Will your pension be cut from January 1?
In just a few weeks many aged pensioners will be hit with cuts to their Centrelink payments. From 1 January 2017, changes to the limits on the value of your assets will apply, and your pension will reduce by a greater amount than before for every dollar you are over the asset limit.
In fact, Centrelink is doubling the amount they cut from your pension if you own or earn too much. And it turns out the number of people affected by these cuts could be more than 330,000 Aussies. And of these, at least 100,000 could lose their pension altogether.
What pensions are affected?
From 1 January, new assets limits apply to recipients of the following pensions:
What are the cuts?
- Your pension will reduce by $3 per fortnight for every $1000 you are at or over the new asset limits.
- This cut is double the current reduction of just $1.50 per fortnight under the current system.
- The threshold to qualify even for the partial pension is being reduced as well.
- These cuts could result in up to 100,000 Aussies missing out on the pension entirely, with another 225,000 people likely to have their fortnightly pension payment from Centrelink reduced.
These cuts were passed by the Government as part of their plan to cut $2.4 billion in spending.
How do I know if I’m affected?
- If you currently receive the maximum pension rate, you’re safe. Your pension payment won’t change at all.
- But if these changes are going to reduce or cancel the payment you receive, Centrelink will have sent you a letter.
- You should login to your MyGov account to check if you have any new updates from Centrelink.
- You can also use Centrelink’s online asset test estimator to see how you might be affected.
- If the increased asset limit means you’re eligible for a higher rate of the pension, this will happen automatically from 1 January 2017.
How to avoid being hit by cuts to your age pension
If you’re close to or above the asset limits, there’s a few ways you can restructure your finances to make sure you continue to receive the age pension.
- Make sure your assets aren’t over-valued. Perhaps they’ve depreciated, so be sure their value is realistic and not too high.
- If you have a younger spouse, consider moving some of your super to theirs.
- You could move some of your finances to other family members. You can gift up to $10,000 in assets a year to your children.
Where can I get more info?
You can read more here.
You can also watch this video from the Department of Human Services.