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  • Eighty percent of retirees (did) get the full or part pension.
  • As of 1 January 2017 under the pension assets test: the maximum asset cut-offs have been reduced by 20-30 per cent; and the rate of pension reduction has been doubled to $3/$1,000 of excess assets.
  • The home is exempt, but when sold any surplus not applied to the next home will most likely be assessable and attract deemed income.
  • A single person moving into an aged care facility of choice will usually need their house to be sold.

It might sound a little alarmist, but the exalted status of the Australian home is beginning to undergo a process of fiscal erosion under the increasing weight of demands on the public purse to pay for, amongst other things, the welfare and care of our ageing population.

It is not just a matter of ageing, or the increasing incidence of dementia and macular degeneration. Those of traditional retirement age have accumulated more private wealth than any previous cohort. For most, the bulk of that wealth lies in the equity in the unencumbered market value of their principal residence. Eighty per cent of retirees own their home with little or no mortgage and are full or part pensioners – the ‘Great Australian Dream’ realised.

The changes

A fiscal shift in government policy is evident in several recent amendments to the Social Security Act 1991 (Cth) (‘SS Act’). These changes came into force on 1 January 2017 and relate to:

  • the age pension asset thresholds and the doubling of the rate of reduction of the pension payable under the Social Services Legislation Amendment (Fair and Sustainable Pensions) Act 2015 (Cth); and
  • the end of exemptions for rental income from the home and the market value of the home, for pension purposes if a single elder has to move into permanent residential aged care as regulated under the Aged Care Act 1997 (Cth) (‘AC Act’). This comes from schedule 18 of the Budget Savings (Omnibus) Act 2016 (Cth).

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