Who are the winners and losers of the new Age Pension

Many Australians will receive a belated Christmas present from the Australian Government: their loss of entitlement to a part age
Changes to the pension are set to hit in January next year.

Many Australians will receive a belated Christmas present from the Australian Government: their loss of entitlement to a part age pension.

They have been too successful during their working life, in this government’s eyes, and joined an elite group of Australians deemed rich enough to supply their own retirement notwithstanding they have paid their taxes and their dues, not bummed of the public purse, not received handouts all their lives, and purchased their homes with often ridiculously high interest rates.

These great Australians must be sitting at home wondering what they have done wrong and why they have been deserted by their government. The age of entitlement we are told has ceased, but these people never asked for entitlements. Something is seriously wrong when, if the age of entitlement is over, there are now more Australians (not pensioners) receiving handouts and benefits today than ever before. Both statements can not be true, so someone is not telling the truth.

So what have these poor Australians lost in real terms and who are the winners and losers?

From this month a couple with current assets of $816,000 will loose $14,001 in part age pension entitlement and become zero rated, receiving no part age pension at all.

That is a lot of money to loose particularly if your future budget already takes that amount into consideration. It is more than just a couple of coffees being lost. Somehow that loss will have to be made up from available assets, which is not easy to do when interest rates are at an all-time low.

A couple with current assets of $1 million come January 2017, loose $6,825 in part age pension entitlements and become zero rated, receiving no part age pension at all. Again a lot of money to be recouped from assets.

With current assets of approximately $1.175 million, the loss of a part age pension would be zero with that the figure being the cut off point prior to January 2017. If you are lucky enough to have assets of $1.175 million reducing them to below $816,000 just so you could obtain a part age pension would be a bit over the top and foolish anyway.

As can be seen, those with assets around $816,000 lose more in real terms than anyone else, while at the same time having less assets with which to take up the slack.

They will have no choice but to supplement from current assets to fill the gap. If you’re doing this, just make sure Centrelink is advised of any changes in current assets done to obtain a raise in part age pension.

Those who receive a windfall and gain an increase in the part age pension are those with assets between $375,000 and approximately $457,000. At $375,000 you can expect approximately $1779 extra per year. With current assets of approximately $400,000 you can expect approximately $2,223 extra per annum.

With current assets of approximately $457,000, the increase would be zero and any amount above that figure would reduce the part pension by $3.00 for every $1000 over.

The amount of increase will vary depending on the value of your assets, but the biggest winners are those with assets between approximately $276,000 and $375,000 as they will now receive the full pension.

An increase or loss situation is easy to work out by going to the Centrelink calculator, which is very good and simple to use. The above figures are for a couple owning a property. For singles, the same is happening, but the figures vary.

In summary, any age pensioner with current assets up to approximately $457,000 will get an increase in age pension or part age pension. Above approximately $475,000 and under $816,000 you will loose money. With current assets above $816,000, you will receive nothing by way of part age pension; entitlement is lost.

Good luck to all those affected adversely by the changes and I trust you have updated your situation accordingly. I am pleased for those with minimum assets who have had their situation increased to a full pension or higher part age pension as many have been finding it very hard.

Have you established how you will be affected? What changes do you think you will have to make to your day to day life style?

This piece was originally published on Starts at 60 as ‘Age Pension — New Year winners and losers’. It was one of our most popular contributions by the Starts at 60 community in 2016.

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  1. Dee  

    I’m not sure those figures are correct. I believe the only winners were those with very few assets or none at all. This article appears to make out that there are lots of winners when there are very few. Most of us are losers and not having any incentive now to be careful in our old age, many of us will just embark on a spending spree to bring the pension into line with what it was before. That may be good for the economy (temporarily) and good for us (while the money lasts). Gone is any incentive to have decent super. Could’ve retired 3 years earlier and be no worse off. This is a stupid decision from a very stupid government, without a doubt the worst in my memory.

    • Guy Flavell  

      Dee, I think you urgently need medical help for your short-term memory loss. Your problem is
      quite severe if you can’t remember the dreadful Rudd/Gillard/Rudd administrations. These
      two fools set our country on a path of fiscal disaster.
      May I remind you of the fact that a home-owning retiree can earn up to $58,000 TAX FREE from
      their retirement funds. Why don’t you just try to be a responsible Australian and exist comfortably
      off your retirement funds without the constant whinging. There are just too many greedy sods like you
      living the high life at the taxpayers’ expense.

      • Dee  

        “There are just too many greedy sods like you”
        Thanks for the character reference. You know nothing of my life or the struggles I had to make to get to this point. Your nasty comments were uncalled for but its what I’ve come to expect from you. You are easily the nastiest person on this site and I’m surprised that such a comment wasn’t removed. I bet you wouldn’t have the gall to speak like that face to face. Of course not, it’s too easy hiding behind a keyboard isn’t it.

