Question 1

• On January 1, 2017, there were changes to the asset test. The change was the threshold was a small increase, but the changes to the taper was from $1.50 to $3. Tony Abbott said there would be cuts to pensions; I would like to know just how many of those who lost their pension are now on a full pension because they had to live on their asset because they had little to no pension. 

Yes, you are correct – back at the start of 2017 there was a major change to the asset test for the age pension (and other income support payments).

Prior to the change, if your assets were above the ‘lower allowable limit’, your pension payment was reduced by $1.50 per fortnight (single or couple combined) for every $1000 of assessable assets over the lower limit. See the below table for current allowable asset limits.

However, since 2017, once your assets are above the ‘lower allowable limit’ your age pension is now reduced by double that amount, i.e. $3 per fortnight.

As an example, if you are $50,000 over the lower limit your age pension is reduced by $150 per fortnight ($50 x $3). Under the old rules it would have only been reduced by $75 per fortnight.

As you have indicated, many people would have then had to draw down more on their own assets, such as their super, at a faster rate if they wanted to live on the same level of income. As they draw down more assets, then their age pension would increase.

Now I don’t have any specific statistics around this particular measure, however, as people age, their receipt of the age pension generally increases. This is because:

• Older age groups had less or no time in the compulsory superannuation system
• Superannuation balances decline with age as balances are drawn down
• Individuals are working longer and into their 60s and sometimes even into their 70s, so are less likely to receive the age pension until they retire.

For example:

• At age 70, 63 per cent of Australians are in receipt of a full or part age pension
• At age 80, 83 per cent of Australians are in receipt of a full or part age pension.

This is a design feature of the system. The age pension is a great safety net and as you draw down on your own assets your age pension increases.

* Pension is reduced by $3.00 per fortnight for each $1000 of assets over this threshold.

Question 2

• I am 77 and have been on an age pension for some time. What is the difference between Commonwealth Seniors Health Card and the Pension Concession Card?

The Pension Concession card is automatically provided to anyone who receives an age pension.

The Commonwealth Seniors Health Card is provided to those who are of age pension age but do not qualify for the age pension.

However, there is still an income test which must be met. The limits are high and there is no assets test applied.

They do have many similar benefits, such as cheaper medicine under the PBS and bulk-billed doctor visits. However, the pensioner card does provide more discounts on utilities.

Certain states and territories also provide additional benefits, such as cheaper public transport.

As an example, Victoria provides this guide for all cardholders.

Question 3

• My 31-year-old son joined MilitarySuper when he was just 17 – he has left the service now and is planning his next career. On discharge he went to a few information discharge sessions. He believes he was advised that he could not transfer his super to another industry super. I’ve done some research on their site but can’t locate any detail around transferring super balances. Can you advise?

My contacts at MilitarySuper have advised that MilitarySuper is a hybrid scheme (this means it has accumulation and a defined benefit components). There are specific and complex rules that can limit the ability to roll funds out of the MilitarySuper scheme. Depending on your son’s circumstances, it is generally possible to rollout certain parts of a member’s MilitarySuper account. What parts can be rolled out can be viewed here.

I suggest contacting the Commonwealth Superannuation Corporation (CSC) team, who administer MilitarySuper to discuss the options.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

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