By John Perri 10 July 2019
Summary of key changes:
- Pension age increases to 66
- ‘Work bonus’ for eligible pensioners gets a boost
- Self-funded retirees and pensioners now able to access a government-funded reverse mortgage on their homes
- Protect Your Super laws come into force
- The age Australians can access their super increases to 58
- Eligible Australians now able to contribute more to super using ‘catch up’ rules
- Relaxation of the ‘work test’ for eligible retirees to help them contribute more to super
Pension age increase to 66
Australians born between 1 January 1954 and 30 June 1955 will now have to wait until they turn 66 before they can receive the age pension. This is part of an ongoing schedule to increase the age pension to 67 by 1 July 2023.
The maximum rate for the Age Pension, including supplements, is currently $926.20 for a single person per fortnight. If you are a couple, the rate is $698.10 each per fortnight.
The ‘work bonus’, which aims to encourage people who’ve reached pension age to continue doing some paid work, is getting a boost.
Currently, eligible pensioners can earn a $250 per fortnight before their pension is impacted.
From July 1, this will be increased to $300. That means, a single pensioner can earn a maximum of $474 per fortnight ($300 from employment, $174 from other income) before their pension payments are reduced. The self-employed, like sole traders, will now also be able to apply for the ‘work bonus’ for the first time.
Government reverse mortgages for retirees
The revamped Pensioners Loan Scheme allowing retirees to boost their income through a reverse mortgage on the family home is about to come into effect in the new financial year.
The enhanced Pensioners Loan Scheme will now be open to full aged pensioners and selffunded retirees. Previously only eligible pensioners were able to access the scheme.
AMP modelling shows a self-funded retiree will now be able to borrow up to a maximum $36,000 per year and a self-funded retiree couple could potentially borrow up to a maximum $54,000 per year, paid in fortnightly instalments.
New means testing rules for new lifetime income streams commence
From 1 July 2019 retirees will have more options when it comes to starting a lifetime income stream.
In addition to immediately payable lifetime annuities, retirees can also purchase a ‘deferred lifetime annuity’, which will pay them an income for life from a designated age in the future.
The Centrelink means tests have been revised to accommodate this development, and the big change is that asset-tested retirees may benefit from a 40 per cent asset test discount if they commence a lifetime income stream from 1 July 2019.
Lifetime income streams may not be the right strategy for everyone. It is important to weigh up your personal circumstances or seek professional advice.
Protect Your Super laws
New rules called the Protecting Your Superannuation (PYS) package are about to take effect.
The key changes include low balance and inactive superannuation accounts being transferred to the Australian Tax Office (ATO), fee caps on certain balances under $6,000, the banning of e