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Aged Pension Changes

Article By Adam Hurwood | | Financial Planning

| Financial Planning

The 2014-15 Federal Budget contained many changes that affect recipients of the Aged Pension. The Assets Test thresholds and taper rates were one of the hotter topics with regards to the Aged Pension.

Assets Test Thresholds and taper rates

Effective date: 1 January 2017

As announced prior to the Budget, the Government is proposing significant changes to the assets test for determining pension eligibility from 1 January 2017.

• The proposed change will restore the existing taper rate of $1.50 pension reduction for every $1,000 above the relevant threshold, to the pre 2007 level of $3.00 for every $1,000 of assets above the threshold. This means that the rate at which pension payments are reduced has doubled (under the Assets Test).

The table below outlines the current and proposed thresholds.

The below graph illustrates (for a home owning couple) the proposed reduction in the combined aged pension entitlement in relation to the level of assets held (excluding the family home). As you will see, the restored reduction rate of $3.00 for every $1,000 of assets above the threshold, the asset cut off is reduced from $1,151,500 to $823,000 at which point the aged pension entitlement is lost.

To ensure you know precisely how you may be affected by one or more of these measures, please consult your Altitude adviser.

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