Key points on social security
- Eligibility for the Disability Support Pension (DSP)
- Amending portability rules for para-athletes preparing for Paralympic Games
- Changes to the Age Pension Assets Test
Eligibility for the Disability Support Pension (DSP)
Effective Date: 3 May 2016
The Government proposes that over the next 3 years, up to 90,000 current DSP recipients will have their DSP eligibility reviewed to assess their capacity to work which is expected to contribute to the new National Disability Insurance Scheme Savings Fund. There will also be up to 30,000 Disability Medical Assessments for current DSP recipients considered high risk of not being eligible for the payment.
It is expected that as a result of this review, a proportion of these recipients may no longer be entitled to receive the DSP.
What does this mean for you?
If you are in receipt of the DSP, you should speak with your financial adviser to ensure that you meet the current eligibility requirements in relation to your capacity to work.
Amending portability rules for para-athletes preparing for the Paralympic Games
Effective Date: 3 May 2016, applying retrospectively from September 2015
It is intended that para-athletes in receipt of the DSP will have up to an additional 4 weeks of overseas travel without their payments being impacted to allow these athletes to attend approved international events leading up to the:
- 2016 and 2020 Summer Paralympic Games; and
- 2018 Winter Paralympic Games.
What does this mean for you?
Currently, when travelling overseas temporarily, you will generally only be paid DSP for up to 4 weeks in any 12 month period. This change will mean that if you are competing in the Paralympics you may have up to a total of 8 weeks DSP within a 12 month period.
Changes to the Age Pension Assets Test
Effective Date: 1 January 2017
One of the biggest changes to affect retirees was announced in the 2015 Federal Budget and has already been legislated. From 1 January 2017 the Assets Test thresholds for the Age Pension will be increased, however, the rate at which assets above the threshold will reduce the Age Pension will increase from $1.50 per fortnight per $1,000 of assets above the threshold to $3 per fortnight. This returns the taper rate to the same level as applied prior to 20 September 2007.
Other benefits affected by the change include:
- Bereavement Allowance
- Disability Support Pension
- Carer Payment
- Wife Pension
- Widow B Pension
- Service Pension
- Pensioners with assets below the new thresholds may see their Age Pension (or other benefit) increased. However, if their entitlement is determined by the Income Test, they may not benefit from the change to the Asset Test.
Pensioners with assets above the new assets test threshold are likely to have their Age Pension (or other benefit) reduced. In particular, the level of assets at which the Age Pension will cut out will be reduced.
Pensioners who lose their Age Pension (or other benefit) as a result of the changes may also lose their Pensioner Concession Card, however, they may be entitled to another concession such as the Commonwealth Seniors Health Card.
What does this mean for you?
It is important to review your overall position to determine how you will be affected by these changes. Where your Age pension entitlements are likely to be reduced as a result of the changes, you should speak with your financial adviser about possible strategies.
Content courtesy of BT’s ‘Federal Budget – May 2016′.
This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice. MGD Wealth Ltd is the holder of Australian Financial Services Licence No. 222600.