2022, eligible people will be able to access up to two lump-sum advances in any 12-month period. These lump sums could be up to a total value of 50% of the maximum annual rate of Age Pension (currently $12,385 for singles and $18,670 for couples).

Another further enhancement of the scheme is that the outstanding debt on the loan cannot exceed the market value of the home.  This means Seniors, or their estate, will not end up owing the Government money when their home is eventually sold.

Aged Care

The Treasurer announced $17.7 billion over 5 years would also be spent to help respond to the royal commission into aged care.  The highlights were:

An additional 80,000 home care packages to be funded over the next 2 years bringing the total to 276,000 by June 2023
Additional funding for training of aged care workers to increase the workforce
Additional funding to enable an increase in the time front line carers can spend with residents in aged care facilities

As always, these proposed measures are not yet law and could change.


While homeowners have benefited through the downsizer and pension loan schemes there was nothing in the budget for renters. This was a disappointing omission when so many sectors of the economy have received a boost.

So what did you think of the budget?  Please let us know by commenting below.