We have received a significant number of queries regarding this letter. Hence, we will attempt to summarise the most common concerns.
The Conversation estimates that 2.4 million Australians “were receiving Age Pensions or Veterans Affairs Pensions”. Therefore, Centrelink are saying that approximately 240,000 Australians will have their pensions rejected or reduced.
Superguide.com.au states “the harsher Age Pension assets test for part Age Pension means an estimated 300,000 Australians will lose Age Pension entitlements, with 100,000 of those retirees losing all entitlements. Now that we know the part Age Pension thresholds are lower than first announced, we expect these estimates to be conservative.”
The Centrelink letter states – in part:
- “Each year an increasing number of people retire and many receive the Age Pension for far longer than in the past”
- “The change ensures that taxpayer funded expenditure will be focused on those with lower or moderate wealth”
1. All too often older Australians would prefer to continue to work but are constrained due to Government policies such as work cover insurance schemes ceasing before the age pension entitlement date, or simply there is no work for older Australians.
2. Most age pension claimants were contributing 3% of their tax to the age pension for the majority of their working life. Some still have their pay slips with that compulsory Government deduction.
3. The age pension is not the largest ‘welfare’ budget item. While the ‘dole’ is approx. 16% and child assistance schemes account for more than 40%. The Conversation states that “As we know from the Intergenerational Report, the proportion of Australians over 65 years is forecast to increase, leading to upward pressure on welfare spending. However, the overall number of Australians who rely on government benefits as their main source of income has been going down from about 28% in the mid-1990s to just under 25% in 2011-12.” Additionally, we know that the proportion of age pensioners in proportion to the tax paying population continues to fall and that trend is forecast to continue.
4. It’s funny that when we consider the kafuffle about the proposed tax concessions for the recent superannuation changes, where a $1.6m limit for an individual was proposed. Compare this to the approx. 25% of that level is applied to a couple’s asset limit before reductions in the age pension are enforced.
Also be warned about using the web site referred to in the letter
“where you can access an asset tested rate estimator”.
This site only considers your assets and as such should only be used by those whose current age pension is being determined by the assets test. If you are unsure please use one of the other age pensioner estimator calculators such as ours http://yourpension.com.au/APCalc/index.html#CalcForm
If the Centrelink letter is accurate and current processing times for the age pension are 4+ months! We expect a deluge of age pensioners applying for the above cards causing significant processing delays. Be warned about the possibility of loss of benefits during the processing times.
We are also intrigued by the statement regarding the Low Income Health Care Card (LIHC) and CSHC cards that “they will never be income tested so you will retain entitlement to the cards indefinitely provided you continue to meet all other eligibility requirements.” With the CSHC card it is an income based card and has no assets test. So currently you could have $20m in assets – excluding the family home - and receive the CSHC card. The Centrelink letter implies that you can go back to work and receive $200k pa and still get the card - really?