TAP into the Centrelink and pension changes
The Centrelink and pension changes present a huge opportunity - but to maximise the potential of this opportunity you may need to act before the Age Pension assets test rules change on 20 September 2007. Read on to find out more about the changes and how they may affect you.
What's changing?
Assets test taper rates
The Age Pension is subject to an income and assets test. The assets test taper is the reduction that is applied to your pension entitlement where your assets exceed a lower threshold. From 20 September 2007, the Age Pension asset taper rate will be halved from $3.00 to $1.50 per fortnight for every $1000 of assets above the lower threshold. This means the maximum amount of assessable assets you can own under the assets test will increase.
As a result, existing pensioners with assets above the lower threshold may see an increase in their Age Pension, and those who are currently ineligible because of the value of their assets, may become eligible.
The table below illustrates the changes to the maximum threshold for the Age Pension assets test.
| Maximum threshold | |||
| Current | From 20 Sept 2007* | ||
| Single homeowner | Current assessable assets | $343,750 | $520,750 |
| Couple homeowner | Current assessable assets | $531,000 | $825,500 |
Term allocated pensions will lose their 50% exemption
A term allocated pension (TAP) pays your super back to you periodically for a set time based on your life expectancy, how much money you have available and the term you set for the payments (which will generally be based on your life expectancy, but may be based on the life expectancy of your spouse).
If you open a term allocated pension (TAP) account before 20 September 2007 that TAP will be eligible for Centrelink's 50% assets test exemption. TAPs commenced after this date will generally not be entitled to the 50% exemption, which may mean you'll miss out on receiving an Age Pension.
Depending on your circumstances, by opening a TAP account before 20 September 2007, you may not only benefit from the assets test exemption - you'll also reap the rewards of the post-20 September changes, including reductions to the assets test taper rates.
Getting started
Like to know how you can take advantage of these opportunities? Talk to your adviser. Alternatively, you can find an adviser.
