Changes include the reinstatement of the pensioner concession card for more than 92,000 pensioners who lost it when the government introduced tighter asset test rules in January. These people will now receive discounts on essential goods and services, such as medicines, public transport fares, vehicle registration and property rates.
There are also changes for foreigners wanting to access the Australian pension. They will now have to have 10 years’ continuous Australian residence, including at least five years during their working life before they are eligible.
In a bid to free up housing for more families, the Government is encouraging seniors to downsize from the family home to a unit or apartment with financial incentives. Couples over 65 can now divert up to $600,000 to superannuation, and for a single homeowner, the figure would be up to $300,000 of the sale proceeds.
Under the new policy, the existing voluntary contribution rules for people aged 65 and older (work test for 65-74; no contributions for those aged 75 and over) would not apply. Existing restrictions on non-concessional contributions for people with super balances above $1.6 million would also be removed.
Representing the over 50s, National Seniors Chief Advocate Ian Henschke thinks the Federal Government’s downsizing initiative has positives for some Australians but hasn’t gone far enough, and more detail is needed about the initiative.
“The initiative is not the proposal National Seniors put to government,” Mr Henschke says. “We wanted up to $250,000 of home sale proceeds exempted from the Aged Pension means test, and we’re disappointed they have been left out.
“But we’re pleased the government heard the message that older Australians need more options to have a better financial future.
“We still have to see more detail on how the policy will affect those on full and part pensions, but for many older Australians who are asset rich and income poor, this appears to be an opportunity to boost their super savings and become more self-sufficient.
However he points out the new policy applies to people who sell a home that has been their principal place of residence for at least 10 years. “Those who love to ‘do up’ and move on every few years will have to think carefully,” he advices.
Mr Henschke says National Seniors also welcomed government incentives to boost investment in affordable rental accommodation for low to moderate income households as recognition that not all older Australians were home owners. From the start of 2018, investors will be entitled to a 60 per cent discount on capital gains if they keep an investment property for at least three years and be provided at below market rent.
The Treasurer also confirmed the Government will provide $268.9 million over two years for a one-off winter energy payment in 2016-17 for pensioners. This will be $75 to singles and $125 per couple, and will be paid before June 30 2017.
Speak to your accountant, financial advisor, Department of Veteran Affairs or Centrelink to find out more about how the 2017/18 will affect you.