Can a couple with $1M still receive the age pension?
By Luke Kidd
In 2017, the Australian Government tightened the Age Pension means test, resulting in many part-pensioners receiving a lower payment or losing it completely. Prior to the change, a couple who owned their own home could have up to $1,123,500 in assets and investments outside the family home and receive a part pension [1]. The 2017 reforms reduced the upper threshold for a part pension to $816,000 for retirees in this category [2].
Over the years since, indexation has steadily increased this cut off threshold. Accelerated in recent years by higher than average CPI figures, the last round of indexation pushed the cut off threshold for a homeowner threshold to $1,003,000 [3]. So, the answer is now Yes! A couple can have up to $1m in assets outside of the family home and still receive a part pension.
What counts as an asset?
The following is a non-exhaustive list of what counts as an assessable asset for the age pension means test [4]:
Financial investments (Cash, Term Deposits, Shares, Managed funds).
Superannuation accounts.
Most income streams including account based pensions and annuities.
Some life insurance policies.
Investment properties.
Motor vehicles, boats, caravans etc.
Personal effects and household contents.
Can I reduce my assets?
There are strategies you can use to reduce your assessable assets such as gifting, spending money on personal expenses or improvements to the family home or purchasing special financial products such as funeral bonds or lifetime annuities. These strategies require careful planning and consideration of the relevant rules and thresholds. You should speak with a financial advisor before attempting to reduce your assessable assets.
What if I’m over the limits?
Unfortunately, if your assessable assets are in excess of the relevant caps, you are not eligible for an age pension. However, you may still be eligible for a Commonwealth Seniors Health Card which provides the same healthcare benefits as the pension card but is only subject to an income test. If you are age pension age and your assessable income is below $95,400 for a single person or below $152,640 for a couple you may be eligible for these concessions [5].
References
[1] https://www.servicesaustralia.gov.au/sites/default/files/2016/10/int001-1610en.pdf
[2] https://www.acoss.org.au/pension-changes/
[3] https://www.servicesaustralia.gov.au/assets-test-for-age-pension?context=22526
[4] https://www.servicesaustralia.gov.au/asset-types?context=22526
[5] https://www.servicesaustralia.gov.au/income-test-for-commonwealth-seniors-health-card?context=21966
Luke Kidd in an authorised representative of Alliance Wealth Pty Ltd. (AR: 001242685)