Budget changes support a brighter retirement
Superannuation | 26/06/2018 |
5 min read
When tax cuts grabbed all the attention in the May 2018 Budget, some quiet tweaks to superannuation and retirement income were drowned out in the noise. These small changes can have a real impact on your super balance, and how long it lasts.
There’s three things retirees need to be aware of.
Expansion of the Pension Loan Scheme
The expansion of the Pension Loan Scheme will allow all Australian age pensioners to boost their income using the equity in their home. Under the scheme, retirees will be able to borrow up to 150% of the Age Pension (currently 100%), or $11,799 a year for singles and $17,787 for couples who are on the full Age Pension.
The loan is a reverse mortgage with an interest rate set at 5.25% a year, about 1% below the average commercial rate.ii The loan is typically not repaid until the home is sold and the Government guarantees that the debt can never exceed the value of the home. Currently, only part-pensioners can access the scheme.
Increased earning ability for pensioners
All age pensioners will be able to earn up to $300 a fortnight in employment income, or $7,800 a year, without reducing their pension. This is an increase of $50 a fortnight and, for the first time, self-employed pensioners will also be eligible.
Voluntary super contributions extension
The Government will provide more time for Australians aged 65 to 74 with a modest super balance to boost their retirement savings. This will take the form of an exemption from the superannuation work test.
In other words, from July 1 retirees aged 65-74 with an account balance below $300,000 will not be required to meet the work test to make voluntary super contributions. At the moment these people are required to work at least 40 hours in a 30 day consecutive period in a year to make any additional super contributions.
Concerned about your retirement income? An Equip financial planner can help you understand your options, and get more out of life. Find out more about our fees and service by clicking here.
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