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Budget 2015 – Investors and Retirees

Budget 2015 – Investors and Retirees

Investors and retirees

The good news for retirees is that the government will continue to index the age pension to wages, not inflation. It has also repeated its pledge not to make any changes to superannuation in this term of government and has maintained its hands-off approach to negative gearing, dividend imputation and capital gains tax discounts.

There will, however, be $2.4 billion in savings from an increase in the age pension asset test threshold and taper rate. For example, couples with assets, excluding their home, above $823,000 will lose their pension instead of the current $1.15 million cut off.

Your Government Payments – Retirees

Pension assets test thresholds

Proposed date of effect: 1 January 2017

A number of changes were announced in relation to pension entitlements including:

  • changes to the assets test thresholds and taper rate, and
  • the removal of the indexation changes announced in the 2014/15 Federal Budget.[1]

The lower threshold will be increased. However, the taper rate will increase from $1.50 to $3.00 which means the upper (or cut-out threshold) will reduce. The taper rate is the amount the age pension reduces for every $1,000 of assets over the lower asset threshold.

The tables that show the amount of pension that could be received under these proposed measures can be found in the Minister’s press release titled ‘Fairer access to a more sustainable pension’.

NOTE: It’s important to remember that both the income and assets tests are applied. The test which calculates the lowest entitlement determines the age pension payable. The tables in the press release assume entitlement is determined under the assets test only.

Commonwealth Seniors Health Care Card

The Government will ensure age pensioners who lose entitlement due to the above changes will be entitled to the Commonwealth Seniors Health Care Card (CSHC) from 1 January 2017. The CSHC is designed to assist older Australians by providing a range of concessions, including:

  • discounts on Pharmaceutical Benefits Scheme (PBS) prescription medicines
  • bulk-billed doctor appointments (at the doctor’s discretion)
  • lower out-of-hospital medical expenses through the Medicare Safety Net, and
  • certain state, territory and local government concessions – such as transport or concessions from private business that vary between each state and territory.

Pension portability

Proposed date of effect: 1 January 2017

The Government permits certain recipients to continue to receive their pension payments while overseas for up to 26 weeks. However, from 1 January 2017, it is proposed to reduce this time to six weeks. This will apply to pensioners who have lived in Australia for less than 35 years. Their payments will be paid at a reduced rate proportional to their period of Australian Working Life Residence. Impacted payments are the Age Pension, Wife Pension, Widow B Pension and Disability Support Pension.

Previous income test proposals

Date of effect: N/A

The Government will not proceed with the income test changes announced in the 2014/15 Federal Budget.

[1] Pensions will continue to be indexed to the greater of CPI and Pensioner and Beneficiary Living Cost Index as well as being
bench-marked against Male Total Average Weekly Earnings.

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