- Increase of $32.49 per week for single Age Pensioners, and $10.14 for couples (see article ‘$32 per week increase in single Age Pension’)
- New index, the Pensioner and Beneficiary Living Cost Index, introduced for adjusting Age Pension (see article ‘$32 per week increase in single Age Pension’)
- Closure of Pension Bonus Scheme from 20 September 2009 (see article ‘Generous Pension Bonus Scheme to close 20/09/09’)
- Harsher
- Introduction of Work Bonus to encourage work participation by Age Pensioners
Harsher income test for Age Pensioners
In what should a major bureaucratic headache for
Under the changes to the income test, the Age Pension will be reduced by 50 cents, rather than 40 cents, for every dollar earned above the income level which delivers full Age Pension income (currently $138 per fortnight for singles and $240 per fortnight for couples).
What this means is that the more income you have the faster that your Age Pension will be cut, compared to the old rules. For example, a single Age Pension can earn $38,693 before the Age Pension entitlement disappears, compared to $47,444, before the Budget announcement. A couple on the Age Pension can earn $59,228 before losing the entire Age Pension entitlement, compared to $74,324 under the old rules.
Note that an Age Pensioner must satisfy both an income test and assets test to receive the Age Pension. The Government made no changes to the assets test.
The important feature of this change is that existing Age Pensioners are not subject to the harsher income test. In what sounds like potted policy, current Age Pensioners remain subject to the old rules until they become better off by applying the new rules. When I know how this is going to work, I’ll let you know but the Government has indicated that existing pensioners could be under the old rules for another 10 years. According to the Government, around 70 per cent of all pensioners (including 93 per cent of all single pensioners) will be unaffected by the pension income test change and will move to the new system immediately.
Potentially, Centrelink will be forced to run two systems. This measure is budgeted to save $1.2 billion over four years, but I’m already imagining the cost savings dwindling due to administrative error and ongoing monitoring.
Introduction of Work Bonus for Age Pensioners
The Government has recognised that many Age Pensioners are forced to supplement the Age Pension with part-time work. If an Age Pension receives income from work (not
This measure can provide Age Pensioners with a maximum benefit of $125 per week, although the individual also benefits from the extra income from work.
On the new income test and “grandfathering”
As I understand the position, income from financial assets is workedout by deeming (Capital value times rate) The rate is currently 3% p.a. (2% on first $41K(single/$68200(couple)
This is clearly low point in interest rate cycle. What happens when deeming rates rise?
There has been no mention of the utility allowance will it still be paid
Dear Beryle – Based on the latest information from government, yes, the utilities allowance remains but in a slightly different form. With other allowances, Age Pensioners can expect an increase of $129.48 a year in total allowances, in addition to Age Pension increases.
In the 2009/2010 federal budget paper, “Secure and Sustainable Pensions’ the government states the following: “The Government will simplify the existing pension allowances by creating a new fortnightly Pension Supplement. From 20 September 2009, the existing Goods and Services Tax Supplement, Pharmaceutical Allowance, Utilities Allowance, Telephone Allowance (at the higher internet rate), and increased assistance of $2.49 per week for singles and $10.14 per week for couples combined will be included in the new fortnightly Pension Supplement.
To assist pensioners to meet lumpy costs, from 1 July 2010, pensioners will:
- be able to receive around half of the Pension Supplement quarterly
- have greater access to advance pension payments through an increase in the maximum allowable advance and increase in the number of times they can access advances in a year.
From 1 July 2011, the new fortnightly Pension Supplement will be increased further to include the Carbon Pollution Reduction Scheme household assistance.”
Hi, interesting article, thanks.
If I may ask a question, didn’t the Federal Govt say during the last Budget last May that they were looking at allowing aged pensioners to earn more than the current income test of $146PF for singles, if I recall right I thought they said $500,
If this is correct, do you know when it will come in and will it apply to people on Disability pension?
Thanks
Phil
Hi Phil
Thanks for your email.
You can access information about the work bonus incentive by clicking on this SuperGuide article link: http://www.superguide.com.au/superannuation-basics/new-income-test-for-age-pension
The work bonus policy took effect from 20 September 2009, and I don’t believe it applies to individuals on the Disability Pension, although you would be best to confirm that fact with Centrelink.
The article above includes a link to a Centrelink page that provides more information on the work bonus incentive, or you can call 13 23 00.
Regards
Trish