Over the past 15 years, there have been significant changes to the assessment of assets and income for social security purposes. Unfortunately, it’s been nothing but bad news. The most significant change came at the start of 2016 with the rebalancing of asset test measures. The majority of Age Pensioners saw a significant decrease in their pension rate or a complete loss of pension entitlements altogether. As a result, we’re now expected to utilize more of our own savings to fund retirement as opposed to pensions providing the bulk of retirement income.
All retirees have been feeling the pinch of historically low-interest rates since the GFC, only to be compounded by changes to the Age Pension criteria brought in by successive Governments, over the last two years, which have seen Age Pension entitlements also fall. There have been at least four changes in the last two years to the treatment of certain investments; each one of these changes has resulted in the reduction of pension, so pensioners have been hit both ways on their investments & Age Pension. So, what, if anything, can a pensioner do, to try & maximize your pension entitlement, to make the most of what you have in hard times.
Correct your asset valuations
It’s important that you correct the values of your assets such as bank accounts, investments, cars, and home contents regularly. It’s a common misconception that a pension account will update your assets for you; however, this is not the case. The majority of your assets depreciate over time, which provides an opportunity to increase your pension.
Update Asset Values Regularly
Updating the value of personal assets such as vehicles, bank accounts or home contents is fundamental to maximizing pension. This is because a majority of assets depreciate over time, hence increasing pension levels. Contrary to common assumptions, the government cannot update asset values and individuals have to do so themselves. It is important to ensure you are not overstating the values of cars, contents etc, as this will impact negatively on your entitlements.
Mistakes can be costly
Many prospective applicants are concerned they might make a mistake, for which they could be penalised later on. As unlikely as this is to happen, many feel stressed by tackling their Age Pension application without professional support. It’s also important to understand that those whose applications are rejected today may find they will qualify at a later stage. Nothing is set in concrete.
Utilize the Gifting Strategy
One form of expense that can reduce a person’s assessable assets and income gifts. Even though there are limitations as to the amounts of gifts deductible, it is a sure way to increase pensions. The only trick is to strategise the gifts in such a way that they qualify for the deduction.
