Pensioners in the dark on eligibility changes

15-Nov-2016

By Daniel Paperny

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A large proportion of Australian pensioners were not up to speed with the latest legislative changes to age pension eligibility, according to new findings by VicSuper.

The superannuation fund’s study, which looked at Australian retirees and pre-retirees aged 55 and over, revealed two in five respondents were unaware of the new framework for age pension entitlements, set to take effect on 1 January next year.

VicSuper chief executive Michael Dundon said the report pointed to a systemic lack of understanding about the changes to Centrelink’s assets test and incoming superannuation tax reform.

Dundon said: “2016 is a year of change in the superannuation industry … our research is telling us that many people aren’t aware of or don’t understand the changes and how they’ll be affected.”

Set to take effect next year, the changes include a reduction to the upper threshold for part-pensions to $542,500 for single homeowners and $742,500 for single non-homeowners, down from $793,750 and $945,250 respectively.

The lower thresholds for eligibility for a full pension would remain unchanged.

According to VicSuper’s report, 54 per cent of Australian pensioners said they felt “financially unprepared” for retirement.

Two in five were worried they would not have enough money to maintain their standard of living and 58 per cent felt aged care would be too expensive.

The report also found nearly one-quarter of Australian pensioners felt completely out of their depth when considering their post-retirement finances and only 8 per cent said they were “completely financially prepared” when it came to retiring.

Dundon noted the challenge of longevity meant a growing number of Australians were retiring in their sixties but living longer, and that was placing a greater strain on Australia’s social security system.

“Retirees are underestimating how long they’re going to live for and therefore running out of money, resorting to relying on the age pension to make ends meet,” he said.

“Given the upcoming changes to pension entitlements and proposed changes to super still on the table, anyone nearing retirement age needs to take a good look at their financial plans for the future to ensure they’ve got enough money to last their retirement.”

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