May 13, 2015
The Federal Government has handed down a budget that includes a tightening of the assets test but no structural changes to superannuation. The Treasurer reiterated that there will be “no new taxes on superannuation under this Government”, affirming that there will be no changes to preservation ages or taxation of superannuation.
The group that will be affected is retirees on government age pensions. From 1 January 2017, the Assets Test thresholds for full pension will be increased, allowing more pensioners with “moderate assets” to receive a full or increased pension. However, the Assets Test taper rate will increase from $1.50 to $3.00, meaning that for every $1,000 of assets over the asset-free threshold the pension rate will be reduced by $3.00 a fortnight. Pensioners who lose their age pension entitlement on 1 January 2017 as a result of these changes will automatically be issued with a Commonwealth Senior Health Card or a Health Care Card for those under Age Pension age.
Retirees on age pensions and assets at the upper thresholds of the assets tests will more than ever need to ensure their investment portfolios are providing the income and growth necessary to meet their needs.