Australian Government, A Plan to Simplify Superannuation

Simplified Superannuation - Final Decisions

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Age pension arrangements

Key Points

  • The pension assets test taper rate will be halved from 20 September 2007 so that pension recipients only lose $1.50 per fortnight (rather than $3) for every $1,000 of assets above the relevant threshold.
  • The assets test exemption for ‘complying’ income streams will be removed for income streams purchased on or after 20 September 2007.
  • There will be no change to the income test arrangements.

Pension assets test (page 37)

The pension assets test taper rate will be halved from 20 September 2007 so that recipients only lose $1.50 per fortnight (rather than $3) for every $1,000 of assets above the relevant threshold.

This will apply to the following payments:

  • Age and service pensions;
  • Disability support pension;
  • Carer payment;
  • Wife pension;
  • Widow B pension; and
  • Bereavement allowance.

Abolition of the 50 per cent assets test exemption for ‘complying’ income streams (page 38)

The current 50 per cent assets test exemption for purchased ‘complying’ income streams will be removed from 20 September 2007. This change will only apply to income stream products purchased on or after 20 September 2007 and will not affect the assets test treatment of income streams purchased before this date.

Pension Income Test

The current income test treatment of superannuation pensions will remain unchanged. Income streams with a term of greater than five years are assessed under the income test on the basis of the gross annual income from the product reduced by an annual allowance for return of capital. Income streams with a term of less than five years are assessed under the social security deeming rules.

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Miscellaneous