        • Guy Flavell  

          Dee, often the truth is hard to accept … and your defensive comments are reflective of this.

      • Leone O'Sullivan  

        If we could see that the amount taken off us per year came off the deficit it might be some satisfaction. This lot couldn’t manage a piggy bank. They made “savings cuts” to everything and still managed to quadruple the size of the deficit in less than 4 years? Is one cent of what they have taken off the working class going off the deficit? No. It is going to their mates, the foreign owned companies and the ultra rich in tax cuts. This is not a saving at all. We spend every cent in our local community. They send every cent to a tax haven overseas. Australia gets no benefit whatsoever from tax cuts to the rich. Don’t give me that blarney about “employing more people” They upgrade their company to use more automation and to employ less people. We won’t mention increasing Liberal government heads-of- department salaries by doubling it to $600,000 pa.

    • Marilyn R  

      The figures don’t seem correct to me! I have just over $450,000 in assets and I don’t gain! I lose $300 a fortnight of my part pension. For singles you lose 3 dollars per $1,000 over, I think, $295,000. I believe you have confused the couple and single figures!

    • Wendy Gibson  

      I disagree with these calculations. My assets are under the $400,000 range and my part pension has been cut by two thirds to about $50 a week.

  2. Jack  

    Totally agree with Guy Flavell. These greedy retirees should be all named and shamed then
    publicly vilified. Confiscate their assets and let them try to live on a $22,700 old age pension
    as their sole income. The greedy B’s would soon change their tune.

    • Dee  

      You men are so full of compassion aren’t you and so brave when you can team up together and attack a woman……just another nasty keyboard warrior twisted with bitterness. You didn’t even get the point of my post which is that the govt has removed the incentive for people to work therefore to me its a bad government.

    • John  

      Your’s and Guys bitter comments towards Dee clearly illustrate your lack of forming an argument to support this lousy government who attack social services and turn a blind eye to their mates from uptown who avoid their moral responsibility of paying taxes.
      Go after the tax avoidance bludgers !

  3. Jeff  

    Jack, this “greedy” retiree worked 60 hours per week for the last 14 years of his working life. Our 3 kids didn’t have annual birthday parties or overseas holidays. We travelled about 60Klm and camped in a tent with minimal facilities. Always drove a car that we could afford and pay for. Borrowed for a house and paid it off as quickly as possible. This is how we are in a position that we will receive a 15% cut to our income to fund people who have lived a prolific lifestyle with no regard to their retirement.
    I believe that after all these years of self control, we are entitled to what we were expecting, and what we had budgeted for, to enable a “comfortable ” retirement.

    • Dee  

      Believe me, Jeff, I know where you’re coming from. But we dare not complain or we’re just “whingers”. Who else in our community has been hit with such savage cuts and we have a right to make some sort of protest as most people I’ve spoken to are unaware of just how much we lost. It makes me upset to think of things my kids have missed out on, all to no avail. I don’t begrudge the pensioners who got the $30 pay rise as they probably needed it, but it was put across that they needed to cut our to pay for theirs. Of course that will cause division and that’s what the LNP is all about it seems.

  4. Rosemary Lynch  

    Those figures certainly do not apply to single homeowners! A single homeowner starts to get cut at $250,000, a non-homeowner $450,000 AND they doubled the deeming rate, so not only do I reduce the pension, I get re-taxed! I am getting clobbered and will never vote for the privileged nongs who voted this in, never for the LNP, One Nation and Greens. They apparently see me as a scammable target. Shame on them! On top of this, the ministerial rorts! Why have the Commonwealth Police not zapped Sussan Ley for stealing as a servant? She knew what she was doing. What is wrong with the Speaker of the Reps: get this woman publically accountable.

    • Dee  

      Yes, the figures are way out. When a single homeowner takes out their assets (ie car, furniture etc) really they are only allowed to have more like $200,000 in their super before they get hit. I was OK with my part pension as it was but not now. Being a single parent, I just couldn’t hope to ever be fully self-funded but tried to plan for my retirement sensibly. So much for that plan which just went right out the window.
      Great work, LNP and Greens! You won’t ever get my vote again either and I can’t wait to see you convincingly evicted. (That should wipe the smirk off Morrison’s face!)

      • Guy Flavell  

        Dee, a truthful reply is all I ask. Do you earn more than $22.7 k pa … ie: the OAP ???
        If you do, then please stop whinging. There are countless non-home owning pensioners out
        there paying nearly half their income on private rentals. They have an awful time trying to make
        ends meet and are often forced to accept food parcels from St.Vinnies and the Salvos to
        survive. Luxuries to them are a cup of coffee at a cafe or a gift card from their kids. Their
        fridge breaks down and they are totally unable to replace it without assistance from people
        like the Good Shepherd (bless them).

        • Guy Flavell  

          Dee, I’m still waiting on your truthful response. Could it be that the truth would be an embarrassment?

  5. Wiso  

    I am not sure why there is so much angst over the changes to Age Pension.

    We have had 30 years notice that it is not sustainable and that is why compulsory superannuation was introduced. There has never been a pension fund within the tax system as all the taxes we have paid go to pay current age pensioners and to fund education, health, roads, hospitals, etc. Age Pension has never been sustainable and the funds to pay all these illegals that come into our country encouraged by Labor/Greens who opened the flood gates for them, has to come from somewhere. We do not have a bottomless pit to draw from but pensions should not be the only thing trimmed. All those able-bodied people who choose not to work should be the big losers, and those foreign companies that take their profits overseas rather than pay tax here.
    Subsidised child-care is another thing that needs to be trimmed and only made available to those who really need it.

    And completely stop foreign aid !!! We got 0 return on that !!

    If these things were implemented there would be plenty to go around.

    • Guy Flavell  

      A brilliant, balanced and honest comment … well said Wiso. Agree with you 100%.

    • Matthew Starrs  

      I completely agree Wiso. I am 51. I won’t ever get a pension because I am working my arse off to make sure I won’t need one. That will be a lot easier for me to achieve if the Government would stop charging me excess taxes to give to bludgers. Btw, If I can do it, anyone can. I was bankrupt at 30 and had to start again.

  6. Newton Hill  

    The only analogy I can draw from this is two pensioners pouring a cup of tea for, and surrendering their most comfortable lounge chair to, an armed robber in their own home. He eats the scones and drinks the tea and then rifles through the money under the mattress put away for future hard times.
    Why? Because pensioners have been dyed in the wool voters for either the Coalition or Labor for decades now. And they, the major parties know this. It will be pass the baton time next election but nothing will change. And, I’m sorry to say, the Australian public bring it on themselves. Its a political merry go round folks and Canberra knows it. Get ready for more of the same for years ahead. This may be a test to see how much they can push the envelope. If it works, expect more.

  7. Chris  

    The article is useful for prospective pensioners/pensioner couples who meet the income test. One can have next to nothing in assets but if you have income or deemed income that take you even a dollar over the income limits, goodnight Josephine.

  8. Guy Flavell  

    So, as I read it a home-owning couple with assets of $816,000 will lose their part-pension.
    If their assets are invested with a long-term 5% return expectancy then they will earn $40,800 pa
    tax free. Still a reasonable income in retirement … nearly double the single person’s OAP.
    If their assets are $375,000 then they will have their pensions increased by over $30 pw.
    Over $457,00 will mean a reduction in pension by $3 pw for every $1000 over $457 k.
    Retirees with assets over $1 million and up to $1.175 k certainly don’t need the pension and
    can live very, very comfortably on their income.
    When you analyse the changes then they certainly appear to be very fair but I am surprised at the
    level of people complaining about same. Could this just be childlike pouting over the loss of their
    previously over-generous pension payments ?

    • Leone O'Sullivan  

      What makes you think that anybody’s entire assets over 816,000 are earning interest. They class a car as an asset. Do tell how a couple with a car each – earns one cent (let alone your whopping 5% return expectancy) on cars. People might have a boat, caravan, trailer, jet ski – or any number of things they have owned for years – even your piano are all added into the total called assets when in fact all of those things are liability. An asset is something that earns you money. A Liability is something that costs you money. Do tell how much money I can make on having a car? NO! It costs – and the government collect fuel tax and GST on every cent of fuel I use. The government collects on compulsory registrations and compulsory third party insurance. The Federal government gets GST on vehicle insurance, vehicle service, vehicle parts, vehicle windscreen replacement, vehicle tyres. The government collects GST on the insurance of our house. Their logic in saying that a registered vehicle is an asset is seriously flawed. Your idea that anybody earns 5% on much at all is seriously flawed. I notice I’ve earned .25% (point two five) interest on a $4,000 V2 account I keep. So that’s $12 per fortnight the government deducts from my pension while the $4,000 actually earns a princely $0.38 per fortnight. So instead of deducting $6.00 per fortnight on my 38 cent earnings as previously – this government has doubled the rate to $12 per fortnight for my earnings of 38 cents per fortnight. Of course, people who have’t been truthful with their “assets” test don’t have a problem?. Understand the real life facts and calculate your earnings on “Assets” that actually earn money – not as the government does and classes as “assets” items that cost money and earn nothing and already contribute to the government coffers. A couple with $816.000 will quite likely be worse off living on their interest than if they received a full pension.

  9. Mary  

    If you feel like living on the pension just make sure you eat drink and be merry whilst you are earning. Go on holidays gamble and enjoy. Then retire at the appropriate age and let them keep you for the rest of your life. The problem is they change the rules all the time and even if you have super it’s not safe

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