In the 2015 budget, parliament passed changes to the Assets and Income tests for the Age Pension. In July 2016 further change was implemented. These changes, which had the support of the major parties have received virtually no press coverage until now.

The changes which took effect from January 1st have had a significant impact on a large number of pensioners. Some, who have assets in the $300,000-$400,000 range will receive a small pension increase. Many however, who have accumulated assets in excess of $500,000, will suffer a substantial drop to their fortnightly payments. Some pensioners will be as much as $13,000 per year worse off.

Such significant reduction in incomes is causing real stress and is leading some pensioners to consider taking drastic steps in an attempt to reinstate their pension payments. Some are even being encouraged to use investment capital to fund a move to a more costly home.

One of the greatest challenges presented by the new thresholds is that there is no “rule of thumb” for predicting the impact or for assessing a simple improvement. For example:

  • Bob & Wendy are homeowners and have assessable assets of $360,000, they will be approximately $1650 pa better off.
  • Elias & Maria are also homeowners but have assessable assets of $500,000 and they will be approx. $1800pa worse off.
  • While Cedric & Lucy who are non-homeowners and have assessable assets of $900,000 will be approx. $7,700 pa worse off.

While there are no “magic bullet” solutions and every pensioner’s circumstances are unique, there are some practical steps which can be taken such as:

  • Revaluing personal use assets
  • Buying a funeral bond
  • Gifting assets

On their own or in aggregate these strategies can improve the pension receivable but they must in turn be affordable in line with your own financial circumstances otherwise you will be going around in financial circles.

Of greatest importance for those impacted is that they receive professional advice. Pensioners will need to consider drawing more heavily on their savings to meet cash flow needs but with proper structuring this can have a minimal effect on their wealth over time; in many circumstances they will actually see a net improvement.

If you need help dealing with the pension changes, I’m more than happy to have a chat. You can shoot me an email at

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