AWNW - 26th October 2016

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Issue #354 – Wednesday, 26 October, 2016

Albury Wodonga’s largest circulating newspaper Prin te

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Free, next week in your Albury Wodonga NewsWeekly 12327847-KC43-16

Winners and losers By Monique Kuzeff THERE will be both winners and losers as the new pension assets test changes come into effect on 1 January next year. While some retirees may feel that the impending pension changes will provide an opportunity to re-evaluate their finances and consider lifestyle changes such as downsizing, some self-funded retirees may find that they’ve sustained financial losses. The changes, which were announced in the 2015 Federal Budget, adjusted the amount pensioners can own in solid and liquid assets to remain eligible for the full entitlement of the pension income. For single homeowners, for instance, the current assets threshold sits at $209,000 with the proposed threshold to increase to $250,000. Currently, every $1000 over the asset threshold reduces the pension payment by $1.50 but post 1 January pensioners will see that every $1000 over the threshold will reduce their pension payment by $3. What this means is that for the single homeowners who own assets over the current threshold ($209,000) but under the new proposed threshold ($250,000) will now get more pension as they will not be docked for being over the threshold. However, those who own assets over $250,000 will have their fortnightly pension payment reduced by $3 from every $1000 they own over the threshold - that’s double the reduction. Aged Care Gurus over 55s finance expert Rachel Lane, who was guest speaker at Ingenia’s Pension Changes Seminar in Thurgoona last Thursday, said there had been a lot of concern around the changes which come as the “biggest changes� to the pension in the

Aged Care Gurus principal Rachel Lane talks to over 55s about the impacts of the changes to the pension. 161036 last 10 years. “Last time we had changes like this was in 2007 so there’s going to be some serious impacts on people’s pension entitlement and there’s a lot of concern round what that means for people,� Ms Lane said. “The winners will be people who fall into that band and who are currently over that asset test but will be under the new asset test threshold, in fact they’ll actually get more income. “When the new assets threshold

comes into effect, once you tip over that threshold the pension payment will be reduced by $3 for every $1000 worth of assets per fortnight.� Ms Lane said pensioners were most concerned about the rate at which the pension payment was being reduced. “(It’s) $3 per $1000 per fortnight and if you look at it as a rate of return on your investment you need to be earning 7.8 per cent on your investments to replace your lost pension. “It’s very difficult for pensioners

who have fairly conservative investment portfolios to get 7.8 percent return on their investments and that means then that they are dipping in to their capital.� She looked towards downsizing to lifestyle communities such as Ingenia Lifestyle Albury as a strategic manoeuvre for single homeowners in order for them to become eligible for rent assistance, along with a variety of other benefits, such as no stamp duty fees. According to Ms Lane, the pension

Picture: MONIQUE KUZEFF

changes come from government trying to send the ageing population two key messages. “The first thing is to expect things to keep changing and for retirees to supplement the pension and not just purely rely on the pension for income. “The government doesn’t just want retirees to only invest in term deposits and bank accounts but to take control of the income side of the equation that they can influence and manage.�

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