An economist has risked the wrath of retirees right across Australia as he called for homes to be included in the Age Pension assets test.
Speaking on ABC’s 7.30 program, economist Chris Richardson claimed the value of a property should help determine how much pensioners receive.
While Richardson claimed the pension in Australia is “not generous” compared to the rest of the world, he insisted the price of one’s home in means testing is necessary.
“The politics are horrendous, but it is still the right thing to do,” he explained. “You have some people who have incredibly valuable homes and yet qualify for the pension.”
Currently people who invest their savings in their principle home can still receive the full Age Pension depending on the value of their other assets. However, those who are renting, but may have more money invested in other assets, such as the stock market or investment properties, might not be able to receive the Age Pension.
Richardson’s comments didn’t sit well with pensioner Julie-Anne James, who is in the process of paying off her mortgage on her apartment on the Gold Coast.
“My home doesn’t generate an income so I don’t see it as being an asset… because I pay body corporate [fees], I pay a lot of bills to live here,” she explained to 7.30.
Meanwhile, other pensioners weighed in on their struggles surviving on the Age Pension, with retiree Wendy Walters explaining she would not be able to get by on her superannuation savings alone.
The Queensland resident said her super funds will only last her around another six years, meaning she will have to live fairly simply on the pension and make sure not to overspend.
“If there wasn’t the pension, I wouldn’t be living,” she told 7.30. “That’s the reality. I always knew that I was probably in a situation where I would never be able to live terribly well. Having said that, one of the great things about my generation is that we do OK with very little.”
Currently, when it comes to applying for the Age Pension, there is a long list of assets that need to be declared, ranging from property and business interests to personal items such as jewellery and computers, as well as privately owned vehicles, including cars, boats, caravans and motorhomes.
Other assets that can impact upon your pension payments include retirement village contributions, life interests and financial investments, along with any income streams, including superannuation income. Any assets that are “gifted” to someone else, or sold for less than their worth, may also count towards the assets test.
As of July 1, for couples in receipt of the full pension, homeowners are allowed to have combined assets worth $394,500 (up from $387,500) while the limit for non-homeowners has risen to $605,000 (up from $594,500) before it impacts upon their Age Pension payments.
The assets test limits increase for those on a part pension, however those in possession of assets valued over the stated amount have their pension payments stopped rather than reduced. As of July 1, individuals can have assets worth up to $572,000 (homeowner) and retain their part pension, or $782,500 for those who do not own their own property.
For couples on a combined part pension the limit for homeowners is now $860,000 and $1,070,500 for non-homeowners, while couples on a combined pension, however separated due to illness, have new asset limits of $1,012,000 and $1,222,500 for homeowners and non-homeowners respectively.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
Starts at 60 Members get a whole lot more value here. It’s free to join and you’ll get:
What are you waiting for?