Asset test changes:
How do they benefit you?
There’s nothing hard and fast in the world of retirement income.
Particularly when it comes to the Age Pension.
As you are no doubt aware, last week saw indexed increases to the base rate of the Age Pension. Hidden in the coverage were more significant changes; these were changes in the income test threshold and the assets test threshold. Both have been increased and this means either that many Australians will have an increase in their fortnightly income or others will now be eligible for the first time.
Today we look at the changes to the assets threshold and what this now means for retirees.
What changed on March 20 2023?
Here’s how the assets thresholds have just changed:
Pension Disqualifying Assets Limits
|Family Situation – Resident||Previous Amount||20 March 2023||Increase|
|Couple (combined), homeowner||$935,000||$954,000||$19,000.00|
|Couple (combined), non-homeowner||$1,159,500||$1,178,500||$19,000.00|
Why could this be good news for you?
Let’s say you are already receiving a small part Age Pension (i.e. you are already under the disqualifying assets limit). It’s still important to treat any incremental increases in thresholds as a trigger to have another look at your own position, especially if you haven’t provided any updates to Centrelink for a while.
While it’s common knowledge that if we have a specific change in financial circumstances we should update Centrelink, often the situation changes over time with nothing to remind us of the reason we need to update.
For instance, your bank account may be lower than when you initially applied, or your car or other personal assets may have depreciated, so it may be worth looking into whether you may be eligible for more than you are getting.
Here’s how Bev benefitted from an update
Bev initially applied for the Age Pension three years ago when she had about $50,000 in savings and a $15,000 car. She has been receiving a part-Age Pension ever since. Because of a few holidays and an increase in her outgoings (due to cost-of-living rises) Bev’s savings are now $35,000. At the same time, the value of her car has decreased to $10,000. This means that her assessable assets have decreased by $20,000, but Centrelink is still assessing these assets at the same value they were when Bev first applied. We encouraged her to advise Centrelink of these changes, which she did. Her Age Pension entitlements have now increased by $60 per fortnight due to her lower asset totals as well as the extra income from the March 20 indexation of Age Pension rates.
This is a great outcome for Bev who was already on the Age Pension. Additionally, many Australians who have previously just missed out on eligibility may now be entitled to the Age Pension and Pension Concession Card (PCC) as they now sit within the new asset thresholds. You won’t be back paid any entitlements if you haven’t applied, so it’s helpful to re-run the sums as soon as possible, to check your current status. You can do so free of charge using the Age Pension Eligibility Calculator.
If you are still unsure how the new rates and thresholds work, or whether it may be worth reviewing your circumstances with Centrelink, you can make an Entitlements Consultation booking in which we can share the rules and answer any questions of concern.