Thousands of asset-rich retirees will lose access to the age pension, thanks to Prime Minister Tony Abbott's plan to cut pension thresholds. The details were outlined during the Budget release in May this year.
What that means is those retirees, described by Mr Abbott as 'liquid assets millionaires', with more than $823,000 in assets on top of their family home will lose access to the part pension. Previously, couples could own as much as $1.15 million in assets before the part pension cut out.
An estimated 91,000 will no longer qualify, according to ABC News, while another 235,000 will have their pensions reduced.
Extra $30 a fortnight for some
Further changes will leave the majority of retirees unaffected while some will receive a small boost. The maximum value of assets a person can own to receive the full pension will increase from $202,000 to $250,000 for single homeowners and from $286,500 to $375,000 for couples who also own their own home.
Social services minister Scott Morrison says those changes will result in more than 170,000 pensioners receive an extra $30 a fortnight. They are due to come into effect from January 2017 and would save the budget $2.4 billion over four years.
90 per cent better off
Prime Minister Abbott has told Macquarie Radio, "This idea that you can be a liquid assets millionaire and still be a part pensioner I think is problematic, so we will be tackling that. But at the same time, at the other end of the asset scale, we want to make it more generous."
"Ninety percent of people on a pension or on a pension-related benefit will be no worse off or significantly better off as a result of these changes," he said.
At the time, Opposition Leader Bill Shorten said he was willing to consider the latest plan but was not in favour of the changes.
Plan of action
The changes mean it is even more important to provide for your own income during retirement. Savings, both inside and outside super are crucially important if you want to maintain to lead a certain lifestyle in retirement.
As we outlined earlier this week, many people seem to overestimate the amount they'll have to live on and could have regrets once they retire. By that stage, it's too late, of course, to do much about it.
The time to act is now.
