Some Aussie retirees may discover to their dismay that they’ve sustained financial losses as a result of changes to the age pension, scheduled to be implemented on 1 January 2017. 

The changes, which were announced in the 2015 Federal Budget, adjusts the amount that retirees can hold in assets (such as cars, superannuation, investment properties, and bank accounts) in order to retain the age pension. Family homes are excluded from this calculation.

“Under the new rules, lower assets test thresholds will be increased, but retirees will lose $3 per fortnight of the age pension for every $1,000 they have in assets above the threshold. This is double the $1.50 per fortnight reduction that currently applies,” stated the official press release from the Commonwealth Bank of Australia (CBA).


Approximately half a million Australians will be affected by the changes to the assets test threshold, and the government estimates that about 326,000 of these retirees will lose some, or all, of their pension. On the plus side, 170,000 retirees will have more money in their pockets.   


According to Linda Elkins, executive general manager at CBA, many people on the age pension may not be aware of how they’ll be impacted by these changes. “It is important for retirees to plan for the changes by checking their position with Centrelink and discussing with a financial adviser what strategies are suitable for their situation,” she said.


“There are a number of strategies retirees can implement now to help them retain or improve their cash flow when the asset changes take effect.”


Elkins went on to outline five areas retirees affected by the new assets test thresholds may consider:

  1. Upgrade the family home
As the family home is exempt from the assets test, strategies such as buying a more expensive principal residence or initiating home improvements may result in reduced assessable assets. However, Elkins says it’s important to assess individual requirements, as these strategies may also result in reduced liquidity and provide no additional income.
  1.  Invest in lifetime annuities
Investing in lifetime annuities can provide advantages under the income and assets test as these are classified as long term income streams (meaning they’re not subject to deeming and have a reducing asset value).


Depending on the annuity, Centrelink may reduce its assessable value by a deduction amount every six months. There’s also the benefit of a regular income from the annuity into old age.

  1. Re-contribute superannuation from the older to younger spouse
For couples with one spouse under the pension age, withdrawing part of the older person’s superannuation account and re-contributing it to the younger person’s account may result in a reduction of assets.
  1. Settle funeral expenses ahead of time
Settling funeral expenses ahead of time (such as purchasing a burial plot, prepaying funeral expenses, or purchasing a funeral bond of up to $12,500) may help reduce assessable assets and maximise the age pension entitlements.
  1. Gift money to children or grandchildren
Ten thousand dollars a year, or $30,000 over five years, can be gifted to children or grandchildren without being subject to the assets test. Gifts over these limits count as assessable assets, and are deemed for income test purposes, for five years from the date of the gift.

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