More than 690,000 people will next month receive letters from the Federal Government warning them they could lose all or part of their age pension.
The slashing of the so-called “asset test” comes into force on January 1 and will see some Australians lose more than $14,000 a year in pension income.
Changes announced in last year’s Federal Budget dramatically cut how wealthy Australians can be before they lose the pension.
Under current rules, home-owning couples can have up to $1.17 million in assets, excluding the family house, and still qualify for part of the age pension.
Last year, the Government moved to reduce that threshold to $823,000. At the time, Treasury estimated 91,000 people would lose all their pension and a further 230,000 would receive less.
Yesterday, the Government unveiled a further tightening of eligibility. On January 1, couples with assets worth more than $816,000, down from $823,000, will lose every cent of their pension. Single pensioners who own their home will lose payments if they have assets worth $542,500, down from the $547,000 envisaged when the changes were unveiled last year.
The lower threshold means more pensioners will lose payments but the Government does not know how many.
Federal Department of Human Services general manager Hank Jongen said the Government would next month write to 691,000 people with “a significant value of assets”.
“This letter will provide information about the changes to the assets test from January 1, 2017, and advise their payment(s) may be affected as a result,” he said.
“In December, we will send additional letters to those customers whose payment rate will reduce or stop as a result of the January 1 changes.”
The fresh changes to the asset test emerged after the Government yesterday announced the biannual indexation of pension payments.
From this week, single pensioners will get $3.20 extra to $877.10 a fortnight. Couples will get a $5 boost to $1322.40.
Some seniors will benefit from a decision to make it easier to get the Commonwealth Seniors Health Card, which entitles holders to a range of discounts, including GP scripts for $6.20 and cut-price council and water rates.
Couples over 65 can now earn a combined $84,472 a year, an increase of $836, and still get the card. Singles can earn an extra $523 a year, to $52,796.