Knowing which changes will occur on July 1 2023 is mandatory for those both in retirement or planning to be in the near future. Changes are coming to eligibility age for the Age Pension, income and asset thresholds for those on a full Age Pension and some superannuation rules. It’s important to check which changes could have an impact on your income. Here’s a handy summary which gives you time to adjust your planning if need be.
Age Pension age increases to 67
Australian Age Pension eligibility depends upon many factors. The major ones being your age, your residency status and your ability to pass a means test based upon income and assets.
In 2013, the Labor Government introduced measures in 2009 to increase the pension age to 67. This has occurred through gradual increases during the period July 2017 to July 2023.
This is the last (currently legislated) increase in Age Pension age.
Income and Asset thresholds will change
Whilst the income and asset thresholds for those on a part-Age Pension changed on 20 March, in line with indexation. Thresholds for those on a full pension are scheduled to change on 1 July.
***Money-smart tip
You can check out the current thresholds here and use the Age Pension Entitlements Calculator to test your current status – and to see if you might be in line for a higher fortnightly payment.
Increase in Transfer Balance Cap
As a result of indexation, the general Transfer Balance Cap of $1.7 million will increase to $1.9 million on 1 July this year. Transfer Balance Caps (TBCs) are caps or limits to the amount that you can transfer from an accumulation fund into an Account Based Pension. Whilst the tax on the earnings on your super in the accumulation phase is 15%, the tax on earnings in Account Based Pensions is nil. Many retirees transfer as much as allowable into a retirement pension where the earnings aren’t taxed.
***Money smart tip
If you are already in decumulation, the full amount of the TBC will not apply, but a proportion might – as always, it’s best to seek advice on your particular circumstances.
SG moves from 10.5 -11%
In line with legislation, the Superannuation Guarantee (SG) will increase from the current level of 10.5% to 11% on 1 July this year. The superannuation guarantee (SG) is a mandatory requirement whereby a percentage of your earnings is paid into your super fund by your employer. The SG rate will continue to rise by 0.5% per year till it reaches 12% in July 2025. Currently this amount needs to be paid quarterly. This will change to ‘payday’ contributions from July 2026.
***Money-smart tip
If you are still working and SG contributions are made into your super fund, it’s worth checking if the SG is part of your salary package. If this is the case, you might actually receive less income as the extra 0.5% will come from your whole package, and not your employer.
And one more thing:
Deeming rates would normally be reviewed on 1 July each year. This year there will be no change as they are frozen until 30 June 2024.
Do you need more information?
You can check the Retirement Essentials Age Pension Entitlements Calculator for free here.
Or you may have some more specific questions that you want help with to determine how an alternative strategy could affect your financial position and your ability to achieve your goals. Retirement Essentials offers adviser-led strategy consultations on a range of topics. In these meetings you are able to join one of our financial advisers online where they assess your current situation and show you what an alternative option may look like. Click on one of the links below to book a strategy consultation.
- Retirement Forecasting (understanding spending options during your retirement journey, followed up with a tailored strategy paper).
- Understanding more about super (there are many options available to maximise income or wellbeing).
- Maximising your entitlements (making the most of your financial resources and Centrelink)
- Understand impacts of your home mortgage (consider your retirement journey options)
- Younger Spouse strategy (How moving assets to a younger spouse’s super can increase your entitlements)
Very useful information.
Is it correct from 1st July 2023 we have to draw down more super.
I am 67 and my husband 68.
If I’m correct it jumps from 2.5 to 5 %.
My question is can the extra income go back into super if we are under the cap.
Hi Alanna, thank you for reaching out! It would be best for you to book one of our Understanding More About Super consultations. This way our advisers can review your specific situation with you and provide better clarity on the options available to you and the pros/cons of each. CLICK HERE to learn more.
The increase in Age Pension age to 67 from 1 July, I’m 65 now, before I would got the Pension June 2025, after this update, how long I got to wait now
John
Hi John, thanks for raising your concern! I think you may have misunderstood something. The Age Pension eligibility age has been increasing from 65 to 67 in 6 month increments (65.5, 66, 66.5 and finally 67) since 2017. This is not something new nor has there been any proposal to increase it higher. If you are 65 now then you will still be eligible when you turn 67 in 2025.
Hi,
I am still currently working 5 hrs per week and was wondering if the Work Bonus will continue after July 1st?
Hi Mx EK, thank you for your comment! The work bonus will continue for the foreseeable future, there has been no proposal to remove it.
What is the work bonus ?
Hi Faye, thanks for your comment! You can learn more about the work bonus HERE.
I still work full time and on a part pension, if I withdraw $5000 out of my Retirement Income account do I have to notify Centrelink of this??? It is to pay off credit cards
Hi Gloria, thanks for your comment! Yes it is best to notify Centrelink of any increases/decreases to your assets of $2,000 or more. At a minimum you should provide updated statements showing the new balance after the withdrawal and also evidence as to where the money went (so Centrelink know you are reinvesting it somewhere else). We recommend you use events like this as an opportunity to make sure all of your asset values are correct and provide Centrelink with updated statements on all of your assets to ensure you are receiving the correct amount of Age Pension.
Hi
I read that the money in superannuation is no longer an asset for pension aged people or does this only apply to people on pension who are under pension age
Hi Annett, thank you for your question! If you are receiving an Age Pension but your partner is too young to qualify, the super they have that is in accumulation is exempt from the assets test. As soon as they either turn Age Pension age or convert the account from accumulation into pension mode, then the balance becomes assessable.
Is there anything for full Pensioners please.