We’ve all heard about the pension changes can affect you if you have assets worth more than a set amount.
But there’s one change that wasn’t mentioned very much and it has people planning on moving into a retirement village quite concerned.
It turns out that if you move into a retirement village and pay an entry contribution over more than $200,ooo, you’ll be classed as a homeowner and your assets limit will be lowered.
According to Centrelink, if you’re classified as a homeowner your entry contribution won’t be counted as an asset – that’s one bit of good news.
However, if your entry contribution is less than $200,000 and you are classed as an non-homeowner, than it’ll be classed as an asset.
So, what does that mean for you if you buy into a retirement village and pay more than $200,000 as an entry contribution?
Well, it means you will start to lose your pension if you have more than $250,000 in assets – compared to the $450,000 that applied previously to those classified as non-homeowners.
For every $1000 in assets more than the limit, you’ll lose $3 of your fortnightly pension.
If you have more than $542,500 in assets, you’ll lose your pension altogether.
But there is some good news.
The good news is that existing retirement village residents won’t be affected by the change, because it will not be applied retrospectively.
According to Centrelink, “homeowner status is determined at the time the person enters the retirement village” and homeowner status of current retirement village residents “does not change as a result of the changes to the assets test”.
Despite the reassurance that existing retirement village residents won’t be affected, there are still fears amongst residents about losing their pensions.
The Association of Residents of Queensland Retirement Villages has circulated an email to members about the issue.
“ARQRV members have been told by Centrelink that they are considered as home owners, even though they live in leasehold villages,” it reeads.
“This means the lower home owner asset free test level applies to our members who are assessed under the assets test. Having arranged their retirement affairs to include assets under the rules current at the time of retirement, members now suddenly face a different set of rules.”
The association also encourages its members and residents to “make representations to their local Federal MP, Government Minister, or other contacts considered appropriate”.
“Perhaps it is not too late to have these harsh new rules reversed. But it is important to act now !!!” the memo reads.
For more information about the laws relating to retirement villages and your pension, visit http://guides.dss.gov.au/guide-social-security-law/4/6/4/10