Record high pension increases!

Patricia Howard -

The Federal Government has lifted the aged pension rates by $20.10 to $ 987.60 a fortnight for single pensioners and by $30.20 to $1488.80 a fortnight for couple pensioner. This is the largest increase since 2013.

Both amounts will be further boosted by the minimum pension supplements and energy supplements and where applicable by rental assistance paid to non-home owning pensioners.

Perhaps more importantly, the Government is also lifting the asset test limits for pensioners by $6,750 for single pensioners to $599,750 and for couples this will increase by $10,000 to $901,500.

Where this might make the biggest difference is where, someone in retirement was hoping to qualify for a part pension and with that an aged pension card and the lucrative discounts and benefits it brings. They might now be eligible.

If you're still not quite there, consider the following strategies to help you get beneath the new test limits;

  • Gifting. You can reduce your assets by gifting away $10,000 a year up to a maximum of $30,000 in any five year period.
  • Pre-paying your funeral. You and your partner can acquire a pre-paid funeral bond of up to $13,500 each or a total of $27,000 if they are held in separate names and reduce your assets for Centrelink's asset test purposes by this amount.
  • Superannuation splitting. If your partner is not of pension age you might consider contributing some super to their superannuation if it is still in accumulation mode. The amount of super in the younger partner's hands that is still in accumulation mode, will not be included in the aged pension asset test as long as the partner is below pension age.
  • Family home. The family home is still treated as an exempt assets for Centrelink purposes  and so can be a good place to effectively hide assets if you are really determined to qualify for the age pension.

Having written all of that, I would urge you not to go to any great lengths to restructure your financial affairs just to qualify for the aged pension.

Focus more on making your money work as hard as possible and as safely as possible to generate as much income as you need in retirement.

The age pension is a wonderful safety net for everyone in retirement but should always be treated as such. It is a safety net for those who for whatever reason weren't able enough  to provide for themselves in retirement.