Increase to Pension Work Bonus
Effective 1 July 2019

The Pension Work Bonus encourages age/service pensioners to remain in the workforce by disregarding an amount of employment income from the pension income test.

Under current rules, the Pension Work Bonus allows pensioners to disregard up to the first $250pf of employment income. Under the proposed changes, the amount of employment income that will be disregarded will increase to $300pf. Pensioners will continue to accrue unused amounts of the fortnightly Pension Work Bonus, which can exempt future earnings from the pension income test. The maximum accrual amount will increase from $6,500 to $7,800.

In addition, the Pension Work Bonus will be extended to earnings from self-employment.

Extending eligibility to the Pension Loan Scheme
Effective 1 July 2019

The Pension Loans Scheme is a voluntary reverse mortgage provided by Centrelink. Under current rules, the scheme allows clients to “top-up” their age pension up to the maximum rate where they receive a part pension due to the income or asset test, or do not receive an age pension under either the income or assets test (but not both). The amount of “top-up” payments are a loan secured against Australian real estate which must be repaid when the property is sold or the client passes away.

From 1 July 2019, the Government will expand the scheme by:

  • extending eligibility to all clients of age pension age including maximum rate age pensioners, and
  • increasing the maximum amount of “top-up” payments from 100% to 150% of the maximum rate of age pension.

Maximum rate age pensioners will be able to increase their income by up to $11,799 (singles) or $17,787 (couples) per year.

While the overall maximum amount of “top-up” payments is 150% of the maximum rate of Age Pension, the actual limit depends on the clients age, how long they intend to receive payments, whether they are single or partnered, the value of their home and the rate of Age Pension they receive. These restrictions ensure they do not have to pay back more than their home is worth.

Means testing of pooled lifetime products
Effective 1 July 2019

From 1 July 2019, new Age Pension means testing rules will be introduced for pooled lifetime income streams.

Under the new rules:

  • 60% of all income payments will be assessed as income, and
  • 60% of the purchase price will be assessed as an asset until age 84, or a minimum of 5 years, and then 30% of the purchase price will be assessed as an asset for the rest of the person’s life.

The Government states that “the new rules will provide industry with the confidence and stability to develop innovative products that can help retirees manage the risk of outliving their income, while ensuring a fair and consistent means test treatment of all retirement income products. These changes also pave the way for the development of CIPRs.”

Existing pooled lifetime income streams purchased before 1 July 2019 will be grandfathered.

The Government will require providers of retirement income products to report simplified, standardised metrics in product disclosure to assist customer decision making.

Comprehensive Income Products for Retirement (CIPR)
Effective date not specified

The Government will introduce a retirement income covenant in the Superannuation Industry (Supervision) Act 1993 requiring trustees to develop a strategy that would help members achieve their retirement income objectives.

The covenant will require trustees to offer Comprehensive Income Products for Retirement (CIPRs) which provide lifetime income streams.

The Government will release a position paper for consultation outlining its proposed approach to the covenant.

Expansion of Home Care
Effective 1 July 2018

The Government will increase the number of high level home care packages that will be available over the next four years by 14,000. This increase is in addition to the 6,000 high level home care packages that were previously announced.

Residential aged care funding
Effective 1 July 2018

The Government will increase funding for residential aged care and short-term restorative care places in 2018-19 by $60 million to support new places.

In addition, they will provide $82.5 million to support mental health services for residents of aged care facilities as well as $61.7 million to make the My Aged Care website easier to use with simpler assessment forms for people to access aged care services.

National register of enduring powers of attorney
Effective date not specified

As part of a range of measures to protect the rights of older Australians from abuse, the Government will work with the States and Territories to establish a National Register of Enduring Powers of Attorney.

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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.