Pensioners’ payouts at risk as new assets test looms

EXCLUSIVE: A new assets test, which strips cash from seniors with substantial investments, will come into effect on January 1, leaving nearly 700,000 waiting to find out if they will lose their pension or have it cut.

NEARLY 700,000 pensioners will be left hanging until nearly Christmas before being notified if they will lose their pension or have it cut.

A new assets test, which strips cash from seniors with substantial investments, will come into effect on January 1.

About 698,000 seniors will be contacted soon to warn them they may be affected, substantially more than expected when the changes were first announced.

Prime Minister Turnbull has been labelled the Christmas Grinch over plans for a new assets test for pensioners.

But the official Centrelink letter confirming individual cases will not arrive until just weeks before Christmas, leaving seniors to rely on online calculators to estimate how they might be impacted.

The good news for Australia’s 4 million pensioners is that 166,000 people will receive a modest increase.

But the biggest losers include 313,000 pensioners who face cuts, including 88,500 expected to have their pension cancelled completely.

If a pensioner loses their eligibility as a result of the changes, the Department of Human Services will automatically issue them with a Low Income Health Care Card and if over 65 they will also get a Commonwealth Seniors Health Card.

Labor leader Bill Shorten said the decision to make seniors wait until Christmas to learn their fate was a shocking bungle which made Prime Minister Malcolm Turnbull “look like the Christmas Grinch”.

Mr Shorten said: “This is an unwelcome Christmas surprise for Australia’s pensioners.

“This has been on the books for 18 months. Why are they only telling people now?

“The Government should be doing more to explain these changes to pensioners. It’s not good enough to just send off a couple of letters.”

Minister for Human Services Alan Tudge said the test should come as no surprise.

While the family home will remain exempt, the new rules will trim payments for single seniors with super, investment property or cars worth more than $250,000.

Human Services Minister Alan Tudge said the changes to the asset test should come as no surprise to pensioners who could estimate the impact using online tools.

“Of the almost 4 million people on pensions, about 480,000 will have a change to their rate on 1 January — some up and some down,’’ he said.

“In coming weeks, letters will be sent from Centrelink to those who will likely be affected as well as to those just outside the threshold to keep them informed in case their assets change in the future.

How does the new asset test work?

From 1 January 2017, the asset free area will increase to $250,000 for single homeowners and to $375,000 for homeowner couples. That figure does not include the family home. So you can have $250K on top of owning the family home.

the asset free area will increase to $450,000 for single non-homeowners and to $575,000 for non-homeowner couples.

asset tested pensions will be reduced by $3.00 per fortnight for every $1,000 of assets owned in excess of the new asset free areas.

Your asset tested rate of pension will be increased if your assets are between

$209,000 and $291,000 for a single homeowner.

$360,500 and $539,500 for a single non-homeowner.

$296,500 and $453,500 for a partnered homeowner.

$448,000 and $702,000 for a partnered non-homeowner.

Your asset tested rate of pension will be reduced if your assets exceed

$291,000 for a single homeowner.

$539,500 for a single non-homeowner.

$453,500 for a partnered homeowner.

$702,000 for a partnered non-homeowner.

“It will outline the new assets thresholds. In December, another letter will be sent to those impacted with specific details on how their payment will change.”

The pension will be cut by $3 a fortnight for every $1000 of assets beyond the new thresholds. The asset-free area will be $375,000 for homeowner couples; $450,000 for single non-homeowners, and $575,000 for non-homeowner couples.

Who is affected?

698,000 seniors will be sent the letter

313,500 will lose payments of lose the pension including 88,500 will have the pension cancelled for Christmas

166,000 will secure a modest increase to pension

500,000 to receive changes to payments in total up and down

4 million pensioners including around 3.5 million NOT affected