Budget to shake up age pension

Social Services Minister Scott Morrison announced yesterday that there will be a number of changes to the Age Pension as part of next week’s federal budget.

The beneficiaries from the changes include more than 170,000 part pensioners with modest assets who will benefit from an average increase of $30 a fortnight to their pension, including 50,000 part pensioners who will now qualify for a full pension.

The ‘assets free area’ is set to be increased in the budget, which is the value of assets you can have in addition to your family home, in order to qualify for a full pension. This will increase from $202,000 to $250,000 for single home owners and from $286,500 to $375,000 for couple home owners.

Pensioners who do not own their own home will also benefit by an increase in their threshold to $200,000 more than homeowner pensioners. This increases the gap between homeowners and non-homeowners thresholds by more than a third, recognising the higher living costs.

But Minster Morrison also announced tightened eligibility for those with higher assets which will see approximately 91,000 part pensioners no longer qualify and a further 235,000 part pensioners who will have their part pension reduced.

As part of the announcement Minister Morrison confirmed that the proposal to rely solely on the Consumer Price Index (CPI) for indexation changes had been scrapped. He also confirmed the family home would continue to be excluded from the assets test.

National Seniors chief executive Michael O’Neill says the announcement was a mixed bag for older Australians. “The pension indexation proposal would have adversely affected 2.6 million age pensioners,’’ Mr O’Neill says. “Under this new proposal, an average increase of $30 per week for some 170,000 part pensioners will be welcomed.”

“A significant number of older Australians will be adversely impacted so it is critical that clear information and access to advice are a priority so they can consider their position and the adjustments they may need to undertake,” according to Mr O’Neill.

“These changes will cause anxiety particularly for those older Australians who have been in receipt of a part pension for an extended period of time,” he says.

“Importantly the family home remains excluded from the assets test and people currently eligible for the Commonwealth Seniors Health Card or Health Care Card will continue to be eligible,’’ Mr O’Neill says.

National Seniors released a report this week showing that rather than draining the economy, older Australians were putting in 1.4 times more than the entire 2013 budget deficit.

“These changes will deliver more than a billion dollars in savings to the budget. Older Australians have every right to expect the government will deliver reforms elsewhere in the economy next week,” says Mr O’Neill.