Retirement is a time to spend relaxing with lifelong friends and extended family. However before you can enjoy this period you need to navigate complex (and ever changing!) rules and regulations surrounding the Australian Aged Pension.
For a basic overview of the Aged Pension, see this article. And for a more detailed look at the evolution of the Aged Pension in 2018, read on.
Changes to the Australian Aged Pension in 2018
Pension Changes For People Overseas
From the 1st of January 2018, the Pension Supplement will be stopping for people who live overseas or travel outside Australia for more than 6 weeks.
After relevant legislation has been passed, payments will stop if you are outside Australia for more than 6 weeks. If you decide to move overseas, the supplement will stop on departure.
Enhanced Residency Requirements
Enhanced residency requirements mean that to be applicable for the Age Pension after the 1st of July 2018, you’ll need to have at least one of the following:
- 10 continuous years of Australian residence, including at least 5 years during your Australian working life (the number of years you’ve lived permanently in Australia between age 16 and pension age).
- 10 continuous years of Australian residence and proof you have not received activity tested income support for cumulative periods of 5 years or more.
- 15 years of continuous Australian residence.
If you’re already receiving the Age Pension, you will not be affected unless your payments are cancelled after the 1st of July 2018. If you try to re-claim after this date you’ll be subject to the new rules. This change is pending legislation, however it is expected to be passed smoothly.
Pensioner Concession Card Reinstatement
If your Pensioner Concession Card was revoked after 2017’s pension assets test change, you’re in luck! Following the passage of legislation, the Pensioner Concession Card will be restored to those who lost their eligibility.
Winter Energy Cash Payments
If you’re on the age pension in 2018 you’ll receive a one-off cash payment to help cover your winter energy bills. These are set to be $75 for singles and $125 for couples.
Other relevant government initiatives in 2018
Home Support Services
In the 2017/2018 budget the Government dedicated $5.5 billion to home support services for the elderly as Australia’s population continues to age.
Home Downsizing Incentive
You may be able to gain some tax benefits from the new Home Downsizing Incentive. According to this initiative, after selling their primary residence, people over the age of 65 will be able to make a non-concessional (after-tax) superannuation contribution of up to $300,000 - provided they have lived there for 10+ years.
This incentive will be enforced from the 1st of July 2018, subject to legislation. It will be exempt from existing tests, including the $1.6 million balance test for making non-concessional contributions. However, participating in this scheme may change or limit your eligibility for the Aged Pension.
Changes to the Australian Aged Pension in 2017
In 2017 extensive changes were made to the Australian Aged Pension. These are still relevant in 2018, so we’ve outlined the major updates below.
The age requirement increased on the 1st of July 2017 to 65 and 6 months of age. The retirement age is due to increase by 6 months every 2 years, becoming 67 by 2023.
Changes to the asset test
Income and asset tests are used to determine eligibility for the aged pension. While the income test remained the same, the asset test changed significantly in 2017.
An increased taper rate means that for every $1,000 by which you exceed the asset threshold for the full pension, your payment will be reduced by $3.00 (instead of $1.50). Asset thresholds also increased in 2017.
Considering ways to lessen your financial stress whilst on the pension is essential. Try to pay off any outstanding debts early on, and where possible forward plan your expenses too.
Paying up to $12,500 for a prepaid funeral plan will not impact your eligibility for the aged pension as it is excluded from the asset test. It’s an effective way to reduce your family’s financial burden - helping everyone to celebrate your life during and after retirement.
At Lady Anne Funerals, we are happy to talk you through your options to find a prepaid funeral and service that suits you. If you’d like more information, please click the below image for your free guide to prepaid funerals.