Pensioners have claimed a small victory today after Treasurer Josh Frydenberg ruled out including the family home in the Age Pension assets test.
According to a report in The Australian, Frydenberg stated in parliament on Wednesday that no changes will be made to the assets test, despite recent comments from Liberal MP Craig Kelly which stirred up Labor pollies who, in turn, slammed the government over the alleged proposals.
Kelly told The New Daily this week that there should be a fresh debate about the inclusion of the family home in the assets test for the pension, which prompted Shadow Treasurer Jim Chalmers to raise the issue in the Lower House on Wednesday.
“The Member for Hughes has called for the family home to be included in the pension asset test which means more retires will be pushed off the pension, out of their homes or both,” Chalmers said. “The government has already shortchanged pensioners by refusing to proper adjust deeming rates for years despite five interest rate cuts.”
However, Frydenberg has since hit back at Labor’s “lies” on Twitter: “Labor’s claim that the pension assets test will be changed to include the value of the family home is a lie. It’s not our policy and never will be.”
Labor’s claim that the pension assets test will be changed to include the value of the family home is a lie. It’s not our policy and never will be.
— Josh Frydenberg (@JoshFrydenberg) July 24, 2019
The family home isn’t currently included in the means test, meaning 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.
The news comes after economist Chris Richardson called for homes to be included in the Age Pension assets test earlier this month.
Speaking on ABC’s 7.30 program, 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, 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.
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 situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.