The government’s changes to the pension have been described as a “mixed bag” for seniors, while a financial planner says they could be bad news for aged care financing.
Social Services Minister Scott Morrison yesterday announced changes to the pension assets test and taper rates, which will be part of next week’s Federal Budget.
Lobby group National Seniors estimated that more than 170,000 part pensioners with modest assets would benefit from an average increase of $30 a fortnight to their pension, including 50,000 part pensioners who would now qualify for a full pension.
However, the tightened eligibility for those with higher assets would result in 91,000 part pensioners no longer qualifying and a further 235,000 part pensioners having their part pension reduced, the lobby group said.
National Seniors chief executive Michael O’Neill said the changes were “a mixed bag” for seniors, and while 170,000 part pensioners would see an increase in their pension, many would be adversely affected.
Mr Morrison also confirmed yesterday that the government was abandoning its controversial proposal to rely solely on the Consumer Price Index (CPI) for indexation changes, which was announced in last year’s Budget. He also confirmed the family home would continue to be excluded from the assets test.
Council on the Ageing (COTA) welcomed the CPI decision.
COTA Australia chief executive Ian Yates thanked the government for “listening to the concerns of pensioners and working with stakeholders to design a much fairer starting point for pension change.”
However he reiterated COTA’s call for a broader retirement incomes review.
“As the Federal Treasurer and Social Services Minister have been saying publicly, whenever you pull one lever in the retirement incomes space you create consequences elsewhere, some known, some unintended – and its important these are properly explored and given full consideration,” Mr Yates said.
Elsewhere, Rachel Lane, principal of Aged Care Gurus, said that the changes to the pension could have impacts on how seniors fund their aged care.
Writing in Australian Ageing Agenda today, Ms Lane said that people who downsize to move into a retirement village or residential aged care often paid less than the value of their house, however under the changes they may be better off paying an amount that was equal or greater to the property’s value. While this was straightforward in retirement living, the recent reforms to aged care meant a resident could not pay more than the market price.