Noel Whittaker writes exclusive weekly blog updates for the Ban Tacs Group, with IN8 Business Advisory, a member of that group. Here, he talks about changes to age pension rates and deeming rates.
A slight rise in the age pension rates, and big changes to the deeming rates, mean that many pensioners may now be better off. Also, some retirees who did not qualify for an age pension because they were over the asset test cut-off point may start to qualify. Under the new rules, a single homeowner can have up to $578,250 of assessable assets and receive a part pension – for a single non-homeowner, the higher threshold is $788,750. For a couple the higher threshold to $869,500 for a homeowner, and $1,080,00 for a non-homeowner.
From 1 May the deeming rates for a couple will be .25% on the first $86,200, and 2.25% on the balance. For a single pensioner the first $51,800 will be assessed at .025%, and the balance at 2.25%. The assets that are subject to deeming include bank accounts, shares, managed funds, insurance bonds, debentures, superannuation when the owner has reached pensionable age, and deprived assets such as excess gifts.
Deeming rates also affect people with income streams like account-based pensions that were started after 1 January 2015, and as such have lost the grandfathering provisions. They also affect anybody receiving a home care package, living in residential aged care, or applying for the Commonwealth Seniors Health Card.
The deeming and age pension calculators on my website www.noelwhittaker.com.au have been updated to reflect the new numbers. So, if you think you might qualify, do the numbers for yourself. Remember, that assets such as furniture should be valued at garage sale value, and not replacement value. Getting this wrong can cost asset tested pensioners dearly.
It’s important to seek good advice. There are strategies such as investing in funeral bonds and gifting, which may enable a person who does not quite qualify for an age pension because of their assets may be able to get over the line. Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. Should you need any personal advice, contact Noel Whittaker via email at noel@noelwhittaker.com.au .
