Delivering on our commitments to Australian seniors
The Abbott Government is honouring its election commitments to age pensioners and self-funded retirees to make no changes to the age pension in this term of government and to index the income thresholds to the Consumer Price Index for the Commonwealth Seniors Health Card for self-funded retirees.
Age pensioners will benefit because the Abbott Government is scrapping the carbon tax which will reduce price pressures, and age pensioners will continue to receive the compensation payment after the carbon tax is scrapped. The indexation of the supplement will be removed and the rate maintained at the amounts payable before 1 July 2014.
The Abbott Government is making decisions that repair the Budget, strengthen the economy and prepare Australia for the long term challenges before us.
Australia faces a major demographic shift as the baby boomer generation enters retirement. We will have more retirees than ever before, and they will be living longer.
This will have implications for the age pension system. If we wish to have a sustainable age pension system that looks after those who need it most, now and into the future, we must reform it.
Australia needs a well-targeted means-tested income support system, which provides financial assistance to those most in need, while encouraging self-provision whenever possible.
The previous government enacted legislation to increase the age pension to 67 years by 1 July 2023.
New legislation will continue this process to increase the age pension age from 1 July 2025, until it reaches age 70 in July 2035. This measure will not affect Australians born before 1 July 1958.
From September 2017 the sustainability of Australia’s pension system will be improved by resetting the deeming thresholds for the income test to $30,000 for single pensioners and $50,000 for pensioner couples combined, $25,000 per member of an allowee couple. This will ensure that the lower deeming rate applies to a level of cash that a prudent person may choose to have on hand such as in a readily accessible bank account.
For a period of three years from July 2017, the sustainability of Australia’s pension system will be improved by pausing the indexation of the income and assets test free areas for the pension. This means that the amount of income and assets that individuals and couples can have before the pension begins to be reduced will remain constant for three years, rather than being automatically indexed in line with the Consumer Price Index on 1 July each year.
In September 2017, the sustainability of Australia’s pension system will be improved by linking pension indexation to the Consumer Price Index. This will bring pension indexation into line with indexation for most social security payments.
The Government will not proceed with the previous government’s Housing Help for Seniors trial. As the trial has not commenced, pension payments will not be affected by the trial not proceeding.
There was no evidence that the Housing Help for Seniors trial would have achieved its objective of encouraging seniors to downsize their homes. Around 100,000 age pensioners move each year under existing means testing arrangements.
The Abbott Government is honouring its election commitment to index the income thresholds to the Consumer Price Index for the Commonwealth Seniors Health Card for self-funded retirees. The Government recognises the contribution self-funded retirees make to the community, including saving the nation considerable pension costs.
From 20 September 2014, the income thresholds for the Commonwealth Seniors Health Card will be indexed annually to the CPI, enabling up to 27,000 additional people to qualify for the Card over the next four years.
Indexing the current income thresholds will mean more self-funded retirees will not lose out on entitlements because of modest changes in their income, giving them more freedom to actively contribute to their community.
The commitments we made at the election were fully funded, ensuring no additional pressure on the Budget.
The Government will remove the Seniors Supplement for holders of the Commonwealth Seniors Health Card. This measure will also apply to Veterans who hold a Commonwealth Seniors Health Card or Gold Card. This measure is necessary so that the Government can repair the Budget and strengthen Australia’s future.
The Government is repairing the Budget so that we can build a stronger economy and strengthen Australia’s future.