Eligibility changes poach nest eggs
Proposed eligibility changes to the age pension risk damaging people who have worked hard to build up their superannuation nest eggs, according to self-managed superannuation fund specialist Martin Murden.
Murden, a director of Partners Superannuation Services, said those with sizeable superannuation balances would be disadvantaged by the age pension eligibility changes because of the removal of term allocated pensions.
He said the hype that had surrounded the May Federal Budget meant the problem of the proposed eligibility changes had been overlooked.
Murden pointed out that from September 20, next year, the partial pension asset threshold had been increased to $783,000 for a married person with a home, and $447,000 for a single person.
He said that while this change was wonderful for those who would need a partial pension to supplement their super, it would be less welcome among those who had built up comfortable nest eggs because of the removal of the 50 per cent asset test pensions, also known as term allocated pensions.
Murden said a couple with $750,000 in investments could, as a result of the increase in the asset test threshold, have arranged their affairs to receive a little over $9,300 as a partial pension each year, generating a total annual income of around $54,300.
However, he said that with the removal of the 50 per cent asset test exempt pension, they would only receive a partial pension of $1,500, with their annual income falling to $46,500.
Murden said he did not have statistics on the number of people negatively impacted by the changes, but evidence suggested the problems were widespread.
AUTHOR
Mike Taylor
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