A key component of retirement advice is assisting retirees to achieve their income goals. With approximately 76% of all people age 65 or above receiving a Centrelink/DVA government pension, strategies to help retirees maximise their age pension benefits are important. This can help you save more for retirement.
From an advice perspective there has recently been a number of legislative changes to the means tests for the age pension that have required advisers to review existing income stream strategies and consider alternate options. These changes have included:
- The deeming of account based income streams (Account Based Pension), unless a grandfathering provision applies, from 1 January 2015; and
- The now legislated increase to the Assets Test thresholds and the Assets Test taper rate from 1 January 2017 — discussed further below.
Increase in The Assets Test Thresholds From 1 January 2017
This first change to the Assets Test relates to the threshold above which a pensioner’s entitlement will start to reduce. Subject to the Income Test, the increase in the Assets Test thresholds from 1 January 2017 (see Table 1) will enable a number of people to qualify for the full pension, rather than receive a part age pension